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Those joining the scheme will not face late-submission penalties in the first year
No late submission penalties in 2026/27
For the 2026/27 tax year, Income Tax Self Assessment (ITSA) taxpayers required to join Making Tax Digital (MTD) will not face late-submission penalties for quarterly updates.
This temporary relief is designed to ease the transition for taxpayers adapting to the new digital reporting system.
From 6 April 2027, the government will apply a new penalty regime for late submission and late payment to all ITSA taxpayers who are not already required to join MTD. The updated rules will be enacted via secondary legislation.
Exemptions and deferrals
The government has also announced a one-year deferral for several small groups of taxpayers (recipients of trust and estates income, individuals who use averaging adjustments, those eligible for qualifying care relief, and non-UK resident foreign entertainers or sportspeople).
These customers should continue to meet their ITSA obligations as they would now and be ready to join MTD for Income Tax from April 2027.
Building on the Spring Statement 2025 announcement on customers who have a power of attorney, customers under a deputyship (as appointed by the Court of Protection) will be permanently exempt from MTD.