Making Tax Digital (MTD) update and what you need to do next

If you’re a sole trader or landlord earning over £50,000, Making Tax Digital (MTD) for Income Tax stopped being a “coming soon” story back in April – it’s now part of how you report to HMRC.

New figures from HMRC show just how many people have already made the switch, and they also flag an important change coming this autumn that could affect anyone who hasn’t signed up yet.

Here’s a plain-English rundown of what’s happened, and what it means for you.

The headline numbers

According to HMRC, more than 436,000 sole traders and landlords have now successfully submitted their first MTD for Income Tax quarterly update, out of over 570,000 customers who have signed up to the service so far.

If you’re required to be in MTD and haven’t submitted your first update yet, the good news is there’s no penalty for being late this year – but that grace period won’t last, and HMRC is about to start chasing outstanding sign-ups directly.

Quick recap: who does this apply to?

MTD for Income Tax has been mandatory since April 2026 for sole traders and landlords with qualifying income over £50,000. It’s expanding, too: from April 2027, anyone earning more than £30,000 from self-employment or property will also need to comply.

Under MTD, you need to:

• Keep digital records of your income and expenses
• Send quarterly updates to HMRC through recognised software (these are short summaries, not full tax returns, and take minutes to complete)
• Still submit your Self Assessment return by 31 January as usual – quarterly updates don’t replace this, but you won’t be able to file your return without having sent them

What’s changing from September 2026

This is the part worth paying attention to. From September, HMRC will start actively signing up customers who should be using MTD for 2026/27 but haven’t done so yet. This will roll out in stages over the following months.

If HMRC signs you up rather than you doing it yourself, you lose some control over the process – you won’t have had the chance to check your details are correct or choose software that genuinely suits your business. HMRC has also confirmed that new guidance will be published in late August explaining what to do if you receive a sign-up letter.

Our advice: don’t wait to be contacted. Signing up now means:

• You control the timing and can prepare properly
• Your MTD details are set up correctly from day one
• You have time to choose (or let us help you choose) software that actually fits how your business works

The penalty situation – for now

There’s some breathing room here: no penalty points will be issued for late quarterly updates during the 2026/27 tax year. Penalties still apply as normal for late tax returns and late payments, so don’t take this as a reason to relax on Self Assessment.

That leniency has an expiry date, though. From 6 April 2027, a points-based penalty system kicks in for missed quarterly deadlines:

• One point per missed deadline
• A £200 fixed penalty once you hit four points
• Points expire after a period of ongoing compliance

In other words, this year is the low-risk window to get your process bedded in before penalties start being enforced.

What we’d recommend doing now

1. Check whether you’re already required to be in MTD – if your self-employment or property income (or combined income from both) is over £50,000, this applies to you now.
2. Sign up on GOV.UK if you haven’t already – don’t wait for HMRC’s letter.
3. Get your software sorted – you’ll need HMRC-recognised software to submit quarterly updates; we can help you choose one that fits your business and, if you’d like, handle the submissions for you.
4. Send your first quarterly update if it’s outstanding – the deadline for the first quarter has already passed (7 August), but there’s no penalty for filing it late this year.
5. If your income is between £30,000–£50,000, start planning now – you’ll be brought into MTD from April 2027, and it’s easier to get ahead of it than scramble later.

We’re here to help

Whether you need help registering, choosing software, or want us to manage your quarterly submissions for you, our team can take the hassle out of MTD.

Get in touch and we’ll make sure you’re set up correctly, ahead of HMRC’s September sign-up push – not after it.