The engine grew to 1275 cc using the development seen on the Mini-Cooper 'S'. Enthusiasts were disappointed that this was a detuned version of the 76 bhp (57 kW) at 5800 rpm Cooper 'S' engine, giving only 65 hp (48 kW) at 6000 rpm and 72 lb⋅ft (98 N⋅m) at 3000 rpm. A reduced compression ratio of 8.8:1 was used instead of the 9.75:1 employed on the Cooper S engine. The Midget used the 12G940 cylinder head casting that was common to other BMC 1300 cars, whereas the Cooper 'S' had a special head with not only larger inlet, but also larger exhaust valves; however, these exhaust valves caused many 'S' heads to fail through cracking between the valve seats. The detuned engine was used for reasons of model range placement – with the Cooper 'S' spec engine, the Midget could have been faster than the more expensive MGB. The hydraulic system gained a separate master cylinder for the clutch. The hood was now permanently attached to the car, with an improved mechanism making it much easier to use.
In late 1967 (1968 model year), US-spec cars received several safety additions: a padded fascia (dashboard) with smaller main gauges, collapsible steering column, scissor-type hood hinges, a third windshield wiper, additional side marker lights, and anti-burst door latches. The rear axle gear ratio was increased from 4.22:1 to 3.9:1, giving 16.5 mph (26.6 km/h) for every 1000 rpm. This increased final drive ratio gave the 1275 model slightly better fuel economy than the 1098 model.
Minor facelift changes were made to the body trim in late 1969 (1970 model year), with the sills painted black, a revised recessed black grille, and squared off taillights as on the MGB. The 13-inch Rubery Owen "Rostyle" wheels were standardized, but wire-spoked ones remained an option. These revised cars were initially presented with matt black-painted windscreen surrounds but this proved very unpopular and after only a few hundred had been built the Midget reverted to the original brushed alloy.
In August 1971, the compression ratio on North American engines was reduced to 8.0:1. Engine power output fell to 54.5 bhp (40.6 kW) at 5500 rpm and 67 lb⋅ft (91 N⋅m) at 3250 rpm.
1972 MG Midget
The square-shaped rear wheel arches became rounded in January 1972. Also in this year, a Triumph steering rack was fitted, giving a gearing that was somewhat lower than earlier Midgets. A second exhaust silencer was also added in 1972. Alternators were fitted instead of dynamos (generators) from 1973 onwards.
Seven months into the 1974 model year, oversized rubber bumper blocks, nicknamed "Sabrinas" after the well-endowed British actress, were added to the chrome bumpers to meet the first US bumper impact regulations.
Many consider the round-arch Midgets with chrome bumpers produced for model years 1972-1974 to be the most desirable. These round-arch cars started leaving the Abingdon factory in late 1971. Between 1966 and the 1969 face lift, 22,415 were made, and a further 77,831 up to 1974.