MTD penalties: is there a penalty for a late quarterly update?
Short answer: HMRC uses a points system for late submissions. You get one point for each missed deadline, and at 4 points you get a £200 penalty. There are no penalty points for late quarterly updates in 2026-27, and Budget 2026 (28 October 2026) gives the April 2027 group the same easement for its first four updates in 2027-28. Late tax returns and late payments are still penalised.
To see which group you are in, use the MTD checker.
Late submission points
Each missed tax return deadline earns one penalty point from the tax year you join MTD. Missed quarterly update deadlines earn points for tax years after 2026-27. GOV.UK says you get only one point per deadline, even with several businesses.
| Item | Rule |
|---|---|
| Penalty point threshold | 4 points |
| Penalty at the threshold | £200 |
| Each further missed deadline at the threshold | Another £200 |
Missing the 7 November update and then the 7 February update means two points. A fourth missed deadline brings the first £200.
How points expire
Below the threshold, HMRC removes each point automatically 24 months after the missed deadline.
Once you reach 4 points, points no longer drop off one by one. To clear them you must send your quarterly updates and tax return on time for 12 months, and send any updates and returns still outstanding from the previous 24 months.
HMRC can cancel a point or penalty in exceptional circumstances, such as insolvency.
Easements by start year
| Your start | Quarterly updates, 2026-27 | Quarterly updates, 2027-28 |
|---|---|---|
| 6 April 2026 (over £50,000) | No penalty points | Points apply, starting with the 7 August 2027 deadline |
| 6 April 2027 (over £30,000) | Not yet in MTD | No points for the first four updates (Budget 2026) |
| 6 April 2028 (over £20,000) | Not yet in MTD | Not yet in MTD |
What GOV.UK says:
- “There are no penalties for missing a quarterly update deadline for the 2026 to 2027 tax year.” You still need digital records and quarterly updates before you can submit your return.
- The Budget 2026 document says taxpayers joining in April 2027 will not receive penalty points for late submission of their first four quarterly updates for 2027-28. The GOV.UK penalties guidance had not been updated to say this when we checked on 11 November 2026, so confirm the wording there.
- For the 2026 group, GOV.UK says points apply to quarterly updates “for tax years after 2026 to 2027”, so the first update deadline that can earn a point is 7 August 2027. ICAEW confirms the easement was not extended for this group.
- Nothing on GOV.UK we found gives an easement for the April 2028 group.
The easement covers quarterly updates only. GOV.UK says penalty points still apply for late tax returns in 2026-27, and ICAEW notes the April 2027 easement does not cover the year-end return either. A late tax return still earns a point and, at the threshold, a £200 penalty. The easement also does not mean you can skip updates: they must be sent before you submit your return. If you are in the April 2027 group, see MTD from April 2027.
Late payment penalties
Late payment penalties are separate from late submission points. They depend on how late the tax is, and they rise with the tax year.
| Days late | 2026-27 | 2027-28 |
|---|---|---|
| Up to 15 | No penalty | No penalty |
| 16 to 30 | 3% of tax owed at day 15 | 4% of tax owed at day 15 |
| 31 or more | 3% at day 15 and 3% at day 30, plus 10% a year on the outstanding amount from day 31, for up to 2 years | 4% at day 15 and 4% at day 30, plus 10% a year on the outstanding amount from day 31, for up to 2 years |
In your first year under the new penalties, you have 30 days instead of 15 to pay or set up a payment plan before penalties start. You get this only once: a volunteer who later becomes required to use MTD keeps 15 days. Interest on late payments starts from the first day a payment is late. Penalties do not apply to payments on account.
Example: Alex, a landlord. Alex owes £2,000 for 2027-28, which is not Alex’s first year under the new penalties, and pays 40 days late. That is 4% at day 15 (£80) and 4% at day 30 (£80), then 10% a year on the outstanding £2,000 from day 31 until paid, plus late payment interest. The figures are an example only.
How to avoid penalties
- Put the four update dates and 31 January in your calendar: see MTD deadlines.
- Remember that a nil update is still an update.
- Keep updates cumulative and send the corrected totals next time if you spot a mistake: see cumulative quarterly updates.
- You can send up to 10 days early if nothing more will be recorded.
Sources
- Penalties for Making Tax Digital for Income Tax
- Budget 2026 (HTML)
- Send quarterly updates
- Find out if and when you need to use Making Tax Digital for Income Tax
- ICAEW: Budget MTD penalty soft landing and exclusions (secondary source)
- LITRG: extension of the MTD penalty easement to the next wave (secondary source)
This guide is general information, not tax or legal advice. Rules can change: check GOV.UK or speak to an accountant about your situation. SendMTD is not affiliated with HMRC.