If you’ve missed a Making Tax Digital (MTD) for Income Tax deadline, or you’re worried you might in the future, there are clear steps you can take to put things right.
Making Tax Digital is being introduced gradually, and the first quarterly submission deadlines will begin from August 2026 for many taxpayers. HMRC has indicated that the first year of MTD for Income Tax will operate under a “soft landing” approach, meaning penalties may be applied more lightly while people adjust to the new system.
However, it is still important to understand how the penalty system works, what happens if you miss a deadline, and how to avoid issues in the future. Once the penalty system is fully enforced, when you reach the penalty threshold of four points for quarterly submissions, HMRC will issue a £200 financial penalty.
Learn more about Making Tax Digital in our MTD: Essential Guide.
Quick Summary (TL;DR)
- HMRC are operating under a “soft landing” approach and will introduce fines slowly to allow people time to get used to the new system
- You usually receive a penalty point, not an immediate fine
- After four missed quarterly submissions, HMRC issues a £200 penalty
- Additional missed submissions can trigger further £200 penalties
- Late payment of tax may result in interest and separate penalties
- You can appeal a penalty if you have a reasonable excuse
- Getting help early can prevent further penalties
If you are unsure whether you have missed a deadline or need help getting back on track, Cutter & Co Chartered Accountants can help you prevent further issues.
Will There Be Penalties Straight Away?
HMRC has stated that the first year of Making Tax Digital for Income Tax will be treated as a transition period, often referred to as a “soft landing”.
This means that while you are still required to keep digital records, use compatible software and submit quarterly updates, HMRC is expected to take a more supportive approach during the early stages of the rollout.
However, this does not mean the rules can be ignored. You will still be required to register for MTD, submit updates on time and keep proper digital records. Understanding how the penalty system works now will help you avoid problems later, when it is fully enforced.
MTD submission dates and deadlines
You must submit each quarterly update by its due date to avoid incurring a late submission penalty point.
Here are the standard submission deadlines for each quarter:
- Q1 (6 April – 5 July): due 7 August
- Q2 (6 April – 5 October): due 7 November
- Q3 (6 April – 5 January): due 7 February
- Q4 (6 April – 5 April): due 7 May
If you miss the first quarterly deadline, for example, 7 August, you can still submit your next quarterly update by 7 November. Submitting the second update will ensure your records are brought up to date. However, you may still receive a penalty point for missing the earlier deadline.
Keep an eye on HMRC MTD website for the latest information on submission dates and deadlines: https://makingtaxdigital.campaign.gov.uk/mtd-for-income-tax-dates/
How Do MTD Penalty Points Work?
Making Tax Digital for Income Tax uses a points-based system for late submissions.
Instead of issuing an immediate fine for every missed deadline, HMRC gives you a penalty point. This system is designed to give people a chance to correct occasional mistakes without being penalised straight away.
How many points can you get?
The penalty threshold is four points. One for each quarterly submission.
- 1 missed submission = 1 penalty point
- 4 points = £200 penalty
- Each additional missed submission after that = another £200
You will only incur a financial penalty once you reach four points.
Do penalty points expire?
Yes, but only if you return to full compliance. To reset your points to zero, you must:
- Submit all required returns
- Remain fully compliant for a set period (usually 12 months for quarterly submissions)
If you continue to miss deadlines, the points will remain active, and additional penalties may apply.
What about late payment penalties?
The points system applies to late submissions. Late payment of tax is treated separately and may result in interest charges and additional late payment penalties.
The latest guidance on penalty rules nd interest, please review the HMRC website: https://www.gov.uk/government/publications/interest-harmonisation-and-penalties-for-late-submission-and-late-payment-of-tax
Can I Appeal an MTD Penalty?
Yes. If you believe you have a valid reason for missing a Making Tax Digital deadline, you can appeal a penalty.
HMRC allows appeals where there is a reasonable excuse for late submission. Each case is considered individually.
How to Avoid Making Tax Digital Penalties
If you want to avoid penalty points and financial fines, the key is simple: stay organised and act early. Here are the most effective steps you can take.
1. Make sure you are registered correctly
If MTD applies to you, you must be registered before your first quarterly submission is due. Registration and submission are separate requirements, and both must be completed to remain compliant.
To learn more about income thresholds for business owners, landlords, and self-employed individuals, read our Making Tax Digital: The essential guide (https://www.cutterandco.co.uk/making-tax-digital/).
2. Use fully compatible software
Your accounting software must be recognised by HMRC and connected correctly. Options include Sage, QuickBooks, Xero, KashFlow and others. View the official list of compatible software.
3. Keep your records up to date
Entering income and expenses weekly or monthly makes quarterly updates much easier. Leaving everything until the deadline increases the risk of mistakes.
4. Set reminders for every quarterly deadline
Quarterly updates are due on:
- 7 August
- 7 November
- 7 February
- 7 May
Missing one deadline gives you a penalty point. Missing four triggers a £200 fine.
5. Ask for support early
If you are unsure whether something has been submitted correctly, it is far easier to fix issues early than after multiple deadlines have passed.
How Cutter & Co Can Help If You’ve Missed an MTD Deadline
We understand the additional administrative burden MTD places on self-employed individuals and landlords, especially when you’re focused on doing the work and keeping things moving day-to-day.
If you’ve missed a Making Tax Digital deadline, the most important thing is not to ignore it. We can help you understand exactly where you stand, what needs to be done, and how to prevent further issues.
We can help you:
- Confirm whether MTD applies to you
- Check your registration status
- Review any missed submissions
- Communicate with HMRC if necessary
- Bring your records up to date
- Put systems in place so future deadlines are handled smoothly
If you are behind, worried about a penalty, or simply want reassurance that everything is set up correctly, we are here to help.
