MTD penalties in 2026/27: the bit almost every guide gets wrong

Search for Making Tax Digital penalties and you will be told that every late quarterly update earns a penalty point, and that four points means a £200 fine. That is a fair description of the system — but it is not what applies in the 2026/27 tax year.

The short answer

There are no penalty points for late quarterly updates in 2026/27. HMRC has confirmed a first-year easement, often called a soft landing, for the people mandated into MTD for Income Tax from April 2026. File a quarterly update late this tax year and you do not receive a point — so you cannot reach the four-point threshold that triggers the £200 fine.

This is a genuine relief rather than a technicality, and it is missing from a great deal of what has been written about MTD. It was missing from our own pages for a few days too, until a landlord on a forum pointed it out and we checked. We corrected them.

What the easement does not cover

Three things still carry consequences, and they are the ones worth protecting:

• Late payment. Interest applies from the first day tax is paid late. Payment deadlines have not moved: tax for 2026/27 is due by 31 January 2028, alongside payments on account where they apply.
• The final declaration. The year-end submission that replaces your Self Assessment return keeps its own late-filing penalty. The easement covers quarterly updates only.
• The obligation itself. The point has gone; the requirement has not. You cannot finalise the tax year until every quarterly update has been filed, so a skipped update is simply a job you still have to do later, under more time pressure.

What changes in 2027/28

From the 2027/28 tax year the points system applies in full:

• Each late quarterly update earns one penalty point.
• Four points brings a £200 fine.
• Points expire after 24 months, so an isolated slip drops off in time; a pattern does not.

April 2027 is also when the threshold drops to £30,000, bringing a much larger group into MTD for the first time. Those joining then were not offered the same first-year easement — it was specific to the April 2026 cohort.

So what should you do this year?

Treat 2026/27 as the practice year it effectively is. The cost of getting a quarter wrong right now is your own time rather than a fine, which makes this the cheapest possible moment to sort out your record-keeping, pick your software and find out what the quarterly routine actually feels like. Getting that wrong next year is what costs money.

Two things catch people out regardless of penalties. First, updates are cumulative: each covers the tax year so far and replaces the previous one rather than adding to it, so a spreadsheet that totals each quarter separately will send wrong figures from the second update onwards. Second, property income and self-employment income are separate sources needing separate updates on the same day — people with both often send one and assume they have finished.

The next quarterly deadline is 7 November 2026, covering 6 April to 5 October. Our deadline guide has the full 2026/27 calendar, and our bridging software guide covers filing from a spreadsheet if you would rather not move to an accounting subscription.

Common questions

Are there really no penalties at all for a late quarterly update this year?

No penalty points are issued for late quarterly updates in 2026/27 under HMRC's first-year easement, so the £200 fine cannot be reached through late updates alone this year. Late payment interest and the final declaration penalty are separate and unaffected. Check your own position on gov.uk or with an accountant.

Does the easement apply to everyone in MTD?

It applies to the cohort mandated from April 2026 — broadly, those with combined gross income from self-employment and property over £50,000. It was not offered to those joining in April 2027 and April 2028 as the threshold drops.

When does the points system start?

From 2027/28: one point per late quarterly update, a £200 fine at four points, and points expiring after 24 months.

If there is no penalty, can I skip a quarter?

You still have to file it. The obligation is unchanged and the final declaration cannot be completed until all the updates are in, so skipping only moves the work later.

Is the MTD threshold based on profit or gross income?

Gross income — your qualifying income before expenses are deducted, combined across self-employment and property, and assessed per person. A property making very little profit can still be well over the line on rent received.