London, January 22, 2026, 11:28 GMT
- HMRC will switch MTD taxpayers to a penalty-points system, replacing the current instant fines for late filings
- A landlord survey reveals broad concern and little confidence ahead of the April shift
- The initial MTD wave targets landlords and sole traders whose qualifying income exceeds £50,000
HMRC plans to scrap automatic late-filing fines in favor of a penalty-points system for those enrolled in its Making Tax Digital programme. Landlords, however, say they’re unprepared and are lobbying for softer penalties at the start.
1
The deadline for the 2024/25 self-assessment tax year is 11:59 p.m. on Jan. 31. Taxpayers must pay any owed tax by that point as well. Missing this cutoff will lead to penalties under the current rules.
2
Starting April 6, the government will require self-employed individuals and landlords with income over £50,000 to comply with Making Tax Digital for Income Tax Self Assessment (MTD for ITSA), according to HMRC guidance. Those earning more than £30,000 must follow suit by April 2027, with the threshold dropping further to £20,000 in April 2028.
3
The points-based system assigns one point each time a taxpayer misses a submission deadline. The government clarified that a fixed £200 penalty kicks in only after reaching a threshold — four points for quarterly returns and two for annual filings. Points expire after two years, but totals reset only after a stretch of on-time filings and any overdue submissions are caught up.
4
An industry survey reveals widespread unease among landlords facing upcoming changes. According to rental management app August, 87.5% of landlords surveyed expressed concerns about Making Tax Digital, yet only 12.8% said they felt very confident about fully understanding its demands.
Samuel Cope, founder of August, slammed HMRC’s guidance as “not practical” for the typical landlord, describing the new rules as a “seismic change” amid rising costs and growing admin burdens. He’s also taken action, writing to the Treasury and the responsible HMRC minister to push for a “substantial reduction in fines” for those who fall short early on.
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Markel Direct, a specialist insurer for freelancers and small businesses, is urging self-employed workers to get ahead by tightening their record-keeping and testing how quarterly reporting will actually work. The company also highlighted recent tax shifts like the basis period reform, which now requires many sole traders to calculate profits strictly on a tax-year basis.
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HMRC’s campaign lays out a tight schedule for those earning over £50,000. Digital record-keeping becomes mandatory from April 6, with quarterly updates due in August and November. Despite this, the usual self-assessment return must still be filed by Jan. 31, 2027, covering the 2025/26 tax year, before the transition to MTD software takes effect.
7
Taxpayers must use commercial software capable of maintaining digital records and submitting quarterly updates, according to HMRC guidance. The department highlights “bridging” tools that link spreadsheet records directly to HMRC, a solution expected to back both major accounting platforms and niche software providers as deadlines stack up.
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The risk is clear: more deadlines bring more opportunities to miss the mark, and penalty points can pile up fast once quarterly reporting kicks off in full. HMRC says it won’t slap penalty points for late quarterly updates during the first mandatory tax year (2026/27), but late tax returns and late payments can still trigger fines.
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The government pitches the programme as a tool to reduce errors and shrink the “tax gap” — the gap between expected and actual tax revenue. Landlords and advisers agree on the goal but clash over the pace, the harshness, and who bears the cost of getting it right.
