HM Revenue & Customs has issued a blunt warning to taxpayers who failed to meet the first Making Tax Digital quarterly update deadline on August 7. The deadline applied to sole traders and landlords with combined turnover from self-employment and property over £50,000 in the 2024/25 tax year.
In a statement, HMRC said: “Missed the Making Tax Digital quarterly update deadline? If your combined turnover from self-employment and property was over £50,000 in the 24/25 tax year, you need to send your first quarterly update. Act now.”
Biggest change since Self Assessment
The deadline marks the first major stage in a huge overhaul of the tax system. Affected sole traders and landlords must now keep digital records and send HMRC updates every three months rather than waiting until the end of the tax year. HMRC describes it as the biggest change since Self Assessment was introduced more than 30 years ago.
Qualifying income includes gross income from self-employment and property before expenses and tax allowances are deducted. This means someone with significant business costs could still be forced into the system even though their taxable profit is much lower.
Penalties waived for first year
HMRC says around 864,000 people were in the first group required to start using Making Tax Digital from April 2026. For those who missed the August 7 deadline, there is some good news: HMRC will not apply penalty points for late quarterly updates during the first tax year, covering 2026/27.
However, taxpayers still need to submit the outstanding update. Penalties continue to apply for late tax returns or late payment of tax. The next quarterly deadline is November 7, followed by February 7, 2027 and May 7, 2027.
More taxpayers to be affected
Quarterly updates do not replace the annual tax return. Taxpayers will still have to submit their final Self Assessment return and pay any tax due by January 31.
The £50,000 threshold is only the start. From April 6, 2027, the rules will extend to sole traders and landlords with qualifying income above £30,000. From April 6, 2028, the threshold will fall to £20,000.
HMRC figures indicate that another 1.077 million people with qualifying income between £30,000 and £50,000 are due to join in April 2027. A further 975,000 people with income between £20,000 and £30,000 are expected to join from April 2028.
What taxpayers need to do
Those already caught by the rules need to use compatible software to record their income and expenses, and send quarterly updates to HMRC through that software. There are free and paid software options, while bridging software is available for some people who want to continue using spreadsheets.
Anyone who missed August 7 should bring their records up to date and submit the outstanding quarterly update rather than waiting until the next deadline. Those who are not yet affected should check their position now, as the days of putting tax affairs aside until the annual Self Assessment deadline are rapidly disappearing.
