MTD penalties: how the points system actually works
It works like driving licence points: lateness earns points, points earn fines, and good behaviour wipes the slate. Here is the whole system in plain English.
Late submissions: points, then £200
- Every late quarterly update or final declaration = 1 point.
- Reach 4 points (the threshold for quarterly filers) = £200 penalty.
- Every further late submission while at the threshold = another £200.
With four updates and a final declaration per year, five deadlines a year gives you real room to hit four points within the 24-month window if deadlines aren't your strong suit.
How points disappear
- Below the threshold: each point expires after 24 months.
- At the threshold: no expiry. You reset to zero only after 12 months of filing everything on time and submitting anything outstanding from the previous 24 months.
The 2026/27 soft landing. HMRC has confirmed it will not charge late-submission penalties for quarterly updates during the 2026/27 tax year. Points and penalties still apply to the final declaration for 2026/27, due 31 January 2028.
Don't let it lull you: the deadlines are still real, the habit is the hard part, and the final declaration is not covered.
Paying late is a separate (worse) problem
Filing on time but paying late has its own escalating scale:
| How late | What it costs |
|---|---|
| Up to 15 days late | No penalty (interest still runs) |
| 16 – 30 days late | 3% of the tax outstanding at day 15 |
| 31+ days late | A further 3% of the tax outstanding at day 30, then 10% per year, accruing daily, until you pay |
Late-payment interest runs from day one on top of all of the above. On a £10,000 tax bill, drifting three months late costs roughly £600 in penalties before interest.
The boring way to never pay any of this
Every penalty above is a lateness penalty. Digital records that stay current plus a reminder before each deadline make the whole page irrelevant — which is precisely what NippyTax is being built to do, and what the waitlist emails already do (free deadline reminders, no product required).
Frequently asked questions
What is the penalty for missing an MTD deadline?
One penalty point per late submission. Points themselves cost nothing — but reach four points (the threshold for quarterly filers) and HMRC charges £200, plus another £200 for every further late submission while you stay at the threshold.
Do MTD penalty points expire?
Yes — individual points expire after 24 months, provided you stay below the four-point threshold. Once you hit the threshold, expiry stops: you must file everything on time for 12 months (and clear any outstanding submissions) to reset to zero.
Are there penalties in the first year of MTD?
HMRC has confirmed a soft landing: no late-submission penalties for quarterly updates during the 2026/27 tax year. The final declaration for 2026/27 (due 31 January 2028) is not covered — miss that and points apply. Late payment of tax is also penalised as normal.
What are the penalties for paying tax late under MTD?
Separate from filing points: nothing for the first 15 days, then 3% of what is outstanding at day 15, a further 3% of what is outstanding at day 30, then 10% per year accruing daily from day 31 — plus late-payment interest throughout.
Is there a penalty for mistakes in a quarterly update?
No — updates are cumulative and honest errors are corrected in the next quarter. Penalties are for lateness (points) and for inaccuracies in the final declaration that are careless or deliberate — the same inaccuracy rules as the old tax return.
Get NippyTax when it launches
We are building the simplest possible way to do MTD quarterly updates — no accounting suite, no jargon. Join the waitlist and be first in when it launches.