MTD late filing penalties to be delayed

HMRC has decided to delay late filing penalties for those starting MTD for Income Tax in April next year.

This has been very much welcomed by experts, who have called it a ‘sensible step’.

What is Making Tax Digital?

Making Tax Digital is a key part of the government’s tax administration strategy – a 10-year plan with the aim of building a ‘trusted and modern’ tax system.

Eventually, all businesses will need to keep digital records by using software that works with MTD and then submit updates every quarter.

This will help to bring the tax system closer to real-time.

Who will it affect in April 2026?

If you are self-employed or a landlord, you will be affected from the:

• 6th April 2026 – if you have an annual business or property income of more than £50,000
• April 2027 – if you have an annual business or property income of more than £30,000

HMRC statistics reveal that 864,000 sole traders and landlords are expected to be in the first wave of taxpayers, rising to almost 3 million as lower-income individuals are included from April 2028.

Late filing penalties delayed for a year

During the Autumn Budget, it was confirmed that late filing penalties won’t come into effect until the 6^th of April 2027.

HMRC will not apply late submission fines for the quarterly updates during the 2026-27 tax year.

This will give these taxpayers the time to adjust to the changes, with the Association of Taxation Technicians (ATT) backing the decision not to penalise those who may miss deadlines due to ‘struggling’ with the new rules.

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