What Happens If a Landlord Misses an MTD Quarterly Update?

Making Tax Digital for Income Tax changes the way landlords report rental income and expenses to HMRC. Rather than waiting until the end of the tax year to complete one Self Assessment return, affected landlords must keep digital records and submit quarterly updates through compatible software.

But what happens if a landlord misses an MTD quarterly update?

The immediate outcome depends on the tax year in question. For the first mandatory year, HMRC has introduced a more lenient approach to late quarterly updates. From 2027/28 onwards, however, late updates can lead to penalty points and financial penalties.

MTD Quarterly Update Deadlines

Landlords within MTD for Income Tax must submit four quarterly updates each year. These updates provide HMRC with a summary of property income and expenses recorded during the quarter.

The standard submission deadlines are:

• 7 August.
• 7 November.
• 7 February.
• 7 May.

These deadlines usually fall one month after the end of the relevant quarterly period. After the fourth quarterly update, the landlord must complete a final declaration to confirm their overall tax position for the year.

Missing an Update in 2026/27

The 2026/27 tax year is the first mandatory MTD year for landlords and sole traders with qualifying income over £50,000.

HMRC has confirmed that no late submission penalty points apply when a quarterly update is missed during the 2026/27 tax year. This is intended to give landlords time to adapt to the new digital reporting requirements.

However, this does not mean the missed update can be ignored.

The quarterly update remains outstanding until it is submitted. It will normally appear as overdue in your HMRC account, and leaving it unfiled can create bigger problems when preparing your final declaration and calculating your year-end tax liability.

The 2026/27 easement also applies only to quarterly updates. It does not protect a landlord from late payment penalties, interest, or late submission penalties on their annual tax return or final declaration.

Penalty Points From 2027/28

From the 2027/28 tax year, HMRC’s points-based late submission penalty system applies to missed MTD quarterly updates.

Each time a landlord misses a quarterly update deadline, HMRC issues one penalty point. A point can also be issued for a missed year-end tax return deadline.

The system works as follows:

• One penalty point is issued for each missed submission deadline.
• A landlord reporting quarterly reaches the penalty threshold after four points.
• Once four points are reached, HMRC charges a fixed £200 penalty.
• Every later missed deadline while the landlord remains at the threshold creates a further £200 penalty.
• A landlord can receive only one penalty point for a particular deadline, even where more than one qualifying income source is reported.

For example, if a landlord misses four quarterly updates after the penalty system starts, they could reach four points and receive a £200 penalty. If they then miss the next quarterly update or their final declaration deadline, a further £200 penalty may arise.

When Do Penalty Points Expire?

Penalty points are not always permanent, but the process for removing them depends on how many points you have accumulated.

Where a landlord remains below the four point threshold, individual points are normally removed after 24 months, provided they do not become subject to the higher compliance requirements.

Once a landlord reaches the penalty threshold, the position becomes stricter. To reset the points, they must submit all outstanding quarterly updates and tax returns for the past 24 months, then meet every relevant filing deadline for a continuous 12-month period.

This is why dealing with a missed update quickly matters. A single missed deadline may not result in an immediate financial penalty, but repeated lateness can create a compliance history that takes a long time to clear.

Late Payment Penalties Are Separate

A late quarterly update and a late tax payment are not the same issue.

Quarterly updates are reporting obligations. They do not normally require a quarterly Income Tax payment. The final tax liability is calculated after the end of the tax year and is payable through the usual Income Tax process.

If tax is paid late, HMRC can apply separate late payment penalties and interest. For 2026/27, a payment made 16 to 30 days late can result in a 3% penalty based on the tax unpaid at day 15. Where tax remains unpaid for 31 days or more, additional penalties and daily interest can apply. The penalty percentages increase from 2027/28.

Landlords should therefore monitor filing deadlines and payment deadlines separately. Filing an MTD quarterly update does not mean the tax position has been finalised or that funds have been reserved for the eventual bill.

Digital Record Keeping Risks

The MTD regime is not just about submitting updates on time. Landlords within scope must keep the required income and expense records digitally and use compatible software to send information to HMRC.

HMRC can impose penalties where a person fails to maintain digital records, fails to use compatible software or does not meet other MTD obligations. In serious cases, penalties can be up to £3,000 for each relevant quarterly period.

For this reason, landlords should avoid treating MTD as a once every three months task. The most reliable approach is to keep rental income and expenditure up to date throughout the month, reconcile bank transactions regularly and ensure that invoices, receipts and agent statements are properly recorded.

What Should You Do After Missing a Quarterly Update?

If you have missed an MTD quarterly update, act promptly.

First, check which quarter is outstanding in your MTD compatible software or HMRC account. Then ensure that all rental income and expenses for the quarter have been recorded accurately before submitting the update.

Do not guess figures simply to clear the deadline. Inaccurate entries can create problems at year end, lead to incorrect tax estimates and increase the time needed to reconcile the annual final declaration.

If you are within the 2026/27 easement, use the opportunity to improve your processes before penalty points apply. If you are already in a later tax year, getting up to date quickly can help prevent a pattern of missed deadlines that may lead to the £200 fixed penalties.

How UK Property Tax Accountants Can Help

MTD compliance is much easier when your bookkeeping is accurate and your property records are updated throughout the year. Most missed updates are caused by incomplete information, unprocessed letting agent statements, lost receipts or uncertainty over which expenses are deductible.

UK Property Tax Accountants support landlords with the accounting systems, tax oversight and deadline management needed to stay compliant.

• Setting up MTD compatible accounting software for personally held rental property.
• Recording rental income, agent statements, mortgage interest and allowable property expenses accurately.
• Preparing and submitting quarterly MTD updates on time.
• Reviewing and correcting missed or outstanding updates.
• Reconciling property income and expenditure each month.
• Distinguishing deductible repairs from capital improvements.
• Preparing final declarations and Self Assessment tax returns.
• Forecasting expected Income Tax liabilities so funds can be set aside before payment deadlines.
• Monitoring penalty point exposure and protecting landlords from avoidable £200 penalties.
• Supporting landlords with ongoing property bookkeeping, tax compliance and portfolio reporting.

Frequently Asked Questions