How do Making Tax Digital penalty points work?

Each missed Making Tax Digital deadline adds one penalty point, and at 4 points HMRC charges a £200 penalty. In the 2026 to 2027 tax year, HMRC charges no penalty for a missed quarterly update, but a late tax return still adds a point.

The rules are on HMRC's page Penalties for Making Tax Digital for Income Tax, last updated 30 March 2026. This article explains HMRC's published rules. It is general information. We do not give tax advice.

How do I get a penalty point?

HMRC says you get a point "for each quarterly update (for tax years after 2026 to 2027) or tax return deadline you miss". The deadlines are 7 August, 7 November, 7 February and 7 May for quarterly updates, and 31 January for the tax return.

You only get one point per deadline. That applies even if you have more than one business, such as a trade and a property business, and send more than one update late.

What happens at 4 points?

The penalty point threshold is 4. When you reach it, HMRC charges a £200 penalty. Every further missed deadline while you are at the threshold brings another £200.

Source: HMRC, checked 21 October 2026.

Is there a grace period in the first year?

Yes, for quarterly updates only. HMRC's page says: "There are no penalties for missing a quarterly update deadline for the 2026 to 2027 tax year." HMRC's press release of 5 February 2026 made the same point for the first 12 months.

The easement does not cover the tax return. A late return for 2026 to 2027, due 31 January 2028, still adds a point. People who join in April 2027 or April 2028 earn points from their first quarterly update.

How do I clear my points?

Below 4 points, HMRC removes each point automatically 24 months after the missed deadline.

At 4 points, both of these must happen before HMRC resets your points to zero:

1. You meet every deadline for 12 months in a row.
2. You send any updates or returns that were due in the previous 24 months.

What about paying late?

Late payment penalties are a separate system from late submission points. HMRC's penalties page sets them out by tax year.

HMRC says the day 15 penalty does not apply if it is your first year. The yearly rate runs for up to 2 years.

How do I avoid points?

1. Put the four quarterly deadlines and 31 January in your calendar.
2. Keep records in your software as you go, so each update takes minutes.
3. Send each update a few days early.
4. If you cannot use software because of age, health, disability or location, ask HMRC about the digital exclusion exemption.

Some people use an accountant to file their updates. If you do, ask who is responsible for each deadline, and get the fee in writing.

A worked example

This example applies HMRC's rules to a landlord in the 2027 to 2028 tax year.

If the landlord then met every deadline for 12 months and sent everything overdue from the previous 24 months, HMRC would reset the points to zero.

Next step

Answer six questions in the MTD check. You see your start date, your next deadline and where you stand on penalty points.