Penalties for Making Tax Digital for Income Tax volunteers
Changes to late submission penalties and late payment penalties if you’re volunteering to use Making Tax Digital for Income Tax.
If you’re not volunteering and are required to use Making Tax Digital for Income Tax from April 2026, there’s different information for penalties for Making Tax Digital for Income Tax.
Changes to penalties
If you’re using Making Tax Digital for Income Tax, new penalties will replace the current late submission and late payment penalties that apply to your personal tax return.
The new penalties will not apply to the following Self Assessment tax returns:
- non-resident company (submitted on behalf of the company)
- trust or estate (submitted by a trustee)
- partnership (submitted by a nominated partner)
Current late payment and late submission penalties will still apply to these tax returns.
There are no changes to how late payment interest works.
When the new penalties will apply to you
Changes to late submission penalties and late payment penalties will apply if you voluntarily sign up to use Making Tax Digital for Income Tax.
You can find out if and when you need to use Making Tax Digital for Income Tax and then decide if you want to volunteer before you’re required to use it.
You can also read more about signing up for Making Tax Digital for Income Tax.
The current penalties will still apply to your previous tax years. For example, if you volunteer to use Making Tax Digital for Income Tax from 6 April 2026, current penalties will apply to your 2025 to 2026 tax return deadline of 31 January 2027.
We’ll send you a letter to confirm when the new penalties will apply to you, once we’ve checked both:
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you have signed up to Making Tax Digital for Income Tax
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we have moved your records over to our new IT platform
You cannot go back to the previous penalties once you have agreed to the new penalties, even if you stop volunteering.
How to agree to the new penalties
You need to agree that the new penalties will apply to you when you sign up to use Making Tax Digital for Income Tax. You will be asked in the service when you sign up.
You will not be able to change your mind once you’ve agreed that the new penalties apply to you.
If you’re an authorised agent, you can agree to the new penalties on behalf of your client. You should discuss this with your client before you sign them up and agree to the penalties.
Deadlines for payments and submissions
The new penalties apply if you miss the deadline for submitting your tax return or making your payments.
The deadline to submit your tax return and pay any tax you owe is 31 January after the end of the tax year.
Quarterly updates
While you are volunteering you will not get penalties for missing quarterly update deadlines.
You still need to keep digital records and send quarterly updates before you can submit your tax return.
The quarterly update deadlines are:
- 7 August
- 7 November
- 7 February
- 7 May
Late submission penalties
The new late submission penalties are points based.
For each tax return you submit late you’ll get a penalty point.
The penalty point threshold is 2 points. If you reach this, you’ll get a:
- £200 penalty
- £200 penalty each time you miss another tax return deadline
If you’re also registered for VAT, your penalty points for Making Tax Digital for Income Tax are separate to your penalty points for VAT.
Late payment penalties
The new late payment penalties are more proportionate to how long it takes you to pay what you owe.
Late payment penalties apply to payments not paid in full, by the relevant due date. This includes:
- a balancing payment for an outstanding amount on your tax bill
- amounts due following an amendment or assessment on your tax return
Late payment penalties do not apply to any payments on account that you may need to make.
If you get a late payment penalty, the penalty amount depends on how long it takes you to pay what you owe. The sooner you pay your overdue amount, the lower the penalty amount will be.
These penalties are not points based and will apply to each late payment.
From the first day your payment is late, until you pay in full, we’ll charge late payment interest.
When late payment penalties apply
In your first year of new penalties, you have 30 days from the payment due date to either:
- make full payment
- contact HMRC to set up a payment plan
After 30 days, we’ll start to apply penalties. After your first year, this reduces to 15 days.
You will only receive the 30-day period once — if you later become required to use Making Tax Digital for Income Tax, you will continue to have 15 days.
The following table shows how late payment penalties will apply, depending on the tax year the payment is for.
| Penalties for 2024 to 2025 tax year | Penalties for 2025 to 2026 tax year | |
|---|---|---|
| Payment up to 15 days late | No penalty | No penalty |
| Payment 16 to 30 days late | No penalty | 3% of the tax owed at day 15, or no penalty if it’s your first year |
| Payment 31 days or more late | 2% of the tax owed at day 15, and 2% of what is still owed at day 30 Plus, an annual rate of 4% per year on the outstanding amount, charged daily from day 31 until the tax is paid, or for up to 2 years |
3% of the tax owed at day 15, and 3% of what is still owed at day 30 Plus, an annual rate of 10% per year on the outstanding amount, charged daily from day 31 until the tax is paid, or for up to 2 years |
If you cannot pay on time
Contact HMRC as soon as possible if you’re having difficulty paying your Income Tax by the deadline.
You can avoid penalties by contacting HMRC as soon as possible to discuss whether you can set up a payment plan and pay by instalments.
If a payment plan is agreed and you make the payments, penalties will be paused from the date you contacted us.
You may be charged a penalty if:
- a payment plan cannot be agreed
- you do not follow the agreed plan
Removing penalty points and penalties
If you have 1 point, we’ll automatically remove it 24 months after the missed deadline.
If you reach the 2-point threshold, individual points will not automatically be removed. Instead, you will need to meet 2 conditions to remove all your penalty points.
To remove all your penalty points you need to:
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submit your next 2 tax returns on time
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submit any outstanding tax returns for the previous 24 months
You can sign in to your HMRC online services account to see the date your points will be removed.
In some exceptional circumstances, such as insolvency, HMRC may cancel a penalty or penalty point, or remove all penalty points.
Making an appeal
We will send you a letter if you get a:
- late payment penalty
- late submission penalty point
- £200 late submission penalty
If you do not agree with the penalty point or penalty, you can appeal. Your letter will tell you how to do this.
If you’re later required to use Making Tax Digital for Income Tax
For the tax year 2027 to 2028 onwards, there are differences to late submission penalties if you’re required to use Making Tax Digital for Income Tax.
These are:
- late submission penalties will apply if you miss quarterly update deadlines
- your penalty point threshold will increase from 2 points to 4 points
For example, you may volunteer for the 2026 to 2027 tax year but are then required to use Making Tax Digital for Income Tax starting from 6 April 2027. From 6 April 2027, your penalty point threshold will increase to 4 points and you will get a penalty point if you send a quarterly update late.
If you already have a penalty point
If you already have a penalty point when your point threshold changes from 2 to 4, your points will increase by 2 (from 1 point to 3 points). This means you are still 1 point away from your new threshold.
Updates to this page
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The guidance has been updated to include a link to new guidance about penalties for those required to use Making Tax Digital for Income Tax. The guidance also confirms there is no penalty for the 2024 to 2025 tax year if payment is 16 to 30 days late. It further explains how to check when penalty points will be removed. If you get a penalty, the letter you receive will explain how to appeal if you disagree.
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Guidance has been updated to clarify how penalty points work if you stop volunteering and when late payment penalties apply.
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Information has been updated to confirm that you must agree to the new penalties when you sign up and you will be asked in the service if you agree. Information about late submission penalties has been updated to clarify that it is a points-based system and that when you reach a penalty points threshold, you’ll get a financial penalty. Section 'How late submission penalties work' has been updated to confirm the information is for volunteers. A new section about what happens when you stop volunteering has been added. Information about payment penalties for the 2025 to 2026 tax year onwards has been added. Section 'If you cannot pay on time' has been updated to confirm that the appeals process for Making Tax Digital for Income Tax is the same as Self Assessment.
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First published.