Making Tax Digital: Less than half of taxpayers met first deadline

Fewer than half of the taxpayers required to use the Making Tax Digital (MTD) for Income Tax system met the first quarterly reporting deadline on 7 August. Data from HM Revenue & Customs (HMRC) indicates that approximately 436,000 out of 864,000 affected sole traders and landlords submitted their updates on time.

The MTD system requires landlords with qualifying income from property and self-employment exceeding £50,000 per year to maintain digital records and provide quarterly updates via compatible software. While 570,000 individuals have registered for the system, a significant portion of the affected population remains unregistered.

HMRC has implemented a 12-month soft-landing period for the 2026/27 tax year, meaning no penalty points will be issued for late quarterly updates during this time. However, the Association of Chartered Certified Accountants (ACCA) warned that taxpayers must still comply with digital record-keeping obligations and cautioned against submitting ‘nil’ placeholder returns to avoid penalties.

In a strategic shift, HMRC announced it will begin automatically enrolling eligible taxpayers starting in September 2026. From 6 April 2027, a points-based penalty system will be strictly enforced for missed quarterly deadlines.