https://www.noxia.co.uk/field-notes/four-points-and-two-hundred-pounds · printed from noxia.co.uk · sources checked 24 September 2026
Field note · Lettings
Four missed deadlines cost £200. The free year is 2026–27 only, which is the trap.
A points system with a free year sounds generous. It is also the most reliable way to build a habit of filing late — and the free year belongs to the 2026–27 tax year, not to the landlord, so the next wave joins without one.
- Lettings
- Landlords
- Making Tax Digital
- HMRC
- Penalties
The short answer
Making Tax Digital for Income Tax uses penalty points: one per missed deadline — a quarterly update or the tax return — and at four points a £200 penalty, then £200 per further miss. Below four, each point expires after 24 months. Late quarterly updates earn no points in 2026–27, a tax year, not a first year. Late payment: 3% at day 15, 3% at day 30, then 10% a year; 4% and 4% from 2027–28.
On this page · 6 sections
The design is sensible. One missed deadline is a mistake; four is a pattern, and the system is built to distinguish them.
The soft landing is where it gets interesting for anyone advising a landlord.
Why the free year is the risk
A landlord who files a quarterly update three weeks late in 2026–27 experiences no consequence. Nothing arrives. The system appears to tolerate it.
From April 2027 the same behaviour earns a point each time, and four quarterly updates a year means the threshold can be reached inside twelve months. The habit formed during the year that was forgiving is the habit that produces the penalty.
And the free year is a tax year, not an allowance. The landlords brought in by the £30,000 threshold in April 2027 never get one: their first late quarter earns a point. A late tax return earns one in any year.
The expiry rule cuts the other way and is worth knowing: below four, each point is removed 24 months after the deadline that caused it. Reach four and they stop expiring on their own; clearing them takes twelve months of filing on time and nothing outstanding from the previous two years.
Late payment is a separate and harsher clock
Nothing for the first fifteen days — thirty, in your first year under the new penalties. Then a 3% penalty on the tax owed at day 15. From day 31, 3% of what is owed at day 30 as well, and a further 10% a year on whatever is still outstanding, charged daily until it is paid or for up to two years. For 2027–28 the two fixed penalties rise to 4% each.
Two things follow. The first window is a genuine grace period and worth using rather than panicking into. And every charge runs on what is outstanding, so a part payment early does real work.
What this means for an agent
You are not responsible for your landlord's tax and should say so in writing. But you hold the data, and the quarterly rhythm means they need it four times a year on a schedule that is not yours.
The operational read is simple: the landlords most likely to miss a deadline are the ones waiting on you. An agent who sends categorised figures without being chased removes the most common excuse, and does it at the moment a landlord is deciding whether the agency is worth its fee. That argument is set out in the note on MTD starting in April, the points calculator does the arithmetic, and the mechanics are a pipeline rather than a person.
What this does not tell you
These are HMRC’s own figures, from guidance updated on 30 March 2026, and penalty regimes are amended — we could not find on legislation.gov.uk the instrument behind the 4% rates HMRC gives for 2027–28. From April 2027 the new penalties apply to everyone who submits a personal Self Assessment return, not only those in MTD. Confirm the position with HMRC before relying on it, and treat this as orientation rather than advice.
It also does not cover appeals, payment plans or what counts as a reasonable excuse — all of which matter enormously in a specific case and none of which we are qualified to set out. We are not accountants. Our work with letting agencies is about getting the data out on time, which is the part that is ours to solve.
Questions people actually ask
How do Making Tax Digital penalties work?
A points system. One point for each missed deadline — a quarterly update or the tax return — and at four points a £200 penalty, then another £200 for each deadline missed after that. Below four, each point is removed 24 months after the deadline that caused it.
Are there penalties in the first year of MTD?
No points are given for late quarterly updates in the 2026–27 tax year, but a late tax return still earns one. The easement belongs to that tax year rather than to your first year, so a landlord who joins in April 2027 earns points from the first quarter. For late payment, your first year under the new penalties gives you 30 days before a penalty rather than 15.
What are the late payment penalties?
For 2026–27: nothing for the first 15 days (30 in your first year), then 3% of the tax owed at day 15; from day 31, 3% of the tax owed at day 30 as well, plus 10% a year on whatever is still outstanding, charged daily until it is paid or for up to two years. For 2027–28 the two fixed penalties rise to 4% each.
Do penalty points expire?
Yes, below the threshold: each point is removed 24 months after the missed deadline. At four points they stop expiring on their own; to clear them you need twelve months of on-time filing and nothing outstanding from the previous 24 months.
Sources
- HM Revenue & Customs, “Penalties for Making Tax Digital for Income Tax”, published 12 March 2026, last updated 30 March 2026: “There are no penalties for missing a quarterly update deadline for the 2026 to 2027 tax year”; “For each quarterly update (for tax years after 2026 to 2027) or tax return deadline you miss, you’ll get a penalty point”; at the 4-point threshold a “£200 penalty” and a “£200 penalty each time you miss another submission deadline”; below it, each point removed “24 months after the missed deadline”. Late payment for 2026–27: “3% of the tax owed at day 15, and 3% of the tax 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”; for 2027–28, 4% and 4%; in the first year of new penalties, 30 days before penalties apply rather than 15; from April 2027 the new penalties “will apply to everyone who submits a personal Self Assessment tax return”. gov.uk ↗ — primary; the tax authority’s own guidance re-checked every 6 months
- ICAS, “Making Tax Digital: Penalties”, read 23 September 2026 — the accountancy body’s summary this note was first written from. Its “No penalty points will be issued for late quarterly updates submission for the first year of MTD” is narrower on HMRC’s page, which ties the easement to the 2026–27 tax year. icas.com ↗ — secondary; superseded here by HMRC’s own guidance above re-checked every 6 months
- The Finance Act 2021 (Increase in Schedule 26 Penalty Percentages) Regulations 2025, SI 2025/589, made 13 May 2025, in force 31 May 2025: in the late payment penalty rules “for ‘2%’ substitute ‘3%’” and “for ‘4%’ substitute ‘10%’”. The legislation behind the 2026–27 rates; we could not find the instrument behind HMRC’s 4% rates for 2027–28. legislation.gov.uk ↗ — primary; the legislation re-checked every 6 months
- HMRC, “Find out if and when you need to use Making Tax Digital for Income Tax”, last updated 26 March 2026 — the thresholds and start dates the penalties attach to. gov.uk ↗ — primary for scope re-checked every 6 months
- The argument that the soft landing is where the habit forms, and the operational point for agents, are ours. We are not accountants and this is not tax advice. — our own argument, labelled as such
Checked 24 September 2026. Next scheduled check 23 March 2027. Numbers that move — leaderboards, live indices — are re-checked every 30 days; annual datasets and rules in force every six months; dated research once a year. If something here has gone stale before we got to it, tell us and we will correct it and say what changed.
Cite this note
Noxia, “Four missed deadlines cost £200. The free year is 2026–27 only, which is the trap”, Field notes, 23 September 2026; sources checked 24 September 2026. https://www.noxia.co.uk/field-notes/four-points-and-two-hundred-pounds
The landlords who miss a deadline are the ones waiting on you.
Four times a year, on HMRC’s schedule rather than yours, every landlord needs categorised figures. We build the pipeline that sends them without anybody asking, and logs what went to whom and when — which removes the commonest excuse and the commonest phone call at once.
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