Penalties for Making Tax Digital for Income Tax volunteers
Source: gov.uk (2025-11-26)

Changes to penalties for Making Tax Digital for Income Tax volunteers.

Changes to penalties

Changes to late submission penalties and late payment penalties will apply to you if you volunteer to test the Making Tax Digital for Income Tax service.

You can find out if and when you need to use Making Tax Digital for Income Tax (https://www.gov.uk/guidance/check-if-youre-eligible-for-making-tax-digital-for-income-tax) and then decide if you want to volunteer to use the service before you need to use it.

When you must start using it depends on your qualifying income within a tax year. Your qualifying income is your total annual income (before you deduct expenses) from self-employment or property.

Read more about signing up for Making Tax Digital for Income Tax (https://www.gov.uk/government/collections/making-tax-digital-for-income-tax).

These new penalties will replace the existing penalties once you have signed up to test and use the service.

You cannot go back to the previous penalties once you have agreed to new penalties, even if you stop volunteering.

How to agree to the new penalties

You need to agree that the new penalties will apply to you when you sign up to use Making Tax Digital for Income Tax. You will be asked in the service when you sign up.

You will not be able to change your mind once you’ve agreed that the new penalties apply to you.

If you’re an authorised agent, you can agree to the new penalties on behalf of your clients. You should discuss this with your client before you sign them up and agree to the penalties.

When the new penalties will apply to you

The new penalties will apply to your personal Self Assessment tax return. They will not apply to Self Assessment in any other capacity, such as being a trustee or to partnerships.

We’ll only confirm the new penalties apply to you, once we’ve checked that:
- you’re eligible to sign up to the service, and have completed the process to sign up
- we have moved your records over to our new IT platform
Once all the steps are completed, we’ll send you a letter to confirm that the new penalties apply to you.

The current penalties will still apply to your previous tax years.

There may be some customers who have to stop testing the service, due to specific changes in their circumstances. We’ll write to you to confirm if this applies to you. Our letter will explain how this affects penalties.

Deadlines for payments and submissions

This table shows the deadlines for payments and submissions during the testing phase. The new penalties become due if you miss these.

Late submission penalties

The new late submission penalties use a points-based system. Each time you miss a deadline, you’ll get a penalty point.

This means you will not face financial penalties if you make a one-off mistake by submitting a quarterly update or tax return late. Financial penalties will only apply if you repeatedly miss deadlines.

When you reach a penalty points threshold, you’ll get a financial penalty.

If you’re also registered for VAT, your penalty points for Income Tax Self Assessment are separate to your penalty points for VAT.

How late submission penalties work for volunteers

When you are volunteering, for each tax return you submit late you’ll get a penalty point, until you reach the penalty point threshold of 2 points.

When you reach the threshold, you’ll get a £200 penalty. You’ll also get another £200 penalty if you miss the deadline for submitting any more tax returns, while you’re at the penalty point threshold.

Removing penalty points

If you have not reached the penalty point threshold, after 24 months we’ll remove your individual penalty point automatically.

If you have reached the threshold for penalty points, you’ll need to take action to reset them to zero. You can do this by completing a period of compliance.

If you volunteer for Making Tax Digital for Income Tax, you’ll need to complete a 24-month period of compliance. This means you must submit your next 2 tax returns on time. Your quarterly updates will not be considered for the period of compliance while you are a volunteer.

Penalties for quarterly updates for volunteers

There are no late submission penalties for missing quarterly update deadlines while you are volunteering to use Making Tax Digital for Income Tax.

If you stop volunteering

In the future, if you need to use Making Tax Digital for Income Tax:
- late submission penalties will apply if you miss deadlines for submitting quarterly updates
- your penalty point threshold will increase from 2 points to 4 points
For example, you may volunteer for the 2026 to 2027 tax year but are then need to use Making Tax Digital for Income Tax starting from 6 April 2027. From 6 April 2027, your penalty point threshold will increase to 4 points and you will get a penalty point when you submit a quarterly update late.

If you need to use Making Tax Digital for Income Tax from 6 April 2026, we will not apply penalty points for late quarterly updates for the first year. Penalty points will still apply for late tax returns.

You will still need to send your quarterly updates before you are able to submit your tax return.

Late payment penalties

In your first year of new penalties, if your payment is more than 30 days late, we’ll start to apply late payment penalties to you.

After your first year the normal rules will apply. This means if your payment is more than 15 days late, we will start to apply late payment penalties to you.

The new late payment penalties are more proportionate to how long it takes you to pay what you owe. This means the longer you take to pay, the higher your penalty will be. These penalties do not use a points-based system.

Late payment penalties can apply to any Income Tax Self Assessment payments not paid in full, by the relevant due date. This could include:
- balancing payments
- amounts due following an amendment or assessment
Late payment penalties do not apply to any payments on account (https://www.gov.uk/understand-self-assessment-bill) that you may need to make.

The sooner you pay your late payment, the lower the penalty amount will be.

From the first day your payment is late, until you pay in full, we’ll charge late payment interest (https://www.gov.uk/government/publications/rates-and-allowances-hmrc-interest-rates-for-late-and-early-payments).

The following tables show how late payment penalties will apply, depending on the tax year the payment is for.

Payment penalties for the 2024 to 2025 tax year

Payment penalties for the 2025 to 2026 tax year onwards

If you cannot pay on time

Contact HMRC as soon as possible if you’re having difficulty paying (https://www.gov.uk/difficulties-paying-hmrc) your Income Tax by the deadline.

To avoid higher penalties, you should either:
- pay what you owe in full, on or before the due date
- contact us to apply for a Time to Pay arrangement (https://www.gov.uk/guidance/find-out-how-to-pay-a-debt-to-hmrc-with-a-time-to-pay-arrangement)
Setting up a Time to Pay arrangement may stop your late payment penalties from increasing.

Making an appeal

We will send you a penalty decision letter if you get a:
- late payment penalty
- late submission penalty point
- £200 late submission penalty
The process to appeal against a decision is the same for Making Tax Digital for Income Tax and for Self Assessment. If you do not agree with our decision, check when and how to appeal (https://www.gov.uk/guidance/check-when-to-appeal-a-self-assessment-penalty-for-late-filing-or-late-payment) against it.