First quarter MTD period ends with four weeks to live reporting

Sara White, Editor, Business & Accountancy Daily. Croner.

With less than 30 days until the first HMRC quarterly reporting deadline for Making Tax Digital (MTD) for Income Tax, affected taxpayers are being advised to sign up as soon as possible.

Nearly 900,000 taxpayers fall into phase one of Making Tax Digital (MTD) for Income Tax, with qualifying income in excess of £50,000, which includes earnings and property related income.

The final registration deadline for phase one of MTD for Income Tax is Friday 7 August, the deadline day for filing the first quarterly update under the new mandatory rules. One saving grace is that HMRC has been forced to waive penalties in the first year of operation, but the administrative burden on landlords, self employed and sole trader is still huge.

Quarter one period for the first income update started on 6 April 2026, running to 5 July 2026, so now anyone falling under the new MTD rules will have the numbers HMRC wants. Now it is necessary to register for MTD or apply for an exemption if you think you may qualify although these are limited, and HMRC is understood to have refused more than half of these claims. HMRC says there are currently only 61 exemption applications outstanding.

The latest HMRC figures on the level of MTD registrations from the £50,000 wave still shows that over half of those mandated to report under the new regime have not signed up.

HMRC has indicated 400,000 taxpayers are signed up now, meaning that almost half a million landlords, sole traders and self employed still need to do so. It also recently had a bumper MTD registration burst with over 4,000 signed up in one day; based on this level of sign-ups, a further 120,000 will conform by the first quarterly reporting deadline.

A total of 864,000 taxpayers are liable for mandatory MTD quarterly reporting from Friday 7 August.

Work is still moving apace on fine-tuning the MTD IT system at HMRC with various updates implemented in the last few weeks.

Craig Ogilvie, director, Making Tax Digital at HMRC said: ‘My team delivered ongoing huge technical releases that underpin MTDs platform and the service for colleagues at HMRC.

‘We are working tirelessly to ensure people are ready for MTD and taking the action needed. So a huge thanks to my team for all their efforts and accountants, agents and bookkeepers as well as developers and professional bodies for the ongoing endeavours. It’s appreciated.‘Let’s keep going and encourage a ramp up of sign ups through July before the first Quarterly Update due 7 August.’

While the absence of penalties may make some taxpayers put off the inevitable MTD, the quarterly reporting nature of the system means the four updates all create the final year end record.

Fraser Campbell, UK head of accounts & business advisory services at Azets, said: ‘MTD for Income Tax represents the most significant change in the personal tax system in nearly 30 years. There are a multitude of reasons why people may not have signed up – they may not be aware of the changes, they may have simply forgotten about it or they may be in denial that they need to register.

‘Whatever their reason, not signing up creates potential problems in the future.

‘HMRC requires an end of tax year declaration which requires the data from the four quarters to be aggregated. By not registering now and by delaying it further, anyone who is in scope of MTD will need to catch up with this year’s four filings at the same time as next year’s quarterly filings become due, as well as their annual declaration, so they’ll have to potentially file nine returns over the same 12-month period.’

The introduction of MTD this April brought the personal tax system closer to real-time and is expected to affect 2.9m people by 2028 when the thresholds are lowered to £20,000.

MTD returns can only be filed digitally so allow enough time to implement any software. Bear in mind bridging software can be used to file data to HMRC, while there are also some free software options available from major software providers, and some major high street banks and online banks are also offering free software to business bank account holders.  

Read all our MTD coverage here