Making Tax Digital · Sole traders
The 2026/27 MTD penalty concession and the points rules that follow
ONLY£15A MONTHHMRC's first-year concession applies to late quarterly updates for 2026/27.
HMRC's first-year concession applies to late quarterly updates for 2026/27. It does not remove the reporting requirement or cover every annual-return and payment obligation. Understanding the later points rules helps you use the first year to build a repeatable routine.
How submission points work
Under the applicable MTD regime, missed deadlines can create points. HMRC sets a four-point threshold, with a £200 penalty at the threshold and further £200 penalties for subsequent missed submission deadlines. There can be only one point per deadline even where several businesses have late updates.
Below the threshold, individual points normally expire 24 months after the missed deadline. At the threshold, the reset conditions require twelve months of on-time reporting and completion of outstanding updates and returns for the previous 24 months. Check HMRC's current rules.
Keep payment penalties separate
Late-payment penalties are not points based. Their timing and rates depend on the tax year and first-year rules. Interest can run from the first day a payment is late.
HMRC states that late-payment penalties do not apply to payments on account, although late-payment interest can apply. Do not assume that this exception removes the payment obligation or extends to every balancing payment.
Worked example: more than one business
After the quarterly concession year, a person misses a shared deadline for both their sole-trade and property updates. The rule allows one penalty point for that deadline, not one for each business.
Both reporting obligations still need attention. The points calculation and the number of unfinished updates are different measures.
Understand the first-year concession
HMRC states that there are no penalties for missing quarterly-update deadlines for the 2026/27 tax year. That concession does not remove the digital-record or quarterly-reporting obligations, and it does not make all tax returns and payments penalty-free. Read the precise penalty guidance.
Outstanding quarterly reporting must be dealt with before completing the relevant annual return. However, a missed August 2026 update should not be described as an automatic penalty on the separate 2025/26 return due in January 2027. The 2026/27 annual-return deadline is January 2028.
After the first-year concession, the points rules apply to missed quarterly deadlines as described by HMRC. Do not assume that multiple businesses create multiple points at the same deadline. Annual-return rules, late-payment penalties and interest require their own checks.
If you have fallen behind, establish what is outstanding and work through the supported catch-up process. Keep evidence of technical problems and contact the appropriate support team with the business, period and error details. The useful next step is a complete record and an accepted update, rather than guessing what a generic warning might mean.
Keep the reporting dates separate from payment dates
The standard first update for 2026/27 covers 6 April to 5 July 2026 and was due by 7 August 2026. The second covers 6 April to 5 October 2026 and is due by 7 November 2026. The third and fourth deadlines are 7 February 2027 and 7 May 2027. These are cumulative updates, not four isolated sets of three-month totals.
Calendar periods have different cut-offs and the same filing deadlines. Check the setting for each business rather than assuming the dates from a bank statement. HMRC lists both reporting calendars.
The annual return for 2026/27 is due by 31 January 2028. The earlier 2025/26 return normally remains due online by 31 January 2027. Keeping those years distinct avoids a common transition-year misunderstanding.
Payments on account, where required, follow their own January and July timetable. An update acknowledgement confirms a reporting event; it does not confirm that an outstanding tax bill has been paid. Check your actual HMRC account and payment obligations separately from the software's progress indicators.
A review that checks more than the total
Start with coverage: the correct person, business and period, plus all relevant accounts and cash records. Then look at completeness. A feed can be connected today while still missing an earlier week. Confirm the earliest and latest transactions against the source.
Next, inspect unusual items. Large transfers, loan receipts, refunds, net settlements and private purchases often need more context than a bank description provides. Check for duplicate imports where a statement overlaps a live feed. An automatic warning is useful evidence to investigate, not proof that the entry must be removed.
Finally, review category totals. A category unexpectedly showing zero, a large increase or a negative amount deserves an explanation. You do not have to make every annual tax adjustment at this stage, but you should understand the records behind the summary you approve.
HMRC explains what quarterly updates contain. Keep the approved version and the resulting acknowledgement together. If something later changes, correct the source record and use the software's supported update process so you can explain which figures are current.
Track the actual position
Check HMRC's record of points, dates and obligations. If a penalty or point appears wrong, use the appeal instructions and retain supporting evidence. Build reminders around record completion, review and accepted submission rather than the deadline alone.
Take the next step
Avona.app offers a self-service route from £15/month. Bring your records together, review the figures and choose a workflow that fits your business. For professional help, discuss the scope and total price of Avona Concierge, managed by chartered accountants, before choosing a service.