Failure to file a Self Assessment tax return on time will incur a penalty (Image: Getty)
UK households will be hit with £200 fines from HM Revenue and Customs (HMRC) after a change to tax return rules which means some taxpayers must now file four times a year. As of April 2026, self-employed workers and landlords earning more than £50,000 from self-employment and property are required to file a tax return every three months instead of once per year, to inform the tax office of any additional tax they owe.
HMRC’s new system aims to help people save time when filing their tax returns by spreading the workload more evenly throughout the year. The change means instead of submitting a single tax return in January, people must instead send quarterly updates to HMRC. As such, there are now four deadlines in a tax year that around 864,000 self-employed workers and landlords are obligated to meet as of April 2026 – and those who miss the deadlines and file late will be hit with fines.
HMRC launched its new ‘Making Tax Digital’ (MTD) system on April 6 for sole traders and landlords, requiring people to keep digital records throughout the year.
Under the new regime, when a taxpayer misses a submission deadline they will incur a penalty point and be liable to pay a fixed penalty of £200 when they have reached a points threshold based on their submission frequency.
The Institute of Chartered Accountants in England and Wales explains: “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 will also incur costs based on late payments of tax, with the new late payment penalty consisting of two separate charges – one payable 30 days after the payment due date based on a set percentage of the balance outstanding, and one payable from day 31 that will accrue daily, based on the sum outstanding.
HMRC has confirmed that fines won’t be issued if quarterly updates are missed in 2026/27, but taxpayers will still be subject to a penalty for late tax returns at the end of the tax year.
Confirming the charges if you miss a deadline for sending an update, HMRC said: “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.
“If you do not send your quarterly update by the relevant deadline, you will get a late submission penalty point. If you reach 4 points, you’ll get a £200 penalty. Penalty points will also apply for late tax returns.”
Those joining MTD in April 2026 will still file their tax return for the 2025 to 2026 tax year in the usual way by January 31, 2027, as this covers the period before MTD begins. The first MTD tax return, covering the 2026 to 2027 tax year, will be due by January 31, 2028.
While no penalty points will be charged for late submission of mandatory quarterly updates during the 2026/27 tax year, tax experts warn that deadlines will still be in place, and those who delay preparing risk confusion, missed submissions and mounting problems later on.
Taxpayers in MTD will need digital records in place for the whole year, and to have submitted some information in quarterly updates in order to file their tax return for the year.
Emma Rawson, Director of Public Policy at the 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.”
HMRC added: “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.
“If you do not send your quarterly update by the relevant deadline, you will get a late submission penalty point. If you reach four points, you’ll get a £200 penalty. Penalty points will also apply for late tax returns.”