Points, and when they start to cost money
You get one penalty point for each submission deadline you miss: a quarterly update, from the tax years after 2026-27, or the tax return. The threshold is 4 points. Reach it and you get a £200 penalty, and a further £200 each time you miss another submission deadline.
You can only get one point per deadline, even if you have several businesses and send more than one quarterly update late. If you are registered for VAT as well, your Making Tax Digital for Income Tax points are counted separately from your VAT points.
How points come off again
- Below the threshold, each point is removed automatically 24 months after the missed deadline
- At the threshold, points do not come off automatically: you need 12 months of on-time quarterly updates and tax returns, plus sending any outstanding updates and returns for the previous 24 months
- You can see the date your points will be removed in your HMRC online services account
Late payment penalties
Late payment penalties are not points-based and apply to each payment that is late. Payments on account are not caught by them. The penalty depends on how long the tax stays unpaid, so paying sooner always costs less.
Late payment interest also runs from the first day the payment is late until it is paid in full, on top of any penalty.
| How late the payment is | 2026-27 | From 2027-28 |
|---|---|---|
| 16 to 30 days | 3% of the tax owed at day 15, or nothing in your first year | 4% of the tax owed at day 15, or nothing in your first year |
| 31 days or more | 3% at day 15 and 3% at day 30, plus 10% a year charged daily from day 31 | 4% at day 15 and 4% at day 30, plus 10% a year charged daily from day 31 |
The 10% annual charge runs daily until the tax is paid, or for up to two years, whichever comes first.
The first-year breathing space
In your first year of the new penalties you have 30 days from the payment due date to pay or to arrange a payment plan. After that it drops to 15 days. You only get the 30-day period once, and if you volunteered early and are now required to use the service, you stay on 15 days.
If you cannot pay on time
Tell HMRC before the deadline rather than after it. If a payment plan is agreed and you keep to it, penalties are paused from the date you contacted HMRC.
If you disagree with a penalty point or a penalty you can appeal, and the letter tells you how. In exceptional circumstances such as insolvency, HMRC may cancel a penalty or remove points.