Making Tax Digital: First quarterly deadline passes as HMRC urges taxpayers to act

The first quarterly deadline under Making Tax Digital (MTD) for Income Tax has now passed, giving us an early indication of how taxpayers are adapting to the new system.

Since 6 April 2026, sole traders and landlords with qualifying income of more than £50,000 have been required to keep digital records and submit quarterly updates to HMRC using compatible software.

The first deadline, covering the opening three months of the 2026/27 tax year, was 7 August 2026.

HMRC has confirmed that 436,000 sole traders and landlords submitted their first quarterly update by the deadline. However, the figures also suggest that a significant number of taxpayers who should be using MTD have yet to fully comply.

MTD registrations remain below expectations

As of 12 August 2026, more than 570,000 taxpayers had signed up for MTD for Income Tax.

However, HMRC previously estimated that around 864,000 taxpayers would need to use the system from April 2026.

That suggests a sizeable proportion of those expected to fall within the first phase of MTD had still not registered shortly after the first quarterly deadline.

If you believe MTD applies to you but haven't yet registered, it's important not to ignore it.

HMRC will begin signing taxpayers up

HMRC has confirmed that from September it will begin signing up taxpayers who are required to use MTD for Income Tax during 2026/27 but haven't registered themselves.

Taxpayers can still register themselves before HMRC takes action. Doing so gives you the opportunity to make sure your details are correct and that you have appropriate MTD-compatible software in place.

HMRC is also providing guidance for taxpayers who receive correspondence confirming that they are being signed up.

MTD for Income Tax is a legal requirement for those who fall within the rules, unless an exemption applies, such as where someone is considered digitally excluded.

Who needs to use MTD for Income Tax?

For the 2026/27 tax year, MTD for Income Tax applies to qualifying sole traders and landlords whose gross income from self-employment and property exceeds £50,000.

The threshold will then reduce.

From 6 April 2027, those with qualifying income above £30,000 will also be brought into MTD for Income Tax.

This means that even if you're not currently required to use MTD, it is worth checking whether the rules could apply to you from next April and preparing in advance.

What happens if you miss a quarterly update?

HMRC has confirmed that taxpayers won't receive penalty points for late quarterly updates during the 2026/27 tax year.

However, this doesn't mean there are no consequences for missing other tax obligations. Existing penalties can still apply to late tax returns and late tax payments.

It's also important to remember that quarterly updates don't replace your annual tax return. If you're within MTD for Income Tax, you'll still need to meet your year-end reporting obligations and ensure your tax return is submitted by the relevant deadline.

From 6 April 2027, a points-based penalty system for late MTD quarterly submissions is due to apply. Under this system, taxpayers can receive a penalty point for each missed quarterly deadline, with a £200 financial penalty once the relevant points threshold is reached.

Haven't registered yet? Now is the time to act

The first MTD deadline may have passed, but taxpayers who haven't yet registered shouldn't wait for HMRC to contact them.

Getting your digital records, software and reporting processes in place now can help make future quarterly submissions considerably easier and reduce the risk of problems further down the line.

If you're a sole trader or landlord and you're unsure whether MTD for Income Tax applies to you, or you need help getting your records and software ready, contact the team at SJC, Chartered Accountants. We can help you understand your obligations and make the transition to MTD as straightforward as possible.