Despite the first deadline for Making Tax Digital (MTD) for Income Tax arriving on 7 August, over 400,000 qualifying landlords and sole traders have still not signed up.
The total number of those who are affected by this deadline is 864,000, which means just under half are on track to miss the submission.
With this many people yet to register, what can be done to stay on top of the quarterly MTD filings and prepare for upcoming changes?
Who does MTD affect?
MTD is compulsory for landlords and sole traders whose combined income from self-employment and property exceeded £50,000 in the 2024/25 tax year.
It’s not a tax return that is due on 7 August, but a short summary of income and expenses for the first three months of the 2026/27 tax year.
The looming deadline is also not optional, as quarterly MTD filings are a legal requirement for taxpayers within the current bracket.
MTD’s catchment will eventually be extended to millions more, with the threshold dropping to £30,000 of qualifying income in April 2027 and to £20,000 of qualifying income in April 2028.
The deadline should be seen as a preview of what’s to come with MTD, so it is important to get prepared before the compliance scope extends to you and your business.
Are there penalties for late submission?
Arriving alongside the broadened scope of MTD in April 2027, a points-based penalty system for taxpayers missing quarterly deadlines will be introduced.
With each missed quarterly deadline earning one point, a balance of four points results in a £200 fixed penalty.
A period of compliance and timely submissions can reset an individual’s point balance, so penalties can be easily avoided if individuals stay proactive.
Do I need an accountant for MTD?
MTD filings are relatively straightforward, only requiring a few minutes to submit information on HMRC-compliant software.
However, HMRC has reported that of the 100,000 MTD taxpayers who have already registered, 69 per cent used accountants or agents.
With a penalty system rolling out in the next tax year and guidance that can feel confusing, it is unsurprising that most people are seeking help to stay compliant.
Accountants can help to ensure digital record keeping is up to date and filings are submitted on time, checking for errors that might lead to penalties.
For people managing properties and running businesses, accountants can help relieve some of the workload to give time back to individuals with already tight schedules.
While changing to new MTD software can be a headache for individuals used to paper reporting, experts can select the software and teach compliant data entry techniques.
Our team can remove the stress from MTD, keeping your records up to date, your software compliant and your quarterly updates submitted on time.
If you aren’t sure if you are ready for the August 7 deadline, or you need to begin quarterly MTD filings next tax year, we can help you with the transition.
We are happy to talk through what MTD means for you and your business, so you can get prepared and avoid any late submission penalties.
