Making Tax Digital – more than a quarter of a million yet to sign up

More than a quarter of a million people who should be signed up to the Government’s new Making Tax Digital system have failed to register. Are you one of them? And what do you need to do to be compliant?

It is now six months since Making Tax Digital was rolled out to landlords and sole traders with income of £50,000 or above.

However, with the second quarterly reporting deadline now just weeks away it has been revealed  there are still more than 275,000 people who fall into the remit of the scheme who have yet to sign up.

The scheme, which is being rolled out in phases, requires you to keep digital records and every quarter, submit summaries of your  income and expenses to HMRC using compatible software.

HMRC estimates there are 864,000 individuals with a qualifying income over £50,000 that should be signed up, including 259,000 who have landlord income, yet as of last month just 588,204 had done so.

Of these only 535,374 had submitted the required quarterly updates – meaning more than 52,000 reports are already missing.

Should I be registered?

The first cohort of landlord – and sole traders – to be impacted by MTD are those of you earning more than £50,000 from your property business, and/or self-employment income.

This is based on turnover including gross income from self-employment and property before any tax allowances or expenses are deducted.

From April next year this will be rolled out to those of you earning more than £30,000 and from April 2028 to those of you earning more than £20,000.

HMRC estimates more than a million additional people will be brought into scope next year – including 279,000 people with landlord income and 975,000 the year after, 338,000 of whom have landlord income.

HMRC reminders

Starting last month HMRC has begun signing up those of you who should be using MTD for the 2026 to 2027 tax year but have yet to register, automatically and will be contacting you to let you know you meet the threshold.

It will also be writing to those of you who have signed up but have yet to submit a quarterly update to remind you of your obligations and encourage you to take the necessary action.

If you sign up for MTD for Income Tax partway through the tax year, you’ll need to catch up with your record keeping by creating digital records from the start of the tax year in April.

These will need to be included when you submit your first quarterly update.

Penalties for missing submissions

There are no penalties for missing a quarterly update deadline for the 2026 to 2027 tax year.

However, you will receive penalty points for missing quarterly submission deadlines for the 2027/28 tax year onwards, meaning you will begin to receive penalty points from the Q1 deadline, which is 7th August next year.

If you incur four penalty points, you’ll be fined £200, with a further £200 penalty for each subsequent quarterly deadline missed.

The quarterly update deadlines – for the previous three-month periods –  are 7th August (April-July), November (August-October), February (Nov-Jan) and May (Feb-April).

You will also need to submit an annual tax return, as usual, by 31st January and you will not be able to submit this if you have not sent your final update for the tax year.

Get ready now

With the scheme set to be rolled out to those of you with a qualifying income of £30,000 or more from April next year HMRC is encouraging landlords who will be brought into the scope of the scheme in six months’ time to start preparing now. 

Craig Ogilvie, HMRC's Director of Making Tax Digital, said: “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.”

What do I need to do?

If you fall into the remit of MTD you need to sign up at the Government website here. To do this you must be registered for Self-Assessment and have submitted a tax return in the last two years.

You then need to make sure your reporting software is compatible with the system.

If you are an NRLA member already using our Portfolio property management platform, your income and expenses are already being recorded in a format that feeds into quarterly submissions. By upgrading to PortfolioPro you can also submit them to HMRC directly via the platform, making it even easier to meet your compliance obligations.

If you prefer you can keep your spreadsheets and use bridging software to make the submission.

The Government also has a list of compatible software, which is available here.

More information

• For more information on Making Tax Digital and how and when it will affect you, read our detailed Making Tax Digital guidance click here.
• Our award-winning Training Academy runs a Making Tax Digital course offering everything you need to know about the system. For dates and to book click here.