At first, it may seem overwhelming to have so many deadlines when you’re just used to the one. However, it’s really important to stick to them, as failure to do so will result in penalty points or fines. This applies both to submitting your digital returns and paying your tax and NICs (as always, by 31st January). The new MTD for ITSA scheme has two types of penalties: one for late filings and one for late payments. Late filings If you submit your digital returns after the deadline, you’ll receive a penalty point for each late filing. You will be liable for a fine if you file two annual returns late (two penalty points) or if you file four quarterly returns late (four penalty points). HMRC may charge you £200 once you reach these thresholds. Every subsequent late filing will also incur a penalty. Late payments Once you’ve missed a payment, the severity of your fine depends on how quickly you take action. Here’s how the penalty payments escalate: If you pay your tax late, but within 15 days of the due date, you won’t be fined. If you pay between 16 and 30 days after the due date, the penalty fine is 2% of the outstanding tax payment. If you haven’t paid your tax more than 30 days after the due date, you will be fined 2% of the outstanding amount at day 15, plus 2% of the outstanding amount at day 30. There is a second late payment penalty on top of this, with interest accruing at a rate of 4% per year. This is calculated on a daily basis on the total unpaid tax from day 31. If you have a reasonable excuse for not paying your tax on time, you can approach HMRC to discuss a ‘time to pay’ arrangement. Learn more here.