MTD penalties for landlords: what a missed quarter actually costs

There is no penalty for missing a quarterly update deadline in the 2026 to 2027 tax year. That is HMRC's own wording, and it is the single most useful thing a landlord in Making Tax Digital can know this autumn.

It is also the fact most often half-remembered. The free pass covers late quarterly updates and nothing else: a late tax return still earns a penalty point this year, and late payment of tax is a separate system that was never paused at all.

This is what each of those actually costs, taken from the two GOV.UK pages that set them.

The four deadlines

Quarterly updates are due on the same four dates every year, whichever update periods you use:

One detail catches people out on the second update. Each one covers from the start of the tax year to the end of the update period, not just the three months since the last one. GOV.UK puts it plainly: the update covers "from the start of the tax year to the end of the update period, not just the previous three months. This means you can correct your records without having to resend previous updates."

So the update due on 7 November is not a report on July to October. It is the whole year so far, restated. If you fixed a mistake from May in September, the November update carries the corrected figure and no resubmission is needed.

The tax return itself, and the payment, are still due on 31 January after the end of the tax year.

How the points work

Late submission penalties are points based, and they behave like a driving licence rather than a fine.

• Each missed deadline gives you one penalty point.
• The threshold is 4 points. Reach it and you get a £200 penalty.
• After that, it is £200 again each time you miss another deadline, with no further points needed.

Two things follow from that shape. The first miss costs nothing in cash. The fourth costs £200, and every one after that costs £200 as well, so the expensive part of this system is staying at the threshold, not arriving at it.

If you are also registered for VAT, those points are counted separately. A late VAT return does not push you towards an income tax penalty, and the reverse is true too.

"I have five properties. Is that five penalties?"

No. This is the question most worth answering for anyone with a portfolio, because the intuitive answer is wrong and the real one is generous.

GOV.UK: "You can only get one penalty point per deadline. This applies even if you have more than one business and send more than one quarterly update late."

Read that carefully, because it is doing more work than it looks. Quarterly updates are sent per business, not per property: all your UK rental property is one property business, however many doors are in it. So five properties were never going to mean five updates in the first place.

But the rule goes further than that. Even a landlord who also runs a trade, and therefore genuinely has two businesses and two separate quarterly updates, and who files both of them late on the same deadline, collects one point, not two.

The practical effect is that the penalty system does not scale with the size of your portfolio. What scales with your portfolio is the work of getting the figures right by the deadline in the first place.

What the free year actually covers

For the 2026 to 2027 tax year, HMRC will not apply penalty points for late quarterly updates. The wording on GOV.UK is unambiguous: "There are no penalties for missing a quarterly update deadline for the 2026 to 2027 tax year."

Three things that free pass does not do:

1. 1It does not excuse the update. You still have to send all four before you can submit your tax return. A quarter skipped in November is a quarter you are doing in January, in a worse week.
2. 2It does not cover your tax return. Penalty points still apply for a late return this year, on the same four-point threshold.
3. 3It does not cover payment. Late payment penalties and late payment interest run exactly as described below, from day one.

From the 2027 to 2028 tax year the shelter goes. Miss a quarterly update deadline then and you get a point, on the same 4-point, £200 ladder as everything else.

Getting points off your record

Points do not sit there forever, but how you shed them depends entirely on which side of the threshold you are on, and the difference is sharp.

Below 4 points. Each point is removed automatically 24 months after the deadline you missed. You do nothing. You can see the removal date in your HMRC online services account.

At 4 points. Nothing comes off automatically. To clear the points you must do both of these:

• send your quarterly updates and submit your tax return on time for 12 months, and
• send any outstanding quarterly updates and tax returns for the previous 24 months, even ones already too late to be worth anything.

That second condition is the one to plan around. A return you gave up on two years ago has to be filed before the points clear, so a landlord who is behind cannot start the 12-month clean run until the backlog is in.

In exceptional circumstances such as insolvency, HMRC may cancel a point or a penalty, or remove all points.

Late payment is a different system

Late payment penalties are not points based. They apply to each late payment, and the amount depends on how long the money is outstanding.

They apply to a balancing payment, and to amounts due after an amendment or assessment. They do not apply to payments on account.

In your first year under the new penalties you get 30 days from the due date either to pay in full or to contact HMRC and set up a payment plan. After that first year the grace period drops to 15 days, and you only ever get the 30 days once.

Late payment interest is charged separately, from the first day the payment is late until it is paid in full, and nothing about how that works has changed.

If you cannot pay, the lever is to ring HMRC before the deadline rather than after. If a payment plan is agreed and you keep to it, penalties are paused from the date you got in touch. They restart if no plan can be agreed or if you fall out of the one you made.

If you volunteered early

Volunteering for Making Tax Digital before you have to is a reasonable move, and one of our other guides argues for it. There is a catch in the penalty rules that deserves to be read before you sign up rather than after.

While you are volunteering:

• No penalties at all for late quarterly updates. Not a point, not a pause, nothing.
• Points do apply to a late tax return, and your threshold is 2 points, not 4. At 2 points it is a £200 penalty, then £200 for each further late return.

And the part that is easy to miss: agreeing to the new penalties is permanent. GOV.UK says you are asked to agree when you sign up, that you cannot change your mind afterwards, and that "you cannot go back to the previous penalties once you have agreed to the new penalties, even if you stop volunteering."

So volunteering is not a trial you can walk out of. The reporting is reversible; the penalty regime is not.

April 2027 catches everyone, not just MTD

This is the part that has not reached most landlords yet, and it has nothing to do with whether your income crosses a threshold.

GOV.UK, on what happens if you become exempt from Making Tax Digital in the 2027 to 2028 tax year: "you will remain under the new penalties — from April 2027, the new penalties will apply to everyone who submits a personal Self Assessment tax return".

So the points system is not an MTD feature that only touches the people pulled into MTD. From April 2027 it is simply how late Self Assessment works.

If you do fall out of MTD and into ordinary Self Assessment, your threshold drops from 4 points to 2, and any points you are carrying are reduced so that you are no closer to the new threshold than you were to the old one. HMRC's own example: three points against a four-point threshold means you are one away, so becoming exempt leaves you with one point against a two-point threshold, still one away.

The new penalties do not apply to returns for a non-resident company, a trust or estate, or a partnership. Those keep the current rules.

What to do before 7 November

If you are in Making Tax Digital this year, the update due on 7 November 2026 is free to be late and expensive to treat that way. A practical order:

1. 1Check which update periods you are on. Standard periods run 6 April to 5 October for this one; calendar periods run 1 April to 30 September. You cannot change them mid-year once you have sent an update.
2. 2Get the year-to-date figures right, not the quarter. The update restates 6 April onwards, so an error from the spring is fixed here rather than resubmitted.
3. 3Send a nil update if there is nothing to report. GOV.UK is explicit: if you had no income and no expenses in the period, "you must still send your quarterly update to tell HMRC".
4. 4Decide about jointly let property now. For jointly let places you may report income only during the year and add the expenses afterwards by resending the fourth update. If you also own places on your own, those need income and expenses in every update.
5. 5Use this year to find out what breaks. The free pass on quarterly updates exists so people can get it wrong once. A miss in 2027 to 2028 is a point.

LetCompliance is recognised by HMRC for Making Tax Digital for UK property income. It keeps the rent, the costs and the receipts against each property as the year runs, and files the quarterly update from the same records, alongside the rest of the let: the advert, the tenancy, the certificates and the notices. One property is free, for as long as you want it.

Sources: Penalties for Making Tax Digital for Income Tax, Penalties for Making Tax Digital for Income Tax volunteers and Send quarterly updates, all read on 21 September 2026.