MTD uses a points-based late submission penalty system. different from the old fixed penalty system under Self Assessment. Understanding exactly how it works helps you understand what is genuinely at risk and what thesoft landing actually protects you from.
Each time you miss a quarterly submission deadline, HMRC issues one penalty point. Points accumulate independently. When you hit four points, HMRC automatically issues a £200 fine. Every further missed submission after that adds another £200. immediately, without waiting for more points.
| Missed submissions | Points total | Cumulative fines | Status |
|---|---|---|---|
| 0 | 0 | £0 | Compliant |
| 1 | 1 | £0 | 1 point. No fine |
| 2 | 2 | £0 | 2 points. No fine |
| 3 | 3 | £0 | 3 points. one miss away from fine |
| 4 | 4 | £200 | Threshold hit, £200 fine issued |
| 5 | 5 | £400 | +£200 per further miss |
| 8 | 8 | £1,000 | Persistent non-compliance |
| 12 | 12 | £1,800 | Serious non-compliance |
Source: HMRC: MTD penalty guidance ↗
HMRC confirmed a soft landing for Phase 1 taxpayers (£50,000+) during 2026–27. During this year, no penalty points are issued for late quarterly submissions. This means you cannot accumulate the four points needed to trigger the £200 fine during 2026–27. even if you miss all four quarterly deadlines.
However, three critical things are not covered by the soft landing:
Even if you never receive a single penalty point, unpaid tax accrues interest. The current HMRC late payment interest structure:
Note: Quarterly updates do not themselves trigger payments. Tax becomes due with your Final Declaration. But if you have payments on account and underpay, interest runs from the original payment on account dates.
Points do not last forever. but the reset conditions are strict:
The practical implication: if your income fluctuates around the threshold, points from non-compliant years may persist even in years you are not technically mandatory. File everything on time to prevent accumulation.
No. the soft landing means no points are issued during 2026–27 for quarterly submissions. So there are no points to carry over. You start 2027–28 with zero points and full penalties in force. Any late submission from 7 August 2027 onwards immediately earns a live point.
Submit as soon as possible. During 2026–27, the soft landing means no penalty points for late quarterly updates, so there is no fine for lateness this year. But you should still submit: HMRC expects compliance, and not filing at all is more serious than filing late. Set up your software and submit Q1 even if late. Q2 is due 7 November. do not miss it too.
Yes. The Final Declaration (due 31 January 2028 for the 2026–27 tax year) is not covered by the soft landing. Miss it and you receive one penalty point under the full penalty regime. The Final Declaration also triggers your tax liability. late filing means late payment interest on any tax owed.
No, not without formal HMRC confirmation. You must notify HMRC that your qualifying income has fallen below the threshold and wait for written confirmation to exit MTD. Continuing to file while awaiting confirmation is the correct approach. Do not simply stop. unilateral cessation of MTD submissions is non-compliance.
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