HM Revenue and Customs (HMRC) will begin automatically enrolling sole traders and landlords who have not yet registered for Making Tax Digital for Income Tax from September, following the first quarterly deadline on August 7.
Making Tax Digital for Income Tax became a legal requirement in April for sole traders and landlords with qualifying income over £50,000 from self-employment and property. More than 570,000 people have signed up, and over 436,000 successfully submitted their first quarterly update for the 2026/27 tax year.
Scale of non-compliance
Tax experts have highlighted the number of people yet to comply. Elsa Littlewood, private client services tax partner at BDO, said the 436,000 who submitted updates represented only around half of the estimated 864,000 taxpayers in the first wave.
She said: “Those who are yet to file should take action now. Those taxpayers in scope should check they are signed up, that their software is compatible and their MTD summary is submitted as soon as possible.” She added that the concern for HMRC would be the roughly one-third of people in scope who have not yet signed up, many of whom may not be represented by an agent.
What to do if you missed the deadline
People who have not yet submitted their update can still do so through HMRC-recognised software. HMRC has confirmed that no penalty points will be issued for late quarterly updates during the 2026/27 tax year, so missing the August 7 deadline will not result in a penalty point. Penalties can still apply for late Self Assessment tax returns and late tax payments.
HMRC plans to publish further guidance in late August explaining what people should do if they receive a letter informing them they are being signed up for Making Tax Digital.
Penalties from April 2027
From April 6, 2027, a points-based penalty system will apply to missed quarterly deadlines. Taxpayers will receive one penalty point each time they miss a deadline, and once they accumulate four points, they will face a fixed £200 penalty. Points can expire following a period of compliance.
The system currently applies to those with qualifying income over £50,000, but from April 2027, those with qualifying income over £30,000 will also be required to use Making Tax Digital for Income Tax.
What is Making Tax Digital for Income Tax?
People covered by the rules must keep digital records and send quarterly updates to HMRC using compatible software. The quarterly updates are not tax returns; they are short summaries of income and expenses. The January 31 Self Assessment deadline remains in place, and quarterly updates do not replace Self Assessment.
Craig Ogilvie, HMRC's Director of Making Tax Digital, said: "It's fantastic to see so many sole traders and landlords successfully sending their first quarterly updates. This marks an important milestone in the move to a more modern tax system, with many customers telling us that the process is straightforward and works well through their chosen software."
He added: "If you haven't yet signed up, now is the time to do so. Taking action now means you stay in control, can make sure your Making Tax Digital for Income Tax details are correct from the start, and have time to choose the software that works best for you, rather than waiting for HMRC to sign you up from September."
There are exemptions from Making Tax Digital for Income Tax, including for some people who are digitally excluded. Full details can be found on GOV.UK.
