MTD penalties and the 2026–27 grace period

MTD adds more deadlines, so it’s fair to ask what happens if you miss one. The short version: late submissions are handled by a points system, and late tax attracts interest and separate penalties. Late quarterly updates carry no penalty in the 2026 to 2027 tax year. Here’s how it fits together. Always confirm the current figures on GOV.UK.

Late submissions: a points system

Instead of an instant fine, each missed deadline earns you a penalty point: one per deadline, even if you have more than one business. At four points you get a £200 penalty, and another £200 for each further deadline you miss while you’re there. Points aren’t forever. Below four, each one expires after 24 months. Once you’ve reached four, they only clear after 12 months of on-time submissions, and once anything outstanding from the previous 24 months is in.

Late tax: interest and penalties

Missing a payment is treated separately from missing a submission. For the 2026 to 2027 tax year, paying up to 15 days late costs nothing. Between 16 and 30 days it’s 3% of the tax owed at day 15, or nothing if it’s your first year. From day 31 it’s 3% at day 15, another 3% at day 30, and then 10% a year on the balance, charged daily until you pay or for up to two years. From 2027 to 2028 the two steps rise to 4%. Interest also runs on tax paid late. Your tax payment dates don’t change under MTD. It’s the record-keeping and quarterly updates that are new, not when the bill is due.

The grace periods for late quarterly updates

There are no penalties for missing a quarterly update deadline in the 2026 to 2027 tax year. The October 2026 Budget announced the same for the next group: people joining in April 2027 won’t get penalty points for late submission of their first four quarterly updates, in the 2027 to 2028 tax year. Nothing similar has been announced for the April 2028 group.

Both reliefs are narrow. Every quarterly update still has to be sent before your final declaration, and neither covers a late tax return, a late payment, or interest on late tax. Treat them as breathing room, not a free pass.

Joint owners: separate exposure

If you co-own, remember there’s no shared return. So there’s no shared penalty position either. Each co-owner has their own deadlines and their own points and penalties. One of you filing late doesn’t affect the other, and vice versa. See the couples guide.

How to stay penalty-free

• Know your dates – the deadlines calendar lists all four plus the final declaration.
• Use software that keeps a running total and reminds you before each deadline.
• Keep digital records as you go, so a quarterly update is a five-minute job, not a scramble.
• Set your own calendar alerts a week ahead of each date.

Pick a tool that makes this painless with the two-minute picker, and print the prep checklist so nothing slips.