Making Tax Digital penalties
Missing an update earns a point, not an instant fine. The fine comes when the points add up.
Good news first. HMRC is not applying penalty points for late quarterly updates during the 2026/27 tax year. If you were mandated in April 2026, your whole first year is covered.
How the points work
Four updates a year means four chances to earn a point. Someone mandated who misses every single one in a year hits 4 points and the £200 penalty. Someone who volunteered early gets there in half the time.
The catch with volunteering
Signing up before you have to is genuinely useful — you learn the software with nothing at stake. But it moves your penalty threshold from 4 points down to 2, so you have less room to slip. Worth knowing before you volunteer, and rarely mentioned when early sign-up is being encouraged.
Missed updates do not just go away
You cannot submit your tax return until your quarterly updates are in. So a missed update is not a penalty you can simply absorb and move on from — it still has to be filed before you can finish the year.
The dates you are being measured against
Four updates, then the return: 7 August, 7 November, 7 February, 7 May, then your tax return by 31 January. Each update covers the whole year to date rather than just the quarter since the last one.
Every date for 2026, 2027 and 2028.
Common questions
What happens if I miss a quarterly update?
You get a penalty point rather than an immediate fine. Reaching 4 points triggers a £200 penalty. If you signed up voluntarily before you were mandated, the threshold is lower — 2 points.
Is there a grace period?
Yes. HMRC is not applying penalty points for late quarterly updates during the 2026/27 tax year. That covers the entire first year for anyone mandated from April 2026.
Does volunteering early cost me?
It lowers your penalty threshold from 4 points to 2. That is worth knowing before you sign up ahead of time — you get to practise, but with less margin for error.
Can I still file my tax return if I missed updates?
You have to send your quarterly updates before you can submit your tax return, so missed updates have to be caught up regardless of any penalty.
Source: Use Making Tax Digital for Income Tax — Send quarterly updates. Check whether any of this applies to you yet.
Tax Threshold gives information, not tax advice. Penalty rules change and appeals depend on circumstances — check with HMRC or an accountant.