HMRC £200 Penalty Warning
HMRC has confirmed changes to the way penalties will work for some self-employed workers and landlords using Making Tax Digital (MTD) for Income Tax.
From 6 April 2027, taxpayers within the MTD system who repeatedly miss their quarterly submission deadlines could face a £200 financial penalty after reaching the required number of penalty points.
Who Could Face the Charge?
Making Tax Digital for Income Tax became mandatory from April 2026 for sole traders and landlords with qualifying income above £50,000.
From April 2027, the threshold will fall to more than £30,000, bringing more self-employed people and landlords into the system.
Under the points-based system, a taxpayer receives a penalty point for a missed quarterly submission. Once four points are reached for quarterly obligations, a £200 penalty can be charged. Further late submissions can result in additional penalties.
Important 2026 Deadline Difference
There is an important transitional rule.
HMRC has confirmed that penalty points will not be issued for late quarterly MTD updates during the 2026/27 tax year. However, taxpayers still need to submit their updates, and penalties can still apply to late tax returns.
The normal Self Assessment deadline also remains important. Missing the annual tax-return deadline can result in a separate £100 initial penalty, followed by additional charges if the return remains outstanding.
What Taxpayers Should Do
Anyone affected by MTD should keep digital records and make sure quarterly updates are submitted on time.
The £200 charge is not a new tax on every UK taxpayer. It applies when specific filing obligations are missed and the relevant penalty threshold is reached.
Checking your HMRC account and understanding your individual filing deadlines could help prevent unnecessary penalties.