April 2027 MTD joiners: no penalty points for late updates

Sole traders and landlords who are required to join Making Tax Digital for Income Tax in April 2027 will not get penalty points for late quarterly updates in their first year. The Budget on 28 October announced the same easing that this year's first wave has. The updates are still required, and the rest of the penalty system still applies.

Who joins in April 2027

You must use Making Tax Digital from 6 April 2027 if your qualifying income for 2025 to 2026 is over £30,000. Qualifying income is your gross self-employment turnover plus your gross rents, before expenses. The first wave, from April 2026, was for qualifying income over £50,000.

What the easing covers

Under the new system, each missed filing deadline earns a penalty point. Reaching four points brings a £200 penalty, and every filing deadline missed after that costs another £200. HMRC's penalty guidance already excludes quarterly updates for 2026 to 2027. The Budget extends that to 2027 to 2028 for the April 2027 group. On 2 November that page had not yet been updated for the change.

Illustration, not a real client. Marcus, a plumber in Croydon, had qualifying income of £42,000 in 2025 to 2026, so he must join in April 2027. In his first year he sends all four quarterly updates late.

• Under the rules as published before the Budget, those four late updates would have taken him to the four-point threshold and a £200 penalty.

• Under the Budget easing, they earn no points and no penalty.

What an update is

A quarterly update is not a tax return. Your software adds up your digital records into totals for each category of income and expense, covering the tax year so far, and you check them and send them. HMRC does not see individual receipts. If nothing happened in a quarter, you still send one. Use the first year to check that your records produce accurate updates. That is what a year without points is for.

What still counts

• The updates themselves. You must send your quarterly updates before you can submit your tax return.

• The tax return for 2027 to 2028, due by 31 January 2029. Missing it still earns a point.

• Paying on time. Late payment penalties still apply, though in your first year of the new rules HMRC allows 30 days after the due date before they start.

The easing does not reach the first wave. Anyone who joined in April 2026 will earn points for late quarterly updates in 2027 to 2028.

What to do now

Treat the easing as time to learn the software, not a reason to skip it. If your 2025 to 2026 figures will show more than £30,000, pick your software and practise an update before April. Our Making Tax Digital checker tells you which year you join. For the new group, the first quarterly update is due by 7 August 2027.

About the author

Harvey Dhillon is Founder and CEO of Zmartly, an accountancy firm for small businesses. He grew up in West London and began his career in finance at Barclays, in investment banking and wealth management, before going full-time on Zmartly in 2020.

Featured photo by Kindel Media on Pexels.