MTD Penalty Points Explained
One point per late submission, £200 at four points, 24-month expiry — and why 2026/27 quarterly updates earn no points but the final declaration does.
The short answer
Points, not fines — until you hit 4. Each late submission earns one point; at 4 points you pay £200, and every further late submission is another £200 until you reset. Points expire after 24 months; a reset needs 12 months of on-time filing. For 2026/27 quarterly updates earn no points — gov.uk: only “for tax years after 2026 to 2027”.
The MTD penalty regime replaced the old £100 automatic fine with a points system. It is more forgiving of a single slip and harsher on habitual lateness — and it has a first-year easement most explainers get wrong.
How the points work
| Event | Consequence |
|---|---|
| Late quarterly update | 1 point (from 2027/28 onwards — none in 2026/27) |
| Late final declaration | 1 point (applies from the first year) |
| Reaching 4 points | £200 penalty |
| Every further late submission while at the threshold | £200 each |
| Point expiry (if below the threshold) | 24 months after it was given |
| Reset from the threshold | All submissions on time for 12 months and all outstanding submissions made |
The 2026/27 easement, precisely
gov.uk’s penalties page says late-submission points for quarterly updates apply only “for tax years after 2026 to 2027”. So a missed 7 August or 7 November 2026 update earns nothing — but HMRC still expects it, the cumulative next update must include it, and the final declaration on 31 January 2028 is not covered by the easement.
Late payment is separate
Paying tax late has its own charges — a percentage of the unpaid tax after 15 and 30 days, plus daily interest. Points are about submitting; the payment regime is unchanged by MTD.
Reasonable excuse
Serious illness, bereavement, HMRC or software outages and similar events can cancel a point on appeal. “My agent was late” and “I didn’t know” are not accepted. Auto-enrolled landlords (HMRC began enrolling ~290,000 from September 2026) get the same rules as volunteers — being enrolled by HMRC is not an excuse for missing the next deadline.
Worked example
A landlord misses two quarterly updates in 2027/28 and the final declaration for 2027/28: three points, no penalty yet. A late Q1 update in 2028/29 makes four — £200. A late Q2 as well: another £200. Filing everything on time for the next 12 months resets to zero.
gov.uk “Penalties for late submission” and “Making Tax Digital for Income Tax: penalties” (threshold, £200, expiry, reset, quarterly-points wording read verbatim 29 Aug 2026). Checked 2026-08-29, re-checked 31 Aug 2026.
Quick answers
One point per late submission; £200 when you reach 4 points, then £200 per further late submission. For 2026/27, quarterly updates earn no points at all.
Yes — 24 months after they were given, if you are below the threshold. At the threshold you need 12 months of on-time filing to reset.
No. The easement is for quarterly updates only. A late final declaration for 2026/27 (due 31 January 2028) earns a point.
No. Late payment has separate percentage charges and interest; points are only about late submissions.