Making Tax Digital penalties: late filing points, £200 fines and late payment
Written by Tom Ellis · Senior Trades Editor
Last updated: 7 November 2026
Quick Answer
What is the penalty for missing an MTD deadline?
Under Making Tax Digital you get one penalty point for each quarterly update or tax return deadline you miss. At four points you pay a £200 penalty, then another £200 for every further miss. There is a first-year soft landing: no points for late quarterly updates in 2026-27 for the April 2026 group, and Budget 2026 announced the same for the April 2027 group in 2027-28 (the legislation is still to be passed). Late tax returns and late payment are still penalised, and from April 2027 late payment costs 4% at day 15, another 4% at day 30, then 10% a year.
How do MTD penalty points work?
- One point per missed deadline. Each late quarterly update or late tax return earns a point, with a maximum of one point per deadline, however late it is.
- £200 at four points. When you reach the threshold of four points you are charged £200.
- £200 for each further miss. While you are at four points, every further missed deadline costs another £200.
- You still have to send it. A penalty does not replace the missing update or return. HMRC still expects it.
This covers your four quarterly updates (due 7 August, 7 November, 7 February and 7 May) and your year-end tax return (previously called the final declaration), due 31 January. See every MTD deadline for 2026, 2027 and 2028 for the dates that apply to your group.
Source: Penalties for Making Tax Digital for Income Tax (GOV.UK).
When do penalty points expire?
Below the threshold (one to three points), each point expires on its own 24 months after you got it, as long as you never reach four.
At the threshold (four points), points stop expiring on their own. Your points are reset to zero only when both of these are true:
- you have sent every update and return on time for 12 months, and
- nothing is outstanding from the previous 24 months: every update and return due in that time has been sent.
Do I get penalty points in my first year?
April 2026 group (over £50,000): no points for late quarterly updates in 2026-27, your first year. This was announced in the Budget 2025 (GOV.UK). Points for late quarterly updates start in 2027-28.
April 2027 group (over £30,000): the Budget on 28 October 2026 (GOV.UK) announced that people joining in April 2027 will get no penalty points for late quarterly updates in 2027-28. Three things to know:
- The legislation is still to be passed. HMRC's penalties guidance was last updated before the Budget and still says points apply after 2026-27.
- You must still send every 2027-28 update before you file your tax return.
- A late tax return and late payment are still penalised, even in your first year.
If you join in April 2027, points for late quarterly updates start with 2028-29 (the first is due 7 August 2028). Your first MTD tax return is due 31 January 2029, and missing it earns a point. Read more about the April 2027 group in the MTD £30,000 threshold guide.
Worked example: how points build up
Dave is a plumber in the April 2026 group. His first-year relief has ended, so from 2027-28 every late update counts. He is busy on jobs and sends several updates late:
| Deadline | What happened | Points | Penalty |
|---|---|---|---|
| 7 August 2027 (Q1 update) | Sent a week late | 1 | None |
| 7 November 2027 (Q2 update) | On time | 1 | None |
| 31 January 2028 (2026-27 tax return) | On time | 1 | None |
| 7 February 2028 (Q3 update) | Late | 2 | None |
| 7 May 2028 (Q4 update) | Late | 3 | None |
| 7 August 2028 (2028-29 Q1 update) | Late | 4 | £200 |
| 7 November 2028 (2028-29 Q2 update) | Late | 4 | Another £200 |
Dave has paid £400 in late filing penalties, on top of any late payment penalties. To clear his points he now needs 12 months of sending everything on time, with nothing outstanding from the previous 24 months. Until then, every further miss costs another £200.
If Dave had stopped at three points in May 2028, he would have paid nothing, and his August 2027 point would have expired 24 months later.
Late payment penalties from April 2027
Late payment penalties are separate from points. From April 2027 (the 2027-28 tax year) they work like this for tax you owe:
| Days after the due date | Penalty |
|---|---|
| Days 1 to 15 | None |
| Day 15 | 4% of the tax unpaid at day 15 |
| Day 30 | A further 4% of the tax unpaid at day 30 |
| Day 31 onwards | 10% a year, charged daily, on the tax still unpaid |
- First year: in your first year under the new penalties you get 30 days instead of 15 to pay or set up a payment plan. People who volunteered for MTD early keep the 15-day window.
- 2026-27 rates are lower: 3% and 3% instead of 4% and 4%.
- Payments on account are not covered by these penalties.
- Interest is charged on late tax as well, and is unchanged.
Source: Penalties for Making Tax Digital for Income Tax (GOV.UK).
Do the new penalties apply if I'm not in MTD?
Yes. From April 2027 the points-based penalties apply to everyone who files a personal Self Assessment tax return, not only people in MTD. If you are not in MTD, your threshold is 2 points instead of 4. So even tradespeople under the MTD thresholds should treat 31 January as a hard deadline. Check whether you are in MTD with the free Making Tax Digital checker.
How to avoid MTD penalties
- Put every deadline in your calendar. Download the MTD deadlines calendar, which has a reminder 7 days before each date.
- Send nil updates. A quarter with no income still needs an update. Missing it earns a point like any other.
- Send on time, then correct. Corrections go in your next update, so don't hold an update back to get every figure perfect.
- Keep records as you go. Capture receipts when you buy, not the night before the deadline.
- Agree who sends what. If your accountant submits for you, agree in writing who sends each update.
If you work under CIS, see MTD for CIS subcontractors in 2027, and if you've heard that MTD means paying tax four times a year, see MTD myths for tradespeople.
How Sleepless Tradesman helps you stay on time
Sleepless Tradesman emails you 14, 7 and 1 day before each quarterly deadline, on every plan including the free one. Your invoices become income, your expenses, cash and CIS income and mileage are recorded as you work, and your quarterly figures are ready in HMRC's MTD format to export for you or your accountant to submit. Direct submission to HMRC from the app is coming once HMRC approves it.
Frequently asked questions
What is the penalty for a late MTD quarterly update?
Each missed quarterly update deadline normally earns one penalty point, with a maximum of one point per deadline. When you reach four points you pay a £200 penalty, and every further missed deadline costs another £200 while you stay at four points.
Do I get penalty points in my first year of MTD?
Not for late quarterly updates. People who joined in April 2026 get no points for late quarterly updates in 2026-27. The Budget on 28 October 2026 announced the same for people joining in April 2027, for their 2027-28 updates, but that legislation is still to be passed and you must still send every update before you file your tax return. Late tax returns and late payment are still penalised in your first year.
How long do MTD penalty points last?
If you are below four points, each point expires after 24 months. Once you reach four points they do not expire on their own: they are cleared after 12 months of sending everything on time, with no updates or returns outstanding from the previous 24 months.
What are the late payment penalties from April 2027?
There is no penalty if you pay within 15 days. At day 15 you are charged 4% of the tax still unpaid, at day 30 a further 4%, and from day 31 a yearly rate of 10% on what is still unpaid, plus interest. In your first year under the new rules you get 30 days instead of 15. These penalties do not apply to payments on account.
Do I still need to send a quarterly update if I had no income?
Yes. You still send a nil update for every quarter, even if you earned nothing. Missing it counts as a missed deadline in the same way as missing an update with figures in it.
Do the new penalties apply if I am not in MTD yet?
Yes. From April 2027 the points-based penalties apply to everyone who files a personal Self Assessment tax return, not only MTD users. If you are not in MTD, the penalty threshold is 2 points instead of 4.
Stay clear of the four-point threshold.
Deadline reminders by email, quarterly figures kept ready as you work. MTD records are on the free plan.
Try Sleepless Tradesman freeRelated: Making Tax Digital for tradesmen, MTD £30,000 threshold, MTD deadlines, MTD for CIS subcontractors, MTD myths, MTD checker.