Does the Soft Landing Mean You Can Relax?
Making Tax Digital for Income Tax is live. If your qualifying income from self-employment and property is over £50,000, it applies to you now, and you have four quarterly updates to send this tax year.
You have probably heard there is a soft landing for 2026/27 and that no penalties apply in the first year. Part of that is true. The rest is where people come unstuck.
This blog covers what the soft landing actually protects you from, the two things it does not and why the safest move is to treat this year as practice rather than ignoring it.
If you are still getting to grips with the basics, our Making Tax Digital guide for sole traders and landlords covers who is in scope and what changes.
What the soft landing actually is
HMRC has confirmed a soft landing for the 2026/27 tax year. In plain terms, no penalty points will be issued for late quarterly updates during your first year under MTD.
The system runs on four quarterly updates a year, so this covers every quarterly submission you make in 2026/27.
The reasoning is simple. Quarterly digital reporting is a significant change and HMRC has built in a year for people to adjust. That part is genuinely useful, but it is also narrower than it sounds.
The catch: the soft landing only covers one thing
MTD has two separate penalty systems. One is for late submission, which means filing your quarterly updates and your Final Declaration on time. The other is for late payment, which means paying the tax you owe by the deadline. Both use the word penalty, which is why “no penalties” sounds broader than it is.
The soft landing is a leniency for the first group going through the new process. It removes the penalty for late quarterly updates in 2026/27 and nothing more. It doesn’t include late payment and even within submission, it doesn’t cover your Final Declaration.
So the headline is real, but can be confusing. No points for late quarterly updates this year, everything else still counts.
The first thing it doesn’t cover: paying your tax
Quarterly updates don’t mean an immediate tax bill, nothing is due for payment when you send them. Your tax for 2026/27 is still payable after the Final Declaration by the usual January deadline (31 January 2028 for the first £50,000 group), with payments on account in July where they apply. Exactly as before.
Late payment penalties are separate and the soft landing doesn’t apply to them. There is one concession for the first year: you get 30 days after the payment deadline before a late payment penalty applies, rather than the usual 15. Beyond that, penalties apply on the tax still outstanding. A further charge follows if it stays unpaid and interest is added on top.
Interest runs from the original payment due date, whatever grace period applies, so a late payment costs you from day one even before a penalty appears.
The second thing it does not cover: your Final Declaration
At the end of the tax year, you confirm your numbers via your software in a Final Declaration. This replaces the Self Assessment return and for 2026/27, it is due by 31 January 2028.
The soft landing does not apply to this. Miss that submission deadline and the normal late filing penalties apply from the start, as they always have.
There is a practical catch here too. You have to file all four quarterly updates before you can submit your Final Declaration. So even though a late update carries no points this year, falling behind still blocks the one submission that does count. The quarterly updates are not optional. They are the route to closing off your year.
It lasts one year, and one year only
The soft landing applies to the 2026/27 tax year and only to the group brought in from April 2026, those with qualifying income over £50,000.
It does not roll forward. From April 2027, qualifying income over £30,000 comes into scope and that group gets no equivalent grace period. From April 2027, late quarterly updates start earning points in full for everyone in the system.
So this is not a change to penalties. It is a single year of breathing room and its value depends entirely on what you do with it.
How to use the year well
If the penalties are relaxed, the sensible move is to build the habit now. A few things worth doing:
1. File every quarterly update on time anyway. Practising the rhythm this year is the whole point and it means no scramble when penalty points return in 2027. Depending on whether you have set up your accounting period to file for calendar months or tax months, the deadline will be either a month or a month and 7 days.
2. Make sure to keep receipts and invoices. Photograph receipts and capture them through your software rather than saving everything for later. Software like Xero also lets you email invoices from your mailbox straight into the system, ready to reconcile.
3. Set a diary reminder for 31 January 2028. That is the payment deadline and the submission deadline for the Final Declaration, neither of which the soft landing covers.
4. Check what your income is. If you are near the £30,000 line, April 2027 will bring you in, so it is worth knowing your numbers now rather than getting a shock when you receive the letter from HMRC.
NEED A HAND?
Most sole traders and landlords we speak to worry about making the move to digital quarterly filing, the rules, deadlines, which software to use, and getting things right. They are also worried about the additional workload and finding the time to stay on top of it, quarter after quarter.
That is the part we take off your plate. As a Xero partner, we set up MTD-compatible bookkeeping and run the quarterly updates for you, so the deadlines are handled and the Final Declaration isn’t a last-minute rush.
If you are not sure where you stand, book a no-obligation chat, and we will work it out together.
Disclaimer: We make reasonable efforts to keep this content up to date, but we do not guarantee that it is current, accurate, or complete. This article is for general information purposes only and does not constitute legal, financial, or tax advice. Please seek professional advice before acting on anything here.
Sources
SHMRC, GOV.UK. Penalties for Making Tax Digital for Income Tax. Retrieved 15 August 2026, from
https://www.gov.uk/guidance/penalties-for-making-tax-digital-for-income-tax
HMRC, GOV.UK. Making Tax Digital for Income Tax (collection). Retrieved 15 August 2026, from
https://www.gov.uk/government/collections/making-tax-digital-for-income-tax
HMRC, GOV.UK. Sign up for Making Tax Digital for Income Tax. Retrieved 15 August 2026, from
https://www.gov.uk/guidance/sign-up-for-making-tax-digital-for-income-tax
