Only 185k signed up to Making Tax Digital

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

Latest figures from HMRC show 21% of taxpayers registered for MTD for Income Tax with nearly 700,000 not yet signed up and low numbers of individual taxpayers.

As mandatory quarterly reporting under Making Tax Digital (MTD) kicks in from taxpayers with non-PAYE qualifying income over the £50,000 threshold, only 185,000 individuals have signed up for the new system.

HMRC confirmed there is a steady flow of new registrants every day with around 15,000 taxpayers a day signing up but this leaves 683,000 landlords, sole traders and self employed still waiting to make the final move.

A source at HMRC said ‘it was happy with the level of registrations’, and from what we can see, there has not been an intense HMRC advertising or communications campaign to persuade taxpayers to get moving. Even HMRC’s own target of 200,000 registrations by 6 April is not hugely ambitious, only 23% of the total £50,000 MTD wave.

What is perhaps more concerning is that only a quarter of registrations so far have been from individual taxpayers as opposed to accountants and tax advisers. For the tens of thousands of unrepresented taxpayers this should perhaps be a warning bell for HMRC.

Craig Ogilvie, director of Making Tax Digital at HMRC, said: ‘This morning we were getting to 1,000 signed ups some hours. The % customer/agent sign up has shifted to 26%/74% also. We’re providing good service to those who need it.

‘As I set out a few weeks ago, I expect around 200,000 as we start the tax year and I expect this to grow through to the first quarterly update on 7 August.

‘My key message with a week to go is…this is the start, not the end, and we have a huge amount to do together!’

‘As I’ve said I know things won’t be absolutely perfect but we are here to support customers and agents to get things right. We don’t expect perfection in year one, but we expect slow steady progress and everyone to engage in the process.’

Effectively there is no real urgency as the first quarterly filing deadline is not until Friday 7 August, but the system is complicated, and taxpayers need to allow enough time to familiarise themselves with the new reporting requirements well before the cut-off date.

However, HMRC is clearly keen for as many people as possible to register early, and regardless many will need to buy MTD software, or sort out bridging software options in good time.

At a MTD webinar hosted by our Croner MTD expert Diane Wright this week, attended by several thousand participants, only 16% of respondents to an online poll during the event said they were ready for MTD. A further 39% said they were ‘not quite there yet, but the process is well advanced’, while 33% said they had ‘started and we are comfortable with what we still need to do’. Only 12% admitted they had ‘not started at all and were worried about the new system’.

All affected taxpayers have been sent at least two letters by HMRC informing them that their income from 2024-25 means they have to register for MTD in phase one as the earned qualifying income over £50,000 for that particular tax year.

It is also very important to note that there will be penalties for non-compliance and a final normal year end self assessment tax return will be due by 31 January 2027 for the 2025-26 tax year.

One saving grace is that the penalties have been suspended for year one, but they will follow the traffic light system when they come in from 6 April 2027 and will be accumulative. Quarterly reporting does not require any in-year tax payments.