Making Tax Digital for Income Tax has changed how many sole traders and landlords report their business information to HMRC.
Instead of gathering everything once a year, people within the rules must:
- keep digital records;
- use compatible software;
- send quarterly updates; and
- submit their annual tax return through compatible software.
For someone used to completing one Self Assessment return each year, four additional deadlines may feel difficult to manage.
So, what happens if you miss one?
The answer depends on the tax year.
For the first year of mandatory Making Tax Digital for Income Tax—2026–27—HMRC will not charge a penalty or issue a penalty point for a late quarterly update.
However, you must still send the missing update before you can complete your annual tax return.
From 2027–28 onwards, missing a quarterly update will normally result in a penalty point. If you collect enough points, HMRC will charge a £200 penalty.
Therefore, a single missed deadline may not create an immediate fine. Nevertheless, it should not be ignored.
Who Must Use Making Tax Digital for Income Tax?
Making Tax Digital for Income Tax applies to qualifying sole traders and landlords in stages.
The starting dates are:
| Qualifying income shown on tax return | When MTD for Income Tax starts |
| More than £50,000 on the 2024–25 return | 6 April 2026 |
| More than £30,000 on the 2025–26 return | 6 April 2027 |
| More than £20,000 on the 2026–27 return | 6 April 2028 |
Qualifying income means gross income from self-employment and property before deducting expenses.
If you have both sources, HMRC combines them.
For example, suppose you received:
- £32,000 of gross self-employment income; and
- £21,000 of gross property income.
Your total qualifying income would be £53,000. Therefore, subject to the detailed rules and exemptions, you would have entered Making Tax Digital for Income Tax from April 2026.
The thresholds relate to income rather than profit. A business with high costs can therefore fall within MTD even where its taxable profit is much lower.
What Is a Quarterly Update?
A quarterly update is a summary of the income and expenses recorded in your compatible software.
It is not a complete tax return.
You will not normally need to make every tax adjustment or claim every allowance in each quarterly update. Instead, the update gives HMRC totals based on the digital records held at that stage.
You must send separate updates for each relevant self-employment and property business.
For example, someone with a sole-trader business and UK rental property will need to maintain digital records for both activities. Their software will use those records to produce the relevant quarterly information.
After the tax year ends, the person must review the complete figures, make any necessary adjustments, add other income and gains, claim relevant reliefs and submit their annual tax return.
Therefore, quarterly updates do not replace the annual return.
When Are MTD Quarterly Updates Due?
For taxpayers using standard update periods, the usual deadlines are:
| Update | Period covered cumulatively | Submission deadline |
| First update | 6 April to 5 July | 7 August |
| Second update | 6 April to 5 October | 7 November |
| Third update | 6 April to 5 January | 7 February |
| Fourth update | 6 April to 5 April | 7 May |
The updates are cumulative. For example, the second update includes information from the start of the tax year through to 5 October.
Taxpayers with an accounting date of 31 March will generally use calendar update periods beginning on 1 April. However, the quarterly submission deadlines remain 7 August, 7 November, 7 February and 7 May.
Your compatible software should show the applicable periods and deadlines. Nevertheless, you remain responsible for meeting them.
What Happens If You Miss an Update in 2026–27?
HMRC has introduced a specific first-year easement.
There are no penalty points or financial penalties for missing a quarterly update deadline in the 2026–27 tax year.
Therefore, if your first update was due by 7 August 2026 and you submitted it late, HMRC should not issue a quarterly-update penalty point.
However, this does not remove the underlying MTD obligation.
You must still:
- keep digital records;
- send all required quarterly updates;
- correct problems with your software or records;
- complete any outstanding updates; and
- submit your annual tax return through compatible software.
HMRC states that taxpayers must send the quarterly updates before submitting their annual tax return.
The annual return for the 2026–27 tax year will normally be due by 31 January 2028.
Therefore, the 2026–27 easement provides breathing space while taxpayers adjust to the new system. It does not allow them to abandon quarterly reporting.
Why Should You Act If There Is No First-Year Penalty?
It may seem tempting to leave a missed update until later.
However, doing so can create several problems.
First, the bookkeeping backlog will continue to grow. What begins as three months of missing transactions can become a full year of unreconciled records.
Second, your later quarterly updates may also become difficult to prepare.
Third, you may not see a useful estimate of your likely tax liability. As a result, you may fail to reserve enough money for the final bill.
Finally, you must complete the missing updates before submitting your annual return.
The first year gives taxpayers a chance to identify problems without collecting quarterly penalty points. Therefore, it makes sense to use that period to improve the process rather than postpone it.
What Happens From 2027–28 Onwards?
From tax years after 2026–27, the new points-based late-submission penalty system will apply to quarterly updates.
If you miss a quarterly-update deadline, HMRC will normally issue one penalty point.
You do not usually receive an immediate financial penalty for the first missed deadline.
The penalty threshold for taxpayers submitting quarterly updates is four points.
The general position is:
| Missed deadlines | General result |
| First missed deadline | One penalty point |
| Second missed deadline | A second penalty point |
| Third missed deadline | A third penalty point |
| Fourth missed deadline | Fourth point and a £200 penalty |
| Further missed deadline while at the threshold | Another £200 penalty |
This means the system should not normally fine someone for one isolated mistake. Instead, it targets repeated failures.
However, penalty points can build up more quickly than expected because quarterly updates and the annual tax return sit within the new submission regime.
Therefore, taxpayers should not assume they have four “free” missed updates.
What If You Have More Than One Business?
A person may need to send separate quarterly updates for:
- more than one sole-trader business;
- UK property income;
- foreign property income; or
- a combination of business and property activities.
However, HMRC says that you can receive only one penalty point for each submission deadline.
For example, suppose you must send quarterly updates for a catering business and a property business. If both updates due on 7 November are late, you should receive only one penalty point for that deadline—not two.
Nevertheless, you still need to submit the missing update for each relevant business.
Does a Penalty Point Mean You Owe £200?
Not immediately.
A point records a missed submission deadline.
The £200 financial penalty normally arises when you reach the four-point threshold. HMRC will then charge another £200 each time you miss a further deadline while you remain at that threshold.
HMRC should send you a notice when it issues:
- a penalty point;
- a £200 late-submission penalty; or
- a late-payment penalty.
You can also check your penalty position through HMRC’s online services.
Do not ignore a penalty-point notice simply because no money is due. Check that HMRC has recorded the correct obligation, taxpayer and deadline.
How Long Does an MTD Penalty Point Last?
If you remain below the four-point threshold, HMRC will normally remove each point automatically 24 months after the relevant missed deadline.
However, the position changes once you reach the threshold.
At that stage, the individual points do not simply expire after 24 months. Instead, you must meet two conditions before HMRC removes them.
You must:
- submit quarterly updates and your tax return on time for 12 months; and
- submit any outstanding quarterly updates and tax returns due during the previous 24 months.
Once you meet both conditions, HMRC should remove all the points.
Therefore, allowing points to reach the threshold creates a longer period during which every further missed deadline can lead to another £200 penalty.
What Should You Do Immediately After Missing a Deadline?
Submit the quarterly update as soon as possible.
Do not wait for HMRC to contact you.
Before submission, check:
- whether all relevant income appears in the digital records;
- whether expenses use the correct categories;
- whether the bank account has been reconciled;
- whether the software covers every relevant business;
- whether digital links work correctly; and
- whether the submission shows as accepted.
If you cannot submit because of a software problem, contact the software provider and keep evidence of the issue.
Evidence may include:
- screenshots;
- error messages;
- support tickets;
- emails;
- dates and times of attempted submissions; and
- details of any HMRC contact.
This information may help if HMRC later issues a penalty point and you need to appeal.
Can You Correct a Quarterly Update?
The quarterly updates reflect the information held in your digital records at that stage.
If you later discover an error, correct the underlying digital records through the appropriate process in your compatible software. Later cumulative information and the final annual return should then reflect the corrected position.
Do not leave a known mistake uncorrected simply because HMRC has already received the quarterly update.
Before submitting the annual return, you must review the full-year figures and make any necessary adjustments. You will also need to add other income and gains and claim relevant reliefs or allowances.
The annual return remains the point at which you confirm the final tax position.
Can You Appeal a Penalty Point or Penalty?
Yes. HMRC says taxpayers can appeal both a penalty point and a financial penalty.
The penalty notice should explain how and when to appeal.
A successful appeal may depend on whether you had a reasonable excuse for missing the deadline.
A reasonable excuse generally means something unexpected or outside your control prevented you from meeting the obligation, despite taking reasonable care.
Possible examples may include:
- a serious illness;
- an unexpected hospital admission;
- bereavement;
- a major software or system failure;
- fire, flood or theft;
- loss of records because of an unforeseen event; or
- another serious event that prevented submission.
However, HMRC will consider the individual facts.
Being busy, forgetting the date or failing to organise the records may not amount to a reasonable excuse on their own.
You should also submit the outstanding update without unreasonable delay once the problem ends.
What If You Cannot Use Digital Software?
Some taxpayers may qualify for an exemption from MTD’s digital requirements.
HMRC may consider an exemption where it is not reasonable or practical for a person to use digital tools because of factors such as:
- age;
- disability;
- remoteness of location;
- religious beliefs; or
- another reason that makes digital compliance unreasonable or impractical.
However, an exemption is not automatic. You must normally apply to HMRC and explain your circumstances.
A dislike of software, lack of confidence or the cost of changing a familiar system may not be enough on its own.
If you believe you may qualify, raise the issue before repeatedly missing quarterly deadlines.
Does Missing a Quarterly Update Delay the Tax Payment?
No.
Quarterly updates do not create quarterly Income Tax payments.
You will still normally pay your Self Assessment liability by 31 January after the end of the tax year, together with any payments on account that apply under the usual timetable.
Missing an update does not move the tax payment date.
It also does not prevent late-payment interest or penalties from arising if you fail to pay the final liability on time.
The late-submission and late-payment rules are separate.
Practical Guide: What to Do If You Miss an MTD Quarterly Update
1. Check which deadline you missed
Confirm the update period, due date and each business affected.
2. Check the tax year
If the update relates to 2026–27, HMRC should not issue a penalty point for the late quarterly update. Later years follow the points-based system.
3. Update the digital records
Enter missing income and expenses and reconcile the relevant accounts.
4. Submit the update promptly
The absence of an immediate penalty does not remove the obligation.
5. Confirm that HMRC accepted it
Do not assume that pressing “submit” completed the process. Check the confirmation within your software.
6. Save evidence of technical problems
Keep screenshots, error messages and support correspondence.
7. Review the next deadline
Correct the process before another update becomes late.
8. Check your penalty position
Review any HMRC notice and confirm that the point or penalty relates to the correct deadline.
9. Appeal where appropriate
Explain the reasonable excuse and provide supporting evidence.
10. Ask for help early
If the problem involves several businesses, incomplete records or unsuitable software, resolve it before the backlog grows.
Frequently Asked Questions
Will I receive a fine for missing one MTD quarterly update?
Not normally. HMRC will not issue penalty points for late quarterly updates in 2026–27. From later tax years, one missed deadline will normally create one penalty point rather than an immediate fine.
When does the £200 penalty apply?
For taxpayers required to send quarterly updates, the penalty threshold is four points. Reaching that threshold normally creates a £200 penalty. Each further missed deadline while at the threshold can create another £200 penalty.
Do I still need to send a late 2026–27 update?
Yes. The first-year easement removes quarterly late-submission penalty points, not the obligation to send the update. You must complete the required updates before submitting your annual tax return.
Can I skip the missed update and wait for the next quarter?
No. A later update does not remove the requirement to deal with the earlier obligation. Complete the missing submission as soon as possible.
If several business updates are late on the same date, will I receive several points?
HMRC says you can receive only one point for each deadline, even if you have more than one business and several quarterly updates are late. However, you must still submit each outstanding update.
Do quarterly updates replace my Self Assessment tax return?
No. You must still submit one annual tax return. That return confirms the complete position, including other income, gains, reliefs and year-end adjustments.
Do quarterly updates mean I must pay tax four times a year?
No. MTD quarterly updates do not create quarterly Income Tax payments. The normal Self Assessment payment dates continue to apply.
Can my accountant submit the updates for me?
Yes. An authorised agent can manage MTD submissions using compatible software. However, you must provide complete and timely records so the agent can meet the deadlines.
Can I appeal an MTD penalty point?
Yes. HMRC will send a notice explaining how to appeal. A reasonable excuse may support an appeal, depending on the facts and the evidence.
Will MTD penalty points affect my VAT penalty points?
No. HMRC treats MTD for Income Tax penalty points separately from VAT penalty points.
Where to Find Official HMRC Information
Current official guidance includes:
- Use Making Tax Digital for Income Tax, covering eligibility, digital records, quarterly reporting and the first year.
- Penalties for Making Tax Digital for Income Tax, explaining the 2026–27 quarterly-update easement and the later points-based system.
- Send quarterly updates through Making Tax Digital, covering update periods and submissions.
- Find out if and when you must use MTD for Income Tax, explaining qualifying income and the staged thresholds.
- MTD quarterly update direction, setting out the information required in quarterly updates.
- Apply for an exemption from MTD for Income Tax, explaining when digital exclusion may apply.
MTD guidance continues to develop. Therefore, taxpayers and agents should check the latest HMRC instructions and ensure their software supports the required submissions.
💡 Key Takeaway
Missing one MTD quarterly update does not normally create an immediate £200 fine.
For 2026–27, HMRC will not issue penalty points for late quarterly updates.
However, taxpayers must still complete all required updates before submitting their annual tax return.
From 2027–28 onwards, each missed quarterly deadline will normally create a penalty point. Reaching four points results in a £200 penalty, while further failures can lead to additional £200 penalties.
If you miss an update, correct the digital records and submit it as soon as possible. The longer you wait, the harder it becomes to keep later updates and the annual return on track.
Need Help?
If you have missed an MTD quarterly update, are unsure whether the rules apply to you or are struggling to maintain digital records, Accounts Tax Group can help.
We can check your MTD start date, review outstanding obligations and help you bring your digital records and quarterly submissions up to date. We can also review an HMRC penalty point or penalty and help prepare an appeal where the facts support one.
Contact us before another quarterly deadline passes. Early action can prevent one missed update from becoming a continuing compliance problem.
For further guidance, explore our HMRC Insights and Updates.
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