The Making Tax Digital (MTD) government initiative introduces a new reporting rhythm for self-employed people and landlords. If your combined self-employment and property income is more than £50,000 (based on your 2024/25 tax return), you should already be using MTD. The threshold will fall to more than £30,000 from April 2027 based on your 2025/26 return, and to more than £20,000 from April 2028 based on your 2026/27 return.
If you fall below these thresholds, you will still need to complete your Self Assessment tax return as usual, although you will not need to use MTD for Income Tax.
If MTD applies to you, you’ll need to keep digital records and send quarterly updates and a final annual tax return to HMRC using compatible software.
With any new system, missed deadlines are not unusual, particularly in its first year of introduction. If you miss an MTD income tax deadline, there is usually a clear, straightforward path to resolve it in most cases. This article sets out what HMRC will expect next and how to bring your position up to date.
For fast and reliable advice on missed MTD deadlines, help is at hand. Contact the Making Tax Digital team at Treetops Chartered Accountants to discuss our sole trader and landlord accounting services, and let’s get back on track.
The quarterly update deadlines
Under MTD for Income Tax, business income and expenses are reported to HMRC through quarterly updates, followed by an annual tax return.
The first quarterly update period runs from 6 April to 5 July 2026 (or 1 April to 30 June if using calendar quarters), with submissions due by 7 August 2026. Note that if you follow calendar quarters instead, the submission deadline remains the same.
Further deadlines are as follows:
7 August 2026: Deadline to send your first quarterly update
7 November 2026: Deadline to send your second quarterly update
7 February 2027: Deadline to send your third quarterly update
7 May 2027: Deadline to send your fourth quarterly update
Quarterly MTD updates are cumulative, meaning each one covers the period from the start of the tax year up to the end of that quarter. You can use calendar quarters if you prefer, but this needs to be updated in your software before you submit your first update, and you cannot switch reporting periods mid-year.
Once the four quarterly updates have been submitted, a tax return, the term HMRC now uses in place of the earlier ‘final declaration’, is due to confirm total income for the tax year. For the 2026/27 tax year, this is due by 31 January 2028, along with any balancing payment.
Not sure how to calculate your qualifying income for MTD?
What happens if you miss the MTD filing deadline?
If you miss a quarterly update deadline in the 2026/27 tax year, it won’t trigger an automatic fine, as HMRC has confirmed a “soft landing” period. The outstanding update will still need to be submitted, as all four quarterly updates must be filed before a tax return can be completed, but a single missed date this year will not, on its own, result in points or a financial penalty.
For those within MTD, HMRC is replacing the previous system of immediate penalties with a points-based approach. For quarterly updates, penalty points only start to apply from April 2027 (the 2027/28 tax year). This is intended to be more proportionate, i.e., an occasional late submission is treated differently from a persistent pattern of lateness.
If you miss the annual tax return filing deadline of 31 January, you may still receive a penalty point, and depending on the number of points you already have, a £200 fine – even in the soft landing period.
It is still a legal requirement to meet the deadline, and HMRC will record those who have not done so.
How does the new points-based penalty system work?
Each time you miss a submission deadline, one penalty point will be recorded. Points alone do not carry a financial cost, and a penalty is only issued once you reach the set threshold of four points.
You can only receive one penalty point for each missed deadline, even if you have more than one business or rental property reporting under MTD.
Once you reach the threshold, HMRC will issue a £200 penalty, and every further late submission after that will also incur a £200 penalty, for as long as you remain at the threshold.
While below the threshold of four points, each point expires automatically 24 months after the missed deadline. Once you reach the threshold of four points, points no longer expire automatically: they are removed only once you have filed every quarterly update and tax return on time for 12 months and submitted anything still outstanding from the previous 24 months – at which point all your points are cleared together.
When do the penalties apply?
Fortunately, the timing works in favour of anyone who has missed a deadline this year. Due to the soft landing for 2026/27, no penalty points are being applied to late quarterly updates during this first year of MTD. But from 2027/28 onwards, the full points-based system will apply to quarterly submissions, so it’s important to ensure you file updates in line with the deadlines.
It’s important to note that late payment is treated separately from late filing, and the soft landing does not cover it. In the first year under the new rules, taxpayers generally have 30 days from the payment due date to pay in full or contact HMRC to arrange a payment plan before a late payment penalty applies. This shortens to 15 days from the second year onwards.
Importantly, interest will continue to accrue on any unpaid tax from the original due date regardless of these grace periods, so where tax is owed, it is worth addressing promptly.
What if you miss the tax return deadline?
The final declaration is your final tax return for the year, following your four quarterly updates. It confirms total income and tax due for the year. Unlike the quarterly updates, the final declaration is not covered by the soft landing period rules, so a late submission can still result in a penalty point and, depending on the number of points already held, a £200 penalty.
If you have missed the deadline, make it a priority to bring your tax return up to date as soon as possible. Treetops Chartered Accountants can help if you are uncertain about how to proceed and limit any further delay.
Can you appeal a penalty?
An MTD penalty can be appealed, usually within 30 days of the penalty notice being issued, and may be considered if there is a reasonable excuse, such as serious illness, bereavement, or a failure in HMRC’s own systems that prevented submission on time.
The penalty notice will set out how to appeal, and this is an area where professional support such as Treetops can be valuable, given the level of detail HMRC typically expects for a successful appeal.
How Making Tax Digital differs from self-assessment returns
For those familiar with the traditional Self Assessment deadline, MTD for Income Tax represents a genuine change in approach rather than simply a new form to complete. Rather than compiling a full year’s figures for a single self-assessment deadline of 31 January, income and expenses are reported to HMRC in quarterly updates, supported by digital record-keeping throughout the year, with a final tax return covering all income, expenses, reliefs and allowances, just as with the traditional Self Assessment, bringing the year to a close.
For many clients, this shift proves beneficial once the initial transition is complete. These smaller, more regular submissions will likely reduce the pressure of a single year-end deadline and provide a clearer, more current view of how business income or rental income is performing throughout the year.
How to avoid penalties in future
To ensure your business stays on top of MTD, a small number of consistent habits can make a significant difference:
- Diarise each deadline well in advance, allowing time to resolve any queries before the date itself.
- Use MTD-compatible software and update records regularly, rather than reconstructing several months of transactions at once.
- Monitor cash flow throughout the year, and contact HMRC or your accountant early if a payment is likely to be difficult.
- Build a quarterly review into your routine with your accountant, so figures are checked before each submission is made.
These steps are straightforward to put in place, and together can turn MTD compliance into a manageable, routine task rather than a significant undertaking four times a year.
How we can help with Making Tax Digital
Treetops Chartered Accountants supports clients through every stage of MTD for Income Tax, from setting up MTD-compatible software to managing quarterly submissions and tax returns on their behalf. Where a deadline has been missed, or a penalty has been issued, we can also correspond with HMRC directly to resolve the matter.
Falling behind on a new reporting requirement is not unusual, and it is something we help clients address regularly. Acting promptly gives us the widest range of options to bring your position up to date with the least disruption.
Get in touch with Treetops to discuss your circumstances today.
Frequently asked questions about Making Tax Digital deadlines
Can I appeal an MTD penalty?
A penalty can usually be appealed online or in writing, typically within 30 days of the notice, where a reasonable excuse applies, such as illness, bereavement, or an HMRC system failure. The penalty notice will explain how to do this.
Will I receive a late payment penalty if I can’t pay my tax bill?
Your business may not be impacted by the late payment penalty rules, provided contact is made with HMRC in good time. Where a payment plan is agreed before the deadline, penalties are generally paused from the date of contact, provided the agreed terms are met. Interest will continue to accrue on the outstanding balance, so early contact is advisable to avoid late payment penalties.
I missed a quarterly update – do I owe extra tax immediately?
No, a quarterly update reports income and expenses to date; it does not itself create a tax liability. A missed update does not result in an immediate tax charge, though from 2027/28 onwards a late update will receive a penalty point, with a £200 penalty only once four points have accrued.
Can an accountant deal with HMRC on my behalf about a late submission penalty?
As a registered agent with HMRC, Treetops can correspond with HMRC directly, manage appeals, and help resolve confusion arising from a missed deadline or penalty.
Can penalty points be removed once issued?
If you remain below the four-point threshold, each penalty point will expire automatically 24 months after the missed deadline. Once you reach four points, they will not. To have all your points removed, you must submit quarterly updates and your tax return on time for 12 months, as well as submitting any outstanding updates and tax returns from the previous 24 months. In exceptional circumstances only, HMRC may cancel points or penalties directly.
Can MTD-compatible software submit your updates?
MTD for Income Tax requires the use of HMRC-recognised software to maintain digital records and submit quarterly updates and the final declaration. A range of compatible MTD software options are available at different price points and levels of complexity, and we can advise on the most appropriate choice for your circumstances.
For more information on MTD, visit the HMRC website.
