Around 864,000 self-employed workers and landlords in the UK are now required to file tax returns every three months under new rules introduced by HM Revenue and Customs (HMRC) in April 2026. Those who miss the quarterly deadlines will incur penalty points and face a £200 fine once a threshold of four points is reached.
New quarterly filing requirements
As part of HMRC's Making Tax Digital (MTD) initiative, individuals earning more than £50,000 from self-employment or property income must submit quarterly updates to HMRC instead of a single annual return. The system, launched on April 6, 2026, aims to spread the tax filing workload more evenly throughout the year and help taxpayers save time.
Under the new regime, there are now four deadlines per tax year. Taxpayers who fail to submit a quarterly update by the relevant deadline will receive a late submission penalty point. Once four points are accumulated, a fixed £200 penalty is applied. Additional penalties may apply for late tax returns at the end of the year.
Penalty structure explained
The Institute of Chartered Accountants in England and Wales (ICAEW) explained: "The new late submission penalties are points based. If the submission frequency is annual, once the taxpayer reaches two points, they will be charged a £200 penalty. A further £200 penalty will be charged if another annual tax return is submitted late. Once a taxpayer is mandated to use MTD income tax and is required to make quarterly submissions, a £200 penalty is applied once they have received four points."
Taxpayers also face late payment penalties, which consist of two separate charges: one due 30 days after the payment deadline, calculated as a percentage of the outstanding balance, and a daily accruing charge from day 31 based on the sum owed.
First-year penalty waiver for quarterly updates
HMRC has confirmed that penalty points will not be applied for late quarterly updates during the 2026/27 tax year. However, taxpayers must still submit their quarterly updates on time to be able to file their end-of-year tax return. Penalty points will still apply for late tax returns for that year.
HMRC stated: "If you miss quarterly update deadlines you may get a late submission penalty — these are points based. If you reach a penalty point threshold, you'll get a £200 penalty. The point thresholds depend on whether you're required to use Making Tax Digital for Income Tax or you're volunteering. HMRC will not apply penalty points for late quarterly updates during the 2026 to 2027 tax year. You will need to send your quarterly updates before you are able to submit your tax return. Penalty points will still apply for late tax returns for this tax year."
Transition and expert warnings
Those joining MTD in April 2026 will still file their tax return for the 2025/26 tax year in the usual way by January 31, 2027. The first MTD tax return, covering the 2026/27 tax year, is due by January 31, 2028.
Emma Rawson, Director of Public Policy at the Association of Taxation Technicians (ATT), said: "It's helpful that penalties won't apply in the first year, but people shouldn't see that as a reason to wait. Making Tax Digital brings multiple new deadlines and new rules."
Tax experts warn that despite the first-year penalty waiver for quarterly updates, deadlines remain in place. Those who delay preparation risk confusion, missed submissions, and mounting problems later. Taxpayers in MTD must maintain digital records for the entire year and submit quarterly updates to complete their annual tax return.
