What are the penalties for Making Tax Digital for Income Tax?
Short answer
MTD for Income Tax uses penalty points: each missed quarterly update deadline adds a point and at 4 points you pay a £200 penalty. In the first year, 2026 to 2027, HMRC gives no points for late quarterly updates, but a late tax return still gets one.
How the points work
Per HMRC (GOV.UK):
- After the 2026 to 2027 tax year, every missed quarterly update deadline is one late submission point.
- At 4 points you pay a £200 penalty.
- A late tax return also gets a point.
For people who volunteered early, late quarterly updates get no penalty; late tax returns do, and 2 points bring a £200 penalty.
What this means for the April 2027 wave
If you join on 6 April 2027, the first year's easement for 2026 to 2027 is already over. Your first update, for 6 April to 5 July 2027, is due by 7 August 2027 and counts from day one.
How to stay at zero
- Keep records as you go, not in the week of the deadline.
- Send an update for an empty quarter too; it is still required.
- Put the four dates in your calendar: 7 August, 7 November, 7 February, 7 May.
- Send early: up to 10 days before the period ends if no more transactions are expected.
Octobooks keeps the books of UK sole traders and landlords and sorts every entry into the categories of the self-employment pages (SA103F) and the UK property pages (SA105). Its Making Tax Digital for Income Tax connection is built and runs end to end against HMRC's test service (the sandbox). Octobooks is not on HMRC's list of compatible software yet; we are working towards recognition. Until it is listed, send your updates and your return through a product that is on the list.
More questions
- Do I need Making Tax Digital from April 2027?
- What are MTD quarterly updates, and when are they due?
- Under MTD, what happens to my tax return and the final declaration?