Making Tax Digital penalties explained
Late submissions earn penalty points; a £200 penalty only comes once you reach the threshold. Late payment is penalised separately.
Late submission: the points system
- You get one point for each missed deadline (quarterly update or tax return). Only one point per deadline, even if you have several businesses.
- At 4 points you get a £200 penalty, and another £200 for every further missed deadline.
- Points below the threshold expire automatically 24 months after the missed deadline.
- Once you reach the threshold, points are only reset after you have met all deadlines for 12 months and sent anything outstanding from the previous 24 months.
- MTD points are separate from VAT penalty points.
First year: no points for late quarterly updates
For the 2026 to 2027 tax year there are no penalties for missing a quarterly update deadline. You still have to keep digital records and send the updates, and the tax return deadline counts as normal.
Late payment penalties
| Payment late by | 2026 to 2027 | From 2027 to 2028 |
|---|---|---|
| up to 15 days | no penalty | no penalty |
| 16 to 30 days | 3% of tax owed at day 15 (none in your first year) | 4% at day 15 (none in your first year) |
| 31 days or more | 3% at day 15 + 3% at day 30 | 4% at day 15 + 4% at day 30 |
From day 31 there is also a daily charge at an annual rate of 10% on the outstanding amount, for up to two years, plus late payment interest. If you contact HMRC early and agree a payment plan, penalties are paused as long as you keep to the plan.
Source: GOV.UK: Penalties for Making Tax Digital for Income Tax. Checked October 2026.