More than 580,000 workers who should have enrolled in HMRC's Making Tax Digital (MTD) for Income Tax have failed to do so, according to a Freedom of Information (FOI) request by accountancy group Azets. HMRC figures show 864,000 individuals and landlords were required to register by April 6, 2026, but only 282,637 had complied as of May 20.
New August deadline looms
In a statement this week, HMRC said it expects further registrations ahead of the August 7 deadline. The Making Tax Digital system replaces the annual self-assessment tax return with four quarterly submissions, introduced incrementally over several years.
Fraser Campbell, UK head of accounts and business advisory at Azets, warned: "MTD for Income Tax represents the most significant change in the personal tax system in nearly 30 years – but two-thirds of those who should be registered aren't." He cited lack of awareness, forgetfulness, or denial as reasons for non-compliance.
Penalties and future filings
HMRC has confirmed no penalties for missing the first quarterly deadline this year. However, Campbell cautioned: "People are setting themselves up for stress, trouble and, potentially, fines by not taking action now." Those who delay will need to file up to nine returns over a 12-month period, including catch-up filings and the annual declaration.
The FOI request by Azets on May 20, 2026, revealed that as of that date, 314,042 users had signed up for MTD for Income Tax. HMRC estimated 90% of these were in the mandated cohort (income over £50,000), meaning around 282,637 required customers had registered.
HMRC's response and advice
An HMRC spokesperson said: "Thousands of customers are signing up every week... we expect further increases ahead of the August 7 deadline. We've written to millions of customers and delivered hundreds of events and webinars."
The MTD rollout affects landlords, sole traders, and the self-employed with gross income above £50,000. The threshold will drop to £30,000 in 2027 and £20,000 in 2028, impacting an estimated 2.9 million people by 2028.
Azets' tips for compliance
- Check if you fall under the new reporting obligations.
- Ensure your software is HMRC-approved and MTD-compatible.
- Start using compliant software now.
- Check if you are exempt via the HMRC website or seek expert advice.
Campbell added: "Preparation, planning and taking advice at the right time are key for compliance."
