.png)
400k need to register for MTD by 7 August filing deadline
- Sara White
- Aug 12
- 4 min read
Over 400,000 landlords and self employed still not signed up to MTD for Income Tax if have £50,000 qualifying income with first quarterly return deadline only two weeks away.
The new Making Tax Digital (MTD) for Income Tax system is compulsory, except for a very few exemptions, so it is absolutely critical to sign up even though the up to £200 HMRC financial penalties will not be imposed in year one for failure to file returns quarterly. Meantime, agents in the beta trials pre-launch are coming up against problems filing year ends for beta clients due to delays with MTD software updates.
The deadline to register and file first quarterly update for Making Tax Digital (MTD) for Income Tax is Friday 7 August, only two weeks away, with a total of 864,000 taxpayers required to file based on their earnings in 2024-25 tax year. It is a legal requirement and is mandatory for taxpayers in scope.
Latest figures from HMRC showed 435,000 taxpayers are signed up so far, but nearly as many landlords and sole traders are not yet registered. As of 17 July, a total of 429,000 MTD phase one taxpayers had not signed up.
The first MTD quarterly update covers income and expenses for the first three months of the tax year, and must be filed digitally with HMRC. The deadline to file the first MTD quarterly update is 7 August, although there will not be penalties in the first year.
The deadline to file the first MTD quarterly update is 7 August, although there will not be penalties for late submissions in the first year.
In terms of progress, over 100,000 registered MTD taxpayers have already filed their quarter one submissions, HMRC said this week, leaving nearly 750,000 still in the process of preparing their updates.
Official figures show 69% of registrations for MTD have come from agents or accountants signing up for their clients, with large numbers of unrepresented landlords and self employed not signed up, leaving HMRC a challenge to ensure these taxpayers get the message and understand the process.
HMRC has warned in scope MTD taxpayers to take action, stressing the ‘the quarterly update is not a tax return. It is a short summary sent directly to HMRC through recognised software and takes minutes to complete’.
Several thousand taxpayers were involved in the beta trial for MTD over the previous tax year, 2025/26, and these individuals are now filing their final year end submissions.
Beta filing issues
Along with the August filing deadline for the first quarterly reporting, agents and taxpayers in the beta trial are also in the midst of beta filing for year ends.
Yesterday, Craig Ogilvie, HMRC director of Making Tax Digital said in his regular update on LinkedIn, said: ‘We are approaching the 700 mark on end of year testing. This is as important as the current quarterly update position as it allows us to build on our technical testing with real customers.
‘To date FreeAgent, Clearbooks and Intuit all have tested over 100. Thomson Reuters, Untied and Absolute on or over 50.’
However, not everything is running smoothly with some accountants reporting issues with their MTD software for year end returns for 2025-26 in the beta trial due to required updates not being available yet. The list of software firms flagged by Ogilvie as completing year end filing for clients excludes some major MTD accountancy software providers.
Accountants with beta clients are reporting problems as they are waiting for software updates for the year end filing from their software provider.
One tax agent posted on LinkedIn that ‘the software we are using has not released the ability for us to prepare and file them’ and has to wait for the software upgrade delivery in several phases from August to the autumn. Another adviser experiencing the same year end filing problem said they were ‘still waiting for that elusive update’ but would not be changing software as they had completed all the MTD preparation, while another with beta clients said it was ‘so annoying for clients with July payments on account’.
MTD is a legal requirement and will be extended to millions more taxpayers from April 2027 onward, with the threshold for qualifying income dropping to £30,000 on 6 April 2027, and down to only £20,000 from April 2028.
HMRC is keen to stress that MTD is straightforward and simple to use, flagging positive taxpayers exerpiences, but it has become increasingly complicated with constant updates of the HMRC guidance to clarify different elements of the system.
The hope is that the system will make it much easier for taxpayers and HMRC as it beds down, with higher compliance levels and less tax errors and mistakes with filing.
Natasha Patterson, a self-employed potter from County Antrim, used Starling Bank’s MTD compatible software to submit her first quarterly update, saying her first submission only took 10 minutes and was ‘so easy’.
‘If they can all go this seamlessly, we’ll be set up for smooth sailing,’ Patterson said. ‘I was expecting there to be some hurdles and I wanted to give myself time to work through any issues but was pleasantly surprised to find the process very smooth and straightforward.
‘I went back to check I did it right about three times, but it really was very straightforward. Everything made sense and was logical - it wasn’t overwhelming, even though it was all new to me.’
MTD quarterly submissions and year end report do not replace self assessment tax returns.
Penalties will only kick in from 6 April 2027 from the second year of MTD for Income Tax onwards.
HMRC stated: ‘From the second year of MTD for Income Tax onwards, points-based penalties will apply where taxpayers miss a quarterly deadline. Taxpayers receive one penalty point for each missed quarterly deadline. Once four points are accumulated, a £200 fixed penalty is charged. Points expire after a period of compliance.’
Comments