Making Tax Digital penalties: points, the £200 penalty and paying late
Miss a quarterly update or your tax return and you get a penalty point. Pay late and a percentage is added. Here is how both work, and when they start for you.
Published 29 October 2026
The short answer
Under Making Tax Digital for Income Tax, each missed deadline for a quarterly update or a tax return gets one penalty point. At 4 points you pay £200, and £200 more for every deadline you miss after that. Paying late is separate: for 2027 to 2028 tax it is 4% of what you owe at day 15, 4% more at day 30, then 10% a year until you pay. Late quarterly updates get no points in the 2026 to 2027 tax year.
How do Making Tax Digital penalty points work?
You get one point each time you miss a deadline. GOV.UK: For each quarterly update (for tax years after 2026 to 2027) or tax return deadline you miss, you’ll get a penalty point
.
Points are counted per deadline rather than per business, so a sole trader who is also a landlord gets one point for a missed quarter.
What is the £200 Making Tax Digital penalty?
You pay it when your points reach the limit: The penalty point threshold is 4 points
. After that, you pay another £200 each time you miss a deadline.
Example: 5 missed deadlines
Take a sole trader who had to start on 6 April 2026. Their late quarterly updates got no points in the 2026 to 2027 tax year, but from the next tax year they do. Say they miss these deadlines:
Our example, worked out from GOV.UK's rules: one point per missed deadline, a penalty at the limit and for each deadline after.
| Deadline missed | What was late | Points | Penalty |
|---|---|---|---|
| 7 August 2027 | First quarterly update for 2027 to 2028 | 1 | None |
| 7 November 2027 | Second quarterly update for 2027 to 2028 | 2 | None |
| 31 January 2028 | Tax return for 2026 to 2027 | 3 | None |
| 7 February 2028 | Third quarterly update for 2027 to 2028 | 4 | £200 |
| 7 May 2028 | Fourth quarterly update for 2027 to 2028 | 4 | £200 |
That is £400 in penalties for 5 late deadlines, and the points stay until you meet both conditions below.
How long do Making Tax Digital penalty points last?
While you are under the limit, each point drops off 24 months after the deadline you missed. Once you reach 4 points they stay until you do both of these:
send your quarterly updates and submit your tax return on time for 12 months
send any outstanding quarterly updates and submit any outstanding tax returns for the previous 24 months
Then all your points are removed.
When do Making Tax Digital penalties start?
From the tax year you join. For quarterly updates there are two breaks:
- The 2026 to 2027 tax year. GOV.UK:
There are no penalties for missing a quarterly update deadline for the 2026 to 2027 tax year
. A late 2026 to 2027 tax return still gets a point. - Your first year, if you must start from 6 April 2027. The Budget on 28 October 2026 announced no penalty points for late quarterly updates in the 2027 to 2028 tax year (a plan, could change). It does not cover people who had to start from 6 April 2026. Late tax returns still get points, and you still have to send every update before your tax return.
After that, every late quarterly update and every late tax return gets a point. What else the Budget changed.
Do the old Self Assessment penalties still apply?
Yes, for the years before you join. If you start from 6 April 2026, your 2025 to 2026 return, due by 31 January 2027, is still under the old rules: an initial £100 penalty if it is late, then £10 a day after 3 months, up to £900, with more after that.
GOV.UK also says that from April 2027, the new penalties will apply to everyone who submits a personal Self Assessment tax return
. So if you stop having to use Making Tax Digital in the 2027 to 2028 tax year, you stay on the points system, but your limit drops from 4 points to 2.
What if I join Making Tax Digital early?
You get no penalties for late quarterly updates while you are volunteering. Late tax returns still get points, and the limit is lower, at 2 points. You agree to the new penalties when you sign up, and you cannot go back to the old ones later, even if you stop.
What are the late payment penalties under Making Tax Digital?
A percentage of the tax you owe, charged on every late payment, with no points. The longer you leave it, the more it grows, and the rate goes up for 2027 to 2028 tax:
Late payment penalties after your first year, by the tax year the tax is for. Source: GOV.UK, penalties for Making Tax Digital for Income Tax.
| Paid | 2026 to 2027 tax | 2027 to 2028 tax |
|---|---|---|
| Up to 15 days late | No penalty | No penalty |
| 16 to 30 days late | 3% of the tax owed at day 15 | 4% of the tax owed at day 15 |
| 31 days or more late | 3% at day 15, 3% more at day 30, then 10% a year until paid | 4% at day 15, 4% more at day 30, then 10% a year until paid |
From day 31, the yearly rate is charged daily on what you still owe, until you pay or for up to 2 years. In your first year of the new penalties you get 30 days rather than 15 to pay or agree a payment plan before penalties start.
Late payment interest is charged on top, from the first day late until you pay in full. Payments on account get no late payment penalty, though interest still runs on them if they are late.
If you cannot pay in time, GOV.UK says to contact HMRC as soon as possible about a payment plan. If a plan is agreed and you keep to it, penalties are paused from the day you got in touch.
Example: £2,000 paid late
Say you owe £2,000 for 2027 to 2028, it is not your first year of the new penalties, and none of it is paid:
Our example, worked out from GOV.UK's late payment table. Late payment interest is charged on top.
| Paid | Penalty |
|---|---|
| 10 days late | No penalty |
| 20 days late | £80 |
| 40 days late | £160, plus about 55p a day from day 31 until paid (for up to 2 years) |
We keep your records in software that works with Making Tax Digital and send your quarterly updates once you approve them.
Get in touchHow do I appeal a Making Tax Digital penalty?
Follow the letter HMRC sends you about each point or penalty: it tells you how to appeal. You usually have 30 days from the date the penalty was issued.
Unless the penalty is wrong, you will usually need a reasonable excuse. GOV.UK’s examples include:
- you had an unexpected stay in hospital that prevented you from dealing with your tax affairs
- your computer or software failed while you were preparing your online return
- issues with HM Revenue and Customs (HMRC) online services
- a fire, flood or theft prevented you from completing your tax return
HMRC will not accept that you found its online system too difficult to use, or that you did not get a reminder.
What to do now
- Put every deadline in your diary. Quarterly updates are due by 7 August, 7 November, 7 February and 7 May, and your tax return by 31 January.
- Send an update even in a quiet quarter. The deadline still counts when there is little to report.
- If you cannot pay, contact HMRC early. An agreed payment plan pauses late payment penalties.
- If a letter looks wrong, appeal in time. Usually within 30 days, using the steps in the letter.
- Check when you start: Making Tax Digital thresholds and dates.
Other questions about Making Tax Digital penalties
Are Making Tax Digital penalty points the same as VAT penalty points?
No. If you are registered for VAT as well, GOV.UK says your penalty points for Making Tax Digital for Income Tax are separate to your penalty points for VAT.
Can HMRC cancel a Making Tax Digital penalty?
Only rarely, outside an appeal. GOV.UK: In some exceptional circumstances, such as insolvency, HMRC may cancel a penalty or penalty point, or remove all penalty points. Otherwise the route is an appeal, usually within 30 days.
What happens to my penalty points if I become exempt from Making Tax Digital?
If you become exempt in the 2026 to 2027 tax year, GOV.UK says you go back to the old Self Assessment penalties. If you become exempt in the 2027 to 2028 tax year, you stay on the new penalties, but your penalty point threshold will decrease from 4 points to 2 points. If you already have penalty points when your point threshold changes from 4 to 2, your points will reduce so that you are no closer to your new threshold.
Primary sources and further reading
Every rule and rate on this page comes from these GOV.UK pages and HMRC's manual.
- Penalties for Making Tax Digital for Income TaxGOV.UK (opens in a new tab)
- Penalties for Making Tax Digital for Income Tax volunteersGOV.UK (opens in a new tab)
- Use Making Tax Digital for Income Tax: send quarterly updatesGOV.UK (opens in a new tab)
- Self Assessment tax returns: PenaltiesGOV.UK (opens in a new tab)
- Disagree with a tax decision or penalty: appeal against a penaltyGOV.UK (opens in a new tab)
- Disagree with a tax decision or penalty: reasonable excusesGOV.UK (opens in a new tab)
- SAM60001: Interest: introductionHMRC (opens in a new tab)
- Budget 2026: Overview of Tax Legislation and Rates (OOTLAR)GOV.UK (opens in a new tab)
Quarterly updates, sent once you approve them
We keep your books every month in software that works with Making Tax Digital, and send each quarterly update once you have approved it. Join the waitlist for 2027.