How the MTD Points-Based Penalty System Works
Each missed submission earns one point. Points expire after a period of compliance. Reaching the threshold triggers a financial penalty.
Penalty Point Thresholds
The threshold depends on your submission frequency. For quarterly MTD updates, the threshold is four points.
Financial Penalties for MTD Non-Compliance
Once at the threshold, each further late submission triggers a £200 fixed penalty, repeating per missed submission until compliance is restored.
Late Payment Penalties vs Late Submission Penalties
Late submission penalties are separate from late payment penalties. Tax paid late also attracts interest and percentage-based penalties.
How to Appeal an MTD Penalty
You can appeal a penalty if you have a reasonable excuse. HMRC publishes guidance on what counts as a reasonable excuse and the appeal process.
Avoiding MTD Penalties
Set calendar reminders ahead of each deadline, automate where possible, and use a quarterly update service for support and oversight.
HMRC's Approach to the First Year of MTD
HMRC has historically taken a soft-landing approach in the first year of new MTD regimes. Always check current guidance — do not rely on this for your own compliance. Note: HMRC has confirmed that those required to use MTD for Income Tax from 6 April 2026 will not receive penalty points for late quarterly updates for the first 12 months. Late tax return penalties continue to apply throughout.