HMRC has issued an alert to 864,000 sole traders and landlords as the deadline approaches for the first Making Tax Digital quarterly update. The August 7 deadline is the first ever quarterly deadline for the new scheme, which is now a legal requirement for customers in scope.
No penalties for late submissions in 2026/2027
HMRC has confirmed that it won’t be issuing penalty points for late submissions during the 2026/2027 tax year in order to give taxpayers a ‘soft landing’ during the transition. However, experts have warned that people shouldn’t take this leeway as a reason to ignore the deadline.
What the quarterly update covers
The quarterly update will cover income and expenses for the first three months of the tax year, although it is not a tax return and will not replace the Self Assessment tax return process. After each quarterly update, users can see an estimate of their tax bill, helping them to plan ahead. The Self Assessment tax return and payment deadline will still be on January 31.
Who is affected
The August 7, 2026 deadline is specifically for landlords and sole traders earning more than £50,000 from their self-employment and property income streams. It will extend to those earning more than £30,000 from April 2027, and to those earning more than £20,000 from April 2028.
Penalties from next year
Although there is currently no penalties for missing a quarterly deadline, from the second year of MTD, if you miss a quarterly deadline you will be issued with a penalty point. Once you have accumulated four points, a £200 fixed penalty will be charged. These points won’t last forever, as after a period of compliance they will expire. Penalties do still apply for late Self Assessment returns and late payments.
HMRC director's statement
Craig Ogilvie, HMRC’s Director of Making Tax Digital, said: “This is a landmark moment for the tax system. Hundreds of thousands of sole traders and landlords are now keeping digital records and will be sending their first quarterly update in the coming weeks. For those already using software, this should be straightforward and take minutes. If you haven’t signed up yet, there is still time - visit GOV.UK and search ‘Making Tax Digital for Income Tax’ to get started.”
Guidance on qualifying income
HMRC guidance notes: “HMRC will assess your qualifying income for a tax year by checking the Self Assessment tax return that you submitted in the previous tax year. You should also check your qualifying income yourself.”
