If you're a landlord moving into Making Tax Digital for Income Tax from 6 April 2026, you've probably heard there's a "soft landing" in the first year. That's true, but it's narrower than the rumours suggest.
HMRC has confirmed one specific easement: there are no penalties for missing a quarterly update deadline in the 2026/27 tax year. That's genuinely helpful while you find your feet. What hasn't changed is the deadline that actually matters most, your tax return, and the penalties for paying late.
This guide sets out exactly what's waived, what isn't, and what you still need to get right in year one. All of it is anchored to HMRC's own penalty guidance, dated to 2026/27.
What is the MTD soft landing for 2026/27?
In short: for the 2026/27 tax year, HMRC won't charge late-submission penalty points for missing a quarterly update deadline. Every other part of the regime, including your final tax return and any late payment, applies as normal.
This is the only formal easement HMRC has set out in its penalty guidance for the first year. It's worth being precise about it, because getting the scope wrong is how landlords drift into a penalty they assumed had been waived.
Who has to join MTD from April 2026?
Answer capsule: You must use MTD for Income Tax from 6 April 2026 if your qualifying income from self-employment and property was over £50,000 for the 2024/25 tax year.
MTD for Income Tax is being phased in by income level. The first wave, from 6 April 2026, captures sole traders and landlords with qualifying income over £50,000, based on the figures in their 2024/25 Self Assessment return. A £30,000 tier follows from April 2027, and a £20,000 tier from April 2028.
Qualifying income is your gross income, the total before you deduct any expenses, and it adds together your self-employment turnover and your gross property income. As HMRC puts it, "HMRC will assess your gross income (income before you deduct expenses, also called your turnover)," and "Your qualifying income is the total income you get in a tax year from self-employment and property."
Income from employment, pensions, dividends and savings does not count toward the threshold. HMRC lists employment (PAYE), dividends (including from your own company), the State Pension and private pensions as income that does "not count towards your qualifying income." You still report that income, but only at your final declaration, not in your quarterly updates.
One more point that trips landlords up: all your UK property is treated as a single property business, while UK and overseas property are separate businesses. If you let out homes here and abroad, you keep two sets of digital records.
If you're working out where you stand, our guide for landlords walks through the wider picture of getting a portfolio ready for digital reporting.
Which penalties are waived in year one?
Answer capsule: Only the late-submission penalty points for quarterly updates are waived, and only for the 2026/27 tax year.
HMRC's penalty guidance is explicit: "There are no penalties for missing a quarterly update deadline for the 2026 to 2027 tax year."
So if you submit a quarterly update late during 2026/27, you won't pick up a penalty point for it. The same guidance confirms that penalty points start to apply to quarterly updates "for tax years after 2026 to 2027," meaning from 2027/28 onwards.
A few things worth noting about this easement:
- It applies to the quarterly update deadlines only (7 August, 7 November, 7 February and 7 May).
- It applies for the 2026/27 tax year. It is not a permanent feature.
- It does not switch off your obligation to submit. You still have to file the updates, you just won't be penalised for lateness in year one.
Treat it as breathing room to get your software and record-keeping right, not as permission to skip the quarters.
Which penalties are NOT waived?
Answer capsule: Your final tax return and your tax payment are not eased. Both attract penalties from the very first year.
This is the part the headlines miss. The soft landing covers quarterly updates only. It does not extend to your final declaration, the submission that confirms your figures and generates your Self Assessment tax bill.
Your tax return is still due by 31 January following the end of the tax year. As HMRC states, "You must submit your tax return by 31 January following the end of the relevant tax year." Miss it, and the new points-based late-submission penalties apply straight away, from year one. The final declaration is where you bring in your reliefs, allowances and any income outside self-employment and property, so it's the submission that genuinely matters.
Late payment is also not eased in the way many assume. If you pay your tax late, late-payment penalties apply in 2026/27, with one narrow exception covered in the late-payment section below.
So the honest summary is: relax a little on the quarterly update deadlines in your first year, but treat 31 January exactly as you would treat a normal Self Assessment deadline, because that's effectively what it is. If you've previously left filing to us, our self-assessment services carry straight over into the final-declaration stage of MTD.
How do the late submission penalty points work?
Answer capsule: You get one point per missed deadline. At four points you receive a £200 penalty, then a further £200 for each later miss.
From 2027/28 onwards, and for your tax return from year one, MTD uses a points-based late-submission system. HMRC's wording is: "For each quarterly update (for tax years after 2026 to 2027) or tax return deadline you miss, you'll get a penalty point."
The threshold is four points. As HMRC puts it: "The penalty point threshold is 4 points. If you reach this, you'll get a £200 penalty," plus "£200 penalty each time you miss another submission deadline."
Points don't sit on your record forever. Below the threshold, they're removed automatically after a period of compliance. Once you hit the threshold, you clear the points by submitting on time for a set period and bringing any outstanding submissions up to date.
The practical takeaway for 2026/27: because quarterly updates can't earn points this year, the only submission that can put points on your record in year one is the tax return itself.
What are the late payment penalties for 2026/27?
Answer capsule: There's no penalty if you pay within 15 days. After that, penalties build, though a first-year buffer applies to the day 16 to 30 band.
Late-payment penalties are separate from late-submission points, and they are not waived in 2026/27. They work on a sliding scale tied to how late the payment is.
| How late the payment is | 2026/27 penalty |
|---|---|
| Up to 15 days late | No penalty |
| 16 to 30 days late | 3% of the tax owed at day 15, or no penalty if it's your first year |
| 31 days or more late | 3% at day 15 plus 3% at day 30, then a 10% annual rate charged daily on the outstanding amount from day 31 |
HMRC's guidance describes the day 16 to 30 band as "3% of the tax owed at day 15, or no penalty if it's your first year," so there is a limited first-year buffer in that middle band. It does not extend to the day 31-plus charges. Once you're more than 30 days late, the percentages and the daily 10% annual rate apply regardless.
From 2027/28, the early percentages step up (4% in place of 3% in the first two bands), so the cost of paying late rises after the first year.
The simplest way to stay clear of all of this is to set money aside as the rent comes in, then pay your bill on or before 31 January.
Illustrative example: a landlord's first MTD year
Illustrative example. Priya is a landlord with three UK rental properties. Her gross rental income for 2024/25 was £62,000, so she's over the £50,000 threshold and must use MTD for Income Tax from 6 April 2026.
In her first year she's still getting used to the software, and she submits her second quarterly update (the one due 7 November 2026) two weeks late. Because this is the 2026/27 tax year, there's no penalty and no penalty point for the late update. The soft landing covers her here.
She then files her tax return (the final declaration) on time before 31 January 2028 and pays her tax bill on the same day. No late-submission point, no late-payment penalty.
Now compare a second scenario. Suppose Priya instead misses her 31 January 2028 tax return deadline. The soft landing does not help her, because it only covers quarterly updates. She picks up a late-submission penalty point straight away, and if she also pays her tax more than 15 days late, late-payment penalties start to build on top.
The lesson from the figures: the quarterly updates are the forgiving part in year one. The return and the payment are not.
Your 2026/27 MTD deadline calendar
For a landlord using the standard quarterly periods, here are the dates that matter in your first MTD year. Quarterly updates are cumulative year-to-date summaries, not four separate mini returns, so each one covers from 6 April to the end of that quarter.
| Submission | Period covered | Deadline | Penalty in 2026/27? |
|---|---|---|---|
| Quarter 1 update | 6 Apr to 5 Jul 2026 | 7 August 2026 | No penalty for lateness |
| Quarter 2 update | 6 Apr to 5 Oct 2026 | 7 November 2026 | No penalty for lateness |
| Quarter 3 update | 6 Apr to 5 Jan 2027 | 7 February 2027 | No penalty for lateness |
| Quarter 4 update | 6 Apr to 5 Apr 2027 | 7 May 2027 | No penalty for lateness |
| Final declaration (tax return) | Full 2026/27 year | 31 January 2028 | Penalty applies if late |
| Tax payment | 2026/27 liability | 31 January 2028 | Late-payment penalties apply |
If your accounts run to the end of the calendar month, you can elect to use calendar quarter periods instead, which keeps the same four deadlines but lets you draw the line at 30 June, 30 September, 31 December and 31 March.
Frequently asked questions
Are MTD quarterly updates really penalty-free in 2026/27?
Yes, for missing the deadline. HMRC's penalty guidance states there are no penalties for missing a quarterly update deadline for the 2026/27 tax year. You still have to submit the updates, you just won't get a penalty point if one is late this year.
Does the soft landing cover my tax return?
No. The easement applies only to quarterly updates. Your final declaration, the tax return that confirms your figures, is still due by 31 January following the tax year, and late-submission penalties apply to it from year one.
When do quarterly update penalties start?
From the 2027/28 tax year. HMRC's guidance confirms penalty points apply to quarterly updates for tax years after 2026/27, so the first year you can pick up a point for a late update is 2027/28.
Will I be penalised for paying my tax late in my first year?
Late-payment penalties are not waived in 2026/27. There's no penalty if you pay within 15 days of the deadline, and HMRC's guidance allows no penalty in the day 16 to 30 band if it's your first year, but charges build once you're 31 or more days late regardless.
How many penalty points before I get a fine?
Four. You get one point per missed deadline, and at four points you receive a £200 penalty, with a further £200 for each later missed deadline. Points are removed after a period of on-time compliance.
Do I have to join MTD if my rental income is below £50,000?
Not from April 2026. The first phase from 6 April 2026 captures qualifying income over £50,000, based on your 2024/25 figures. A £30,000 tier follows in April 2027 and a £20,000 tier in April 2028. Qualifying income is gross and combines self-employment and property income.
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Get your first MTD year right
The soft landing gives you a little room on the quarters, but the return and the payment still bite from day one. If you'd rather hand the whole thing to a team that does it daily, book a free call with a Zmartly accountant and we'll get your records, software and deadlines sorted before 6 April 2026.
