Under Making Tax Digital (MTD) for Income Tax, sole traders and landlords with income of more than £50,000 have been required to keep digital records and send quarterly updates to HMRC since 6 April 2026.
The first quarterly submission deadline, covering the first three months of the 2026-27 tax year, passed on 7 August 2026. HMRC have since issued a press release confirming that 436,000 taxpayers filed their first quarterly tax update by the deadline and reminding those who have not submitted their update to do so using HMRC-recognised software.
Slow sign-up triggers HMRC intervention
HMRC’s press release reveals that as of 12 August 2026, over 570,000 taxpayers had signed up for MTD for Income Tax, versus HMRC’s predicted figures of 864,000. This means that around one third of taxpayers who should have registered for MTD for Income Tax from April 2026 have not signed up.
As a consequence, from September, HMRC will sign up taxpayers who are required to use MTD for Income Tax for 2026-27, but who have not yet registered for the service themselves. HMRC will publish guidance before the end of August to explain what taxpayers need to do if they receive a letter from HMRC about being signed up.
How can I avoid being signed up?
MTD for Income Tax should not be ignored: it is a legal requirement for sole traders and landlords earning more than £50,000 from self-employment and property to comply, unless exempt (e.g. due to digital exclusion).
Taxpayers can avoid any issues caused by being signed up automatically by HMRC by signing themselves up now, ensuring their MTD details are correct at the outset.
Taxpayers are also reminded that from April 2027, those earning more than £30,000 from self-employment and property will be required to comply.
What are the penalties?
Those within scope of MTD for Income Tax must submit their quarterly updates in order to file their tax returns by 31 January. While HMRC have confirmed that there will be no penalty points for late quarterly updates in 2026-27, penalties will still apply for late tax returns and late payments.
A points-based penalty system will be introduced from 6 April 2027. Taxpayers will receive one point for each missed quarterly deadline and a £200 fixed penalty once four points have accumulated.
If you have not yet registered for MTD for Income Tax and are concerned that it may apply to you, contact us as soon as possible so we can help you assess your obligations.
