Making Tax Digital for Income Tax is live. If you are self-employed or a landlord with qualifying income over £50,000, you now send quarterly updates to HMRC, and missing one has consequences.
This year, 2026/27, is a soft-landing year: HMRC will not apply penalty points for late quarterly updates. But the system bites in full from 2027/28, and the next wave of MTD joiners gets no grace period at all.
Here is exactly how the points system works.
How the Points System Works
Late-submission penalties under MTD are points-based. HMRC has scrapped instant fines for missed quarterly updates. Instead, each missed deadline earns you one penalty point.
The rules are simple:
- You get one point per missed quarterly update or tax-return deadline.
- You can only earn one point per deadline, even if several updates go in late at once.
- Points for MTD Income Tax are separate from VAT penalty points. A VAT point does not count toward your Income Tax total, and vice versa.
- Quarterly update deadlines fall on 7 August, 7 November, 7 February, and 7 May.
When Points Turn Into Cash
Points sit on your record quietly until you hit the threshold. For quarterly filers, that threshold is 4 points.
At 4 points, HMRC charges a £200 penalty. After that, every further missed deadline brings another £200 penalty: no more grace, no more warnings.
So the first three missed updates cost you points only. The fourth costs you £200, and the fifth costs you another £200.
How Points Expire
Points do not last forever, if you stay below the threshold. Each point expires 24 months after the missed deadline that created it.
But once you hit the 4-point threshold, the rules tighten. Your points stay until you complete a compliance period:
- File every outstanding submission.
- Send four consecutive quarterly updates on time.
Only then does your record reset.
The 2026/27 Soft Landing, and Who Misses It
If you joined MTD in April 2026 (the £50,000-plus group), you are in the soft-landing year. HMRC will not apply penalty points for late quarterly updates during 2026/27.
Two important catches:
- Quarterly updates are still mandatory. HMRC must receive all your updates before you can submit your year-end tax return. The soft landing removes the points, not the obligation.
- The April 2027 intake gets no concession. If you join MTD next April under the £30,000 threshold, penalty points apply from your very first quarter. There is no grace year for the 2027 joiners.
The full points system applies to everyone from 2027/28.
Can You Appeal a Point?
Yes. You can appeal a penalty point on “reasonable excuse” grounds: the same principle that applies across HMRC penalties. A serious illness or an event genuinely beyond your control can cancel a point.
Late Payment Is a Separate System
Penalty points cover late submissions only. Late payment of your tax bill runs on a different set of rules, and there is no points system for it.
Instead, late-payment penalties rise the longer you wait, and interest accrues from day one until you pay in full. There is one concession: in your first year of MTD, HMRC gives you 30 days (instead of 15) before a late-payment penalty can apply.
What to Do Now
- Put the four deadlines in your calendar: 7 August, 7 November, 7 February, 7 May. Your next one is 7 November 2026.
- File every update, even in the soft-landing year. Good habits now mean no points later.
- Use compatible software. Quarterly updates must go through HMRC-recognised software: you cannot do them by hand.
iFiler is HMRC-recognised software for MTD Income Tax quarterly updates. It keeps your income and expense records organised through the year, so each quarterly update takes minutes. It is free for now.
Frequently Asked Questions
Four points. At four penalty points, HMRC charges a £200 penalty. Every further missed deadline after that brings another £200 penalty.
Yes, if you stay below the threshold. Each point expires 24 months after the missed deadline. Above the threshold, points stay until you file everything outstanding and send four consecutive quarterly updates on time.
No. They are completely separate systems. Points earned for late MTD Income Tax updates never count toward your VAT penalty-point total.
Yes, for points only. HMRC will not apply penalty points for late quarterly updates during 2026/27. The updates themselves are still mandatory, and the full points system applies to you from 2027/28.
No. The April 2027 intake gets no penalty-points concession. Points apply from your very first quarter.
Yes, on reasonable excuse grounds: for example, a serious illness or an event genuinely beyond your control.
Disclaimer:
This guide provides general information about Making Tax Digital as of October 2026. Tax rules and HMRC guidance can change. Always consult with a qualified tax professional about your specific circumstances. That’s what we’re here for. In accordance with our normal practice this reference is given in good faith and in confidence, without legal liability on the part of the author or the company. The author assumes no responsibility or liability for any errors or omissions in the content of this site
The information provided in this blog is for general guidance and educational purposes only and does not constitute financial, tax, accounting or legal advice. iFiler, registered in England under Company Registration Number 15996173, has prepared this content to offer general insights into financial and taxation matters. Although every effort is made to ensure the accuracy and relevance of the information at the time of publication, no guarantee is given regarding completeness, accuracy or suitability for your specific circumstances.
Readers should not act, or refrain from acting, based solely on the information contained in this content. Professional advice tailored to your personal or business situation should always be obtained before taking any financial or tax related decision. iFiler accepts no liability for any loss or damage arising from reliance on the information presented in this blog.
