In 2026/27 a late Making Tax Digital quarterly update earns no penalty point, but you must still send all four. From 2027/28 each late quarterly update earns one point if you joined in April 2026, and people joining in April 2027 have their own concession for 2027/28 (announced at Budget 2026).
This guide explains what the concession covers, what still applies in full, how the points system works, and how late payment is treated. For the exact amounts, see HMRC's penalties guidance, which is the source for everything below. Commentators call the 2026/27 concession the soft landing; HMRC does not use that term.
Joining at £30,000? MTD for landlords in April 2027 sets out your dates, and Budget 2026 for landlords sets out what the concession says.
What the "soft landing" is
"Soft landing" is not a term HMRC uses in its guidance. What HMRC says is that it will not apply penalty points for late quarterly updates during the 2026 to 2027 tax year. That is the whole of it. It does not cover:
- the tax return for 2026/27, due by 31 January 2028;
- paying tax late;
- inaccuracies in what you report;
- the requirement to send the updates at all. HMRC will not accept your tax return until all four quarterly updates have been sent.
This concession is tied to the tax year, not to when you joined, so people who joined in April 2026 can get points for late updates from 2027/28. At Budget 2026 the government announced a similar one for people joining in April 2027: no penalty points for late submission of their first four quarterly updates, for the 2027 to 2028 tax year. They must still send the updates before they can submit a tax return. Nothing like it has been announced for people joining in April 2028, who start with points applying to quarterly updates from their first deadline.
What applies in each year
| 2026/27 | 2027/28 onwards | |
|---|---|---|
| Late quarterly update | No penalty point | One penalty point (April 2027 joiners: none in 2027/28, as announced at Budget 2026) |
| Late tax return | One penalty point | One penalty point |
| Reaching the points threshold | Financial penalty | Financial penalty |
| Paying late | Late payment interest and penalties | Late payment interest and penalties |
How penalty points work
- One point per missed deadline. A late quarterly update (from 2027/28) or a late tax return each earns a point.
- Only one point per deadline, even if you have several businesses and send more than one update late for the same deadline.
- The threshold is 4 points if you are required to use Making Tax Digital. Reaching it triggers a financial penalty, and each further missed deadline while you are at the threshold triggers another.
- Points below the threshold expire automatically 24 months after the deadline you missed.
- Once you reach the threshold, points do not expire one by one. To clear them you need to meet every deadline for 12 months and send anything outstanding from the previous 24 months.
- Points for Making Tax Digital are separate from any VAT penalty points.
If you are volunteering for Making Tax Digital before you have to, late quarterly updates do not earn points at all, but late tax returns do, with a lower threshold of 2 points.
Worked example
A sole trader required to use Making Tax Digital from April 2026 sends everything on time in 2026/27. From 2027/28:
- Update due 7 August 2027, sent a week late: 1 point.
- Update due 7 November 2027, on time: still 1 point.
- Update due 7 February 2028, sent late: 2 points.
- Update due 7 May 2028, on time: still 2 points.
- Update due 7 August 2028, sent late: 3 points.
- Update due 7 November 2028, sent late: 4 points. The threshold is reached and a financial penalty follows.
No single late update produced a penalty. Four did, spread over little more than a year, because the first point had not yet expired.
Paying late
Late payment works separately from the points and applies from the first year:
- Late payment interest is charged from the first day a payment is late until it is paid.
- Late payment penalties are a percentage of the tax still unpaid at set points after the due date, followed by a daily charge at an annual rate for as long as it stays unpaid, up to a limit. HMRC's guidance gives the rates for each tax year, and the rates for 2027/28 are higher than for 2026/27.
- In your first year of the new penalties, HMRC gives you 30 days from the due date to pay in full or contact it to set up a payment plan before penalties start. After that it is 15 days. You only get the 30 days once.
- Payment plans pause penalties. If HMRC agrees a plan and you keep to it, penalties are paused from the date you contacted HMRC.
- Payments on account are not subject to late payment penalties.
Getting the figures wrong
Penalties for careless or deliberate inaccuracies in what you tell HMRC are separate from the late submission and late payment rules, and the first-year concession does not affect them. Quarterly updates can be corrected, though: because each update covers the tax year so far, a mistake you fix in your records is corrected in the next update, and anything left after the fourth update is dealt with before you submit the tax return.
If you become exempt later
If you become exempt from Making Tax Digital during 2026/27, you go back to the existing Self Assessment penalties. From April 2027 the new penalties apply to everyone who submits a personal Self Assessment return, not only to Making Tax Digital users, so if you become exempt in 2027/28 or later, you stay under the new penalties with a threshold of 2 points, and any points you already have are reduced so you are no closer to the new threshold than before.
How to avoid penalties
- Keep records as you go. A bank feed or a weekly habit of adding transactions turns each update into a check rather than a scramble.
- Put the dates in your calendar: 7 August, 7 November, 7 February and 7 May, and 31 January for the tax return and payment. Our deadlines guide has the full calendar.
- Send the update even if you are unsure about a category. The deadline is what earns a point; a category you correct later is fixed in the next update.
- Send nil updates. A quarter with no income and no costs still needs an update.
- If you cannot pay, contact HMRC before the deadline about a payment plan.
If you have already missed a deadline
Send the missing update or return as soon as you can. In 2026/27 a late quarterly update earns no point, but you cannot submit your tax return without it. If HMRC charges a penalty or gives you a point you disagree with, the letter tells you how to appeal. HMRC considers whether you had a reasonable excuse, such as serious illness or a failure of HMRC's own service, and each case is decided on its facts.
VoxaMTD sends quarterly updates for self-employment and UK property income directly to HMRC's live Making Tax Digital service, and sending them is free. Start free, no card needed.
This guide summarises HMRC's published guidance as at 27 September 2026. It is general information, not tax or legal advice. Penalty amounts and rates are set out on GOV.UK.