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The MTD soft landing period is one of the most misunderstood parts of the April 2026 rollout. HMRC confirmed the concession at the Autumn Budget 2025, and it has been widely welcomed, but also widely misread. The soft landing does not mean a penalty free first year. It means one specific type of penalty is paused, while everything else applies from day one. This article covers exactly what the MTD soft landing period covers, what it does not, and what you need to do right now to avoid an unexpected bill in your first year.
This article breaks down exactly what the MTD soft landing period covers, what it does not, and what you need to do right now to avoid an unexpected bill in your first year of MTD.
KEY TAKEAWAYS
The MTD soft landing period suspends penalty points for late quarterly updates during 2026 to 2027 only
The Final Declaration is not covered. Penalty points apply to a late Final Declaration from April 2026 regardless of the soft landing
Late payment penalties and interest apply in full from April 2026. The only payment concession in year one is an extended 30-day window before the first penalty triggers
No equivalent soft landing has been confirmed for Phase 2 or Phase 3 taxpayers. Planning on the assumption that one will be offered is a compliance risk
Quarterly updates are still legally required during the soft landing year. The absence of penalty point consequences does not make submissions optional
What Is the MTD Soft Landing Period?
The MTD soft landing period is a first-year concession confirmed by HMRC at the Autumn Budget 2025. For taxpayers joining MTD in April 2026, no penalty points will be issued for late quarterly updates throughout the 2026 to 2027 tax year.
The reason HMRC introduced this concession is straightforward. Over 850,000 sole traders and landlords are moving to a new way of reporting their income, and a significant proportion of them are doing so without a tax agent to guide them. Giving people time to find their footing before penalties start accumulating is a pragmatic decision.
What the MTD Soft Landing Period Covers
The Four Quarterly Update Deadlines in 2026 to 2027
The soft landing covers all four quarterly submission deadlines for the 2026 to 2027 tax year.
By default, HMRC uses standard quarters that follow the tax year, running from the 6th of one month to the 5th of the next.
If you prefer to align your reporting with calendar months, you have elected to use calendar quarters, the periods run from the 1st of each month rather than the 6th. The submission deadlines are the same either way.
Quarter | Standard Period | Calendar Quarter Period | Submission Deadline |
|---|---|---|---|
Q1 | 6 April to 5 July 2026 | 1 April to 30 June 2026 | 7 August 2026 |
Q2 | 6 July to 5 October 2026 | 1 July to 30 September 2026 | 7 November 2026 |
Q3 | 6 October 2026 to 5 January 2027 | 1 October to 31 December 2026 | 7 February 2027 |
Q4 | 6 January to 5 April 2027 | 1 January to 31 March 2027 | 7 May 2027 |
Missing one, two, three, or all four of these deadlines during 2026 to 2027 will not add any penalty points to your record. You enter 2027 to 2028 with a clean slate.
What the MTD Soft Landing Period Does Not Cover
This is the part that matters most. The MTD soft landing period is real, but its scope is tightly limited. Three areas fall entirely outside its protection.
The Final Declaration
The Final Declaration for the 2026 to 2027 tax year is due by 31 January 2028. It is not covered by the soft landing. Penalty points apply to a late Final Declaration from April 2026 onwards under the standard rules. Missing this deadline in your first year of MTD carries genuine consequences, and the soft landing offers no cover whatsoever.
Late Payment Penalties
The soft landing covers submission points only. If you owe tax and do not pay on time, late payment penalties apply in full during 2026 to 2027.
There is a separate first-year concession specifically for payments: in your first year of joining MTD, the initial penalty window is extended from 15 days to 30 days, giving you more breathing room before the first charge triggers. After 30 days, the standard late payment penalty structure applies — 3% of the amount owed at day 30, plus a 10% annual rate charged daily from day 31. From the second year onwards, the 15-day window applies as standard. Interest runs from the original due date regardless of the extended window.
Taxpayers Entering MTD from April 2027 or April 2028
The MTD soft landing period applies exclusively to Phase 1 taxpayers (qualifying income above £50,000, mandatory from April 2026). There is no confirmed equivalent concession for Phase 2 taxpayers (qualifying income above £30,000, mandatory from April 2027) or Phase 3 taxpayers (qualifying income above £20,000, mandatory from April 2028).
Common MTD Soft Landing Misconceptions — and the Facts
A number of myths have built up around the soft landing. Here are the most common ones, and the facts behind them.
Misconception | Fact |
|---|---|
The soft landing means quarterly updates do not need to be submitted in 2026 to 2027. | Submissions are still a legal requirement. The soft landing removes the penalty point consequence for late filing. It does not make the filing itself optional. |
The soft landing protects you from all penalties in your first year. | Late payment penalties and interest apply in full from April 2026. Only penalty points for late quarterly updates are suspended. |
The soft landing lasts for two years. | It covers the 2026 to 2027 tax year only. From 6 April 2027, penalty points apply to every late quarterly update for Phase 1 taxpayers without exception. |
Phase 2 and Phase 3 taxpayers will receive their own soft landing. | No equivalent grace period has been confirmed for those joining MTD from April 2027 or April 2028. |
Missing the Final Declaration is covered by the soft landing. | The Final Declaration is explicitly outside the scope of the soft landing. Penalty points apply to a late Final Declaration from the very first year of MTD. |
What Still Applies in Full During the MTD Soft Landing Period
The MTD soft landing period is not a compliance holiday. It protects you from one specific consequence for one specific type of late filing. Everything else remains legally in force from 6 April 2026.
You are required to keep digital records of your income and expenses in MTD-compatible software from the start of the tax year. You are required to submit quarterly updates, even though late submission will not trigger points in 2026 to 2027. You are required to submit your Final Declaration on time. You are required to pay your tax on time.
Think of the soft landing year as a structured practice run. The absence of quarterly penalty point consequences gives you space to set up your software properly, learn the submission process, identify any gaps in your record keeping, and build a reliable routine before the consequences become real. That framing is far more useful than treating the year as permission to delay.
WORKED EXAMPLE
Sarah is a landlord with gross rental income of £54,000. She qualifies for Phase 1 and must begin MTD from 6 April 2026.
In 2026 to 2027,
Sarah is slow to get her software set up. She misses the Q1 deadline of 7 August 2026 and the Q2 deadline of 7 November 2026. She submits both updates late in December 2026, then files Q3 and Q4 on time.
Under the normal MTD penalty rules, those two missed deadlines would give Sarah two penalty points. Under the MTD soft landing period, she receives zero. Her record is completely clean going into 2027 to 2028.
In 2027 to 2028,
Sarah assumes the relaxed approach will continue. She misses Q1 on 7 August 2027 and receives one penalty point. She misses Q2 on 7 November 2027 and receives a second. Two more late filings in the same year would put her at four points and trigger the £200 financial penalty, with £200 added for every further late filing after that.
The lesson is clear. The MTD soft landing period is a one-off window to get things right. It is not a preview of how the system will always work.
The Penalty Structure After the Soft Landing Period
From April 2027, taxpayers move into the full MTD penalty regime for quarterly updates. Here is how it works across the three main areas.
Late Quarterly Updates
For late quarterly updates, each missed deadline adds one penalty point. At four points, a £200 financial penalty is issued. Every late filing after reaching that threshold adds a further £200. Penalty points under MTD for Income Tax are tracked separately from any VAT penalty points and do not interact with them.
Late Payment
For late payments, the 30-day grace window applies in first year of joining MTD. From sec year of MTD, the standard structure applies: no penalty for days 1 to 15, a 3% charge on the amount owed at day 15 from day 16 to day 30, and a further 3% on the amount owed at day 30 plus a 10% annual rate charged daily from day 31. Late payment interest runs from the original due date regardless. These penalties apply to balancing payments and assessment amounts only, not to payments on account.
Note: the late payment penalty rates are scheduled to increase to 4% from the 2027/28 tax year onwards.
Late Final Declaration
For the Final Declaration, penalty points have applied since April 2026. The important distinction here is that the financial penalty threshold for annual filers is two points, not four. Two missed Final Declaration deadlines are enough to trigger the £200 penalty. This makes the Final Declaration deadline significantly less forgiving than the quarterly update threshold.
What to Do During the MTD Soft Landing Period
The soft landing removes the risk of penalty points for late quarterly updates in 2026 to 2027, but it is not a reason to disengage. Here is what to focus on during this window.
First, use the grace period to bed in your software and record keeping habits without the pressure of penalty consequences. If your first quarterly submission is late or imperfect, you will not accumulate points. Use that headroom deliberately, not accidentally.
Second, do not treat the soft landing as a submission holiday. HMRC still expects updates to be filed, and the habit of quarterly reporting needs to be established in year one. Taxpayers who skip submissions entirely in 2026 to 2027 will find the transition to the full penalty regime in 2027 to 2028 significantly harder.
Third, remember what the soft landing does not cover. Late payment penalties and a late Final Declaration will still attract consequences in 2026 to 2027. The grace period is narrow and specific: it applies only to penalty points for late quarterly updates.
Conclusion
The MTD soft landing period is a genuine and useful concession. Phase 1 taxpayers will not accumulate penalty points for late quarterly updates during 2026 to 2027, and that gives real space to find your footing in a new system. But it is one concession, covering one type of filing, for one tax year only.
The MTD soft landing period gives you one year to build the right habits. Use it to choose your software, establish your record keeping routine, and submit your first quarterly updates with confidence, so that when the full penalty regime begins in April 2027, you are already in a reliable rhythm.
Frequently Asked Questions
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RentalBux is an HMRC-recognised MTD software platform built for UK landlords. It handles digital record keeping, quarterly update submissions, and Final Declaration support, all in one place.
