Making Tax Digital penalties: what happens if you miss a deadline
18 October 2026 · 5 min read · Checked against GOV.UK 16 October 2026
How penalty points work
Making Tax Digital uses a points system instead of an instant fine. Each missed deadline, whether a quarterly update or your end-of-year tax return, adds one point. Nothing is charged until you reach the threshold of four points.
Example: four missed deadlines
Points don't last forever. Once you've sent everything on time for a set period, they're wiped back to zero. HMRC's guide below has the exact rules.
The 2026 to 2027 soft landing
For the first year of MTD, HMRC won't give points for late quarterly updates. That helps people who joined in April 2026. It doesn't carry over: if you join on 6 April 2027, your updates from 7 August 2027 onwards count from day one.
Late tax returns still get points in every year, including 2026 to 2027.
Late payment is separate
Sending updates on time doesn't mean your tax is paid. If you pay late, HMRC gives you a short grace period (30 days in your first year under the new rules, then 15 days) to pay in full or set up a payment plan. After that, a late payment penalty starts at 3% of the tax still owed and grows the longer it's unpaid. Interest is charged from the day payment was due.
- Setting up a payment plan with HMRC before the grace period ends can stop the penalty growing.
- Putting tax aside every month is the simplest way never to pay one.
How to avoid penalties altogether
- Keep records as you go: a bank feed means updates are mostly ready already.
- Put the four deadlines in your calendar: 7 August, 7 November, 7 February, 7 May.
- Send updates early. You can send one any time after the period ends.
- If something stops you, such as illness, tell HMRC. You can appeal a point if you had a reasonable excuse.
Read HMRC's penalties for Making Tax Digital (opens in a new tab) for the full rules, or see what goes in a quarterly update.