Guides › MTD Penalties: Points, £200 Fines and Late Payment
MTD Penalties: Points, £200 Fines and Late Payment
General information, not tax advice. This page summarises HMRC and GOV.UK guidance as read on 17 October 2026. Rules, thresholds and dates can change; check GOV.UK and speak to a qualified adviser or HMRC about your own circumstances. Figures in examples are made up.
Short answer: If you use MTD for Income Tax, new penalties replace the current Self Assessment late submission and late payment penalties for your personal return. Late submissions earn points; reaching the threshold brings a £200 penalty. Late payment penalties are percentages that depend on how late you pay.
When the new penalties apply
From the tax year you join MTD for Income Tax (GOV.UK also says that from April 2027 the new penalties apply to everyone who submits a personal Self Assessment return). Earlier years keep the current penalties (for example, if you start on 6 April 2026, current penalties apply to your 2025 to 2026 return due 31 January 2027). There are no changes to how late payment interest works.
Late submission: points
- Each missed deadline for a quarterly update (for tax years after 2026 to 2027) or a tax return earns one point.
- At 4 points: a £200 penalty, and £200 each time you miss another deadline.
- Only one point per deadline, even with several businesses.
- MTD for VAT points are separate.
The 2026 to 2027 tax year
HMRC will not apply penalty points for late quarterly updates in 2026 to 2027. You still need to keep digital records and send the updates before you can submit your return. Points still apply to late tax returns.
People starting in April 2027
GOV.UK says that for quarterly updates for tax years after 2026 to 2027 a missed deadline earns a point. We did not find a statement that those who join in 2027 get their own points holiday. Check GOV.UK before relying on any grace.
Removing points
Below the threshold, each point is removed automatically 24 months after the missed deadline. At the threshold, points are not removed individually; to remove all points you must send updates and returns on time for 12 months and have sent any outstanding updates and returns for the previous 24 months.
Late payment penalties
These apply to balancing payments and amounts due after an amendment or assessment, not to payments on account.
| Tax year 2026 to 2027 | Tax year 2027 to 2028 | |
|---|---|---|
| Up to 15 days late | No penalty | No penalty |
| 16 to 30 days late | 3% of tax owed at day 15 (none if first year) | 4% of tax owed at day 15 (none if first year) |
| 31 days or more | 3% at day 15 and 3% at day 30, plus 10% a year on the outstanding amount from day 31 (up to 2 years) | 4% at day 15 and 4% at day 30, plus 10% a year from day 31 (up to 2 years) |
In your first year of the new penalties you have 30 days from the due date to pay in full or contact HMRC to set up a payment plan; afterwards 15 days. You get the 30-day period only once. Late payment interest still applies from day one.
Cannot pay?
Contact HMRC as soon as possible. If a payment plan is agreed and you keep to it, penalties are paused from the date you contacted HMRC.
Volunteers
If you volunteer before you are required to join, GOV.UK has a separate page on penalties for volunteers, with different point thresholds. We have not summarised it here. If you volunteered and are later required to use MTD, you keep the 15-day (not 30-day) payment period.
If you become exempt
If you become exempt in 2026 to 2027 you return to the current Self Assessment penalties. If you become exempt in 2027 to 2028 you remain under the new penalties (GOV.UK: from April 2027 they apply to everyone who submits a personal Self Assessment return) and your point threshold drops from 4 to 2; existing points are reduced so you are no closer to the threshold.
Appeals
HMRC sends a letter for each late payment penalty, penalty point or £200 penalty. If you disagree you can appeal; the letter says how. Exceptional cases such as insolvency may lead to cancellation.
FAQ
Do I get a penalty for a late quarterly update in 2026 to 2027? HMRC says no points are applied that year.
What if I have two businesses? One point per deadline.
How much is the £200? £200 at the threshold and for each further missed deadline.
Does interest still apply? Yes, nothing changes there.
What we could not verify
- Any separate treatment for people starting in April 2027.
- How the penalty interacts with specific reasonable-excuse cases.
- Later changes after the page's 30 March 2026 update.
Sources (GOV.UK / HMRC)
- GOV.UK, Penalties for Making Tax Digital for Income Tax — https://www.gov.uk/guidance/penalties-for-making-tax-digital-for-income-tax (last updated 30 March 2026; read 17 October 2026)
- GOV.UK, Use Making Tax Digital for Income Tax: Send quarterly updates — https://www.gov.uk/guidance/use-making-tax-digital-for-income-tax/send-quarterly-updates (read 17 October 2026)
- GOV.UK, Sign up for Making Tax Digital for Income Tax — https://www.gov.uk/guidance/sign-up-your-business-for-making-tax-digital-for-income-tax (last updated 13 October 2026; read 17 October 2026)
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Not tax advice. Examples use made-up figures. Nothing here has been reviewed by a tax professional. See the disclosure.