HMRC has introduced a new deadline on August 7 under its Making Tax Digital (MTD) initiative, which may catch many taxpayers by surprise. Sole traders and landlords with gross income over £50,000 must now keep digital records and submit quarterly updates using HMRC-compatible software, replacing the previous annual Self Assessment tax return due in January.
Who Is Affected by the August 7 Deadline?
The new deadline applies to self-employed workers and landlords earning more than £50,000 in gross income from self-employment and property sources. HMRC calculates this threshold based on total qualifying income from the previous tax year's Self Assessment return. For example, if you earn £27,000 from self-employment and £25,000 from rental income, your total is £52,000, making you liable. It is gross income, not net profit, and excludes PAYE income, dividends, and pensions.
No Penalties in 2026/27 But Experts Warn Against Delay
HMRC has confirmed it will not issue penalties for late submissions during the 2026/2027 tax year, offering a 'soft landing' for taxpayers transitioning to MTD. However, experts caution against complacency. Thomas Drury, money-saving expert at The Investors Centre, warned: “Even though HMRC is taking a softer approach to late quarterly submissions during the first year, businesses shouldn't mistake that for a free pass. This is the time to get systems, software and record-keeping processes in place before the regime becomes fully enforced.”
Penalty System From 2027/28
Once the soft landing ends, taxpayers will receive one penalty point for each missed quarterly update or tax return deadline. Four penalty points trigger a £200 penalty, with an additional £200 for each subsequent missed deadline. The annual Self Assessment deadline in January remains, but reporting obligations become more frequent.
Common Mistakes and Future Threshold Reductions
Drury noted a common misconception: “This isn't just moving paperwork from paper to a computer screen. It's a shift towards continuous digital record keeping. Businesses that leave everything until January may find their existing systems simply aren't suitable anymore.” From April 2027, the threshold drops to £30,000, and to £20,000 in April 2028, bringing more self-employed individuals into the MTD system.
