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tax-deadlinesUpdated 2026-02-27

What happens if I miss a Making Tax Digital deadline?

Quick Answer

MTD uses a points-based penalty system. You receive one point per late submission. At four points, you receive a £200 fine. Points reset after 24 months of full compliance.

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Detailed Explanation

Making Tax Digital introduces a new points-based penalty system that replaces the old fixed penalties for late filing.

How the points system works: - Each late quarterly submission earns one penalty point - When you accumulate four points, you receive a £200 fine - Every subsequent late submission after reaching the threshold also incurs a £200 fine - Points reset to zero after 24 months of continuous on-time submissions

Quarterly submission deadlines: - Q1 (6 April – 5 July): Due 7 August - Q2 (6 July – 5 October): Due 7 November - Q3 (6 October – 5 January): Due 7 February - Q4 (6 January – 5 April): Due 7 May

Final Declaration: Due 31 January after the end of the tax year (e.g., 31 January 2028 for the 2026/27 tax year).

Soft landing year (2026/27): HMRC will not issue penalty points for late quarterly updates in the first year. This gives taxpayers time to adjust to the new system. However, the Final Declaration is still subject to penalties even in the soft landing year.

Late payment penalties: Separate from late submission penalties. Interest is charged on any tax paid late, and additional penalties apply if payment is significantly overdue.

Source: HMRC Penalties for Late Filing Under MTD

Real-World Examples

First Year Soft Landing

It is 2026/27, your first year under MTD. You miss the Q1 and Q2 deadlines. Under the soft landing, no penalty points are issued. However, you should still submit as soon as possible to build good habits.

Accumulating Four Points

Over two tax years, you miss four quarterly deadlines. You now have four penalty points and receive a £200 fine. Your fifth late submission also triggers another £200 fine.

Missing the Final Declaration

You submit all four quarterly updates on time but miss the 31 January Final Declaration. Even in the soft landing year, this incurs a penalty point and potential late payment interest.

Common Mistakes to Avoid

  • Assuming the soft landing year means no penalties at all — the Final Declaration is still penalised.
  • Not realising that penalty points accumulate across tax years until you have 24 consecutive months of compliance.
  • Confusing late submission penalties (points-based) with late payment penalties (interest-based) — they are separate.
  • Ignoring penalty points because the £200 fine only hits at four points — they accumulate faster than you expect.

How long does the soft landing last?

The soft landing applies to the 2026/27 tax year only (the first year of mandatory MTD ITSA). From 2027/28, the full penalty points system applies to all submissions.

Can I appeal a penalty point?

Yes. You can appeal if you had a reasonable excuse for the late submission, such as serious illness, bereavement, or a natural disaster. Reasonable excuses do not include being too busy or forgetting.

Do penalty points expire?

Points reset to zero after 24 consecutive months of on-time submissions. If you miss another deadline during that period, the 24-month counter restarts.

Is there interest on late tax payments?

Yes. HMRC charges interest on any tax paid after the due date. The interest rate is set at the Bank of England base rate plus 2.5%. Additional penalties apply if payment is 30+ days overdue.

Practical Tips

  • Set up calendar reminders one week before each quarterly deadline: 7 August, 7 November, 7 February, 7 May.
  • Use accounting software that tracks your submission status and sends deadline alerts.
  • Even during the soft landing year, submit on time to build the habit — you will need 24 months of compliance to reset points later.
  • If you know you will be late, submit as soon as possible — while a point is issued, it demonstrates good faith for any future appeals.

Related Questions

When does Making Tax Digital for Income Tax start?

MTD for Income Tax Self Assessment starts in April 2026 for those with qualifying income over £50,000, April 2027 for £30,000+, and April 2028 for £20,000+.

What is the MTD Final Declaration?

The Final Declaration replaces the traditional annual Self Assessment tax return under MTD. It confirms your final income and expenses for the tax year and is due by 31 January after the end of each tax year.

What do I need to report in MTD quarterly updates?

You report category totals of income and expenses — not individual transactions. Self-employment categories include turnover, cost of goods, wages, travel, and professional fees. Property categories include rent received, repairs, insurance, and mortgage interest.

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