The first quarterly Making Tax Digital (MTD) deadline falls on 7 August, but more than half of eligible applicants have yet to sign up.
Of the 864,000 people expected to register for the service, only 375,000 have done so.
This marks the first wave of MTD registrations due over the coming years, so people should check their income now to see whether they meet the threshold before the deadline.
What is MTD, and am I eligible?
MTD is designed to modernise the tax system by moving taxpayers from paper records and annual returns to a digital process.
Businesses and landlords must keep digital records, send quarterly updates to HMRC and submit one annual return.
They must use HMRC-approved software, such as Xero or QuickBooks.
Quarterly updates are due on:
- 7 August
- 7 November
- 7 February
- 7 May
After the tax year ends, taxpayers must file an End of Period Statement (EOPS) and a final declaration confirming their total income and final tax bill.
For MTD in 2026, you are eligible if your gross self-employment or property income exceeded £50,000 in the 2024/25 tax year.
MTD aims to reduce errors, improve accuracy and help taxpayers manage their finances more easily throughout the year.
What are the penalties for missing the deadline?
There are no penalties for missing the 7 August deadline or any quarterly updates this year, but future non-compliance could prove costly.
The new late submission rules are points-based – each missed quarterly update or tax return deadline earns one penalty point.
Once you reach four points, you will receive a £200 penalty, with a further £200 fine for each additional missed submission deadline.
If you are VAT-registered, your penalty points will be tracked separately for each service.
Late payment penalties work differently. The amount charged depends on how long it takes to pay what you owe: the sooner you pay, the lower the penalty.
How to register for Making Tax Digital
If you are a sole trader or landlord earning above the £50,000 threshold and you haven’t already, you need to sign up for MTD through HMRC’s online service.
Though if you haven’t done this already, you may struggle to do this without support, as sorting out up to date MTD compatible software may be difficult ahead of the deadline.
Our talented team of accountants can help you set up HMRC-recognised software, automate record keeping and submit quarterly updates on your behalf.