On 6 April 2026, Making Tax Digital (MTD) for Income Tax became mandatory for sole traders, landlords and self-employed individuals with qualifying incomes over £50,000.
Despite this, only 35 per cent of those affected have registered with MTD, leading to HMRC taking the stage at Accountex London 2026 to address the mass non-compliance.
A new approach is being suggested, but will this inspire MTD compliance or risk creating a greater problem?
As MTD registration is now mandatory, the large-scale non-compliance is problematic, though not entirely unexpected.
MTD is the biggest change to tax filing in decades, with many impacted by it failing to see the value.
HMRC might not have succeeded in fully selling the value of MTD on its own, causing a fresh angle to be offered in the latest discussion at Accountex.
This centred on the controversial implementation of quarterly updates, with HMRC making it clear that these are not viewed as additional tax filings but rather as data-driven checkpoints.
As such, quarterly updates can be amended and updated later on without incurring penalties.
From this approach, it is apparent that HMRC wants to reassure those affected that the quarterly updates do not need to be viewed as heavy administrative tasks and will be taking a relatively casual approach to them.
However, the nature of this casual approach may not serve to effectively uplift the value of MTD for those still unconvinced about the need to change systems so dramatically.
From the current uptake numbers, it is clear that the value of MTD is being overlooked and that perhaps only the threat of penalties will get people over the line.
This will take effect in 2027, but falling into lax habits with quarterly updates now may risk facing down those penalties when the time comes.
While HMRC may have taken a casual angle for the quarterly updates, penalty points will still be assigned for missing the submission deadlines.
If the nature of the data contained in the quarterly do not matter from a compliance perspective, then there is little to stop inaccurate or incomplete updates being submitted purely to dodge penalties.
This will make the annual tax submission more challenging as it will be based on poor-quality data that will need to be rectified at that stage.
If you are above the income threshold, you should be registered for MTD or making the necessary preparations now.
Even if the value of MTD has escaped you, we can help you take on this new obligation and find the real benefit in it.
MTD is supposed to be about empowering people to take control of their finances by giving them a continual view of tax obligations and requirements rather than getting year-end shocks.
The digital systems cut out the need to rummage through filing cabinets and boxes, instead giving you full access to important information when you need it.
Through this, it should be possible to adjust your budgets to better accommodate market challenges or make the most of opportunities as they arise.
None of this will be true if the quarterly updates are not taken seriously, as this approach will see MTD become the administrative nightmare that so many fear it is.
Our expert team value your work and would not leave you in a position where your quarterly update is a low-quality box-ticking exercise.
Instead, we will work with you to collect the necessary data in order to meet the deadlines and empower you to make the most of your finances.
Done right, MTD represents an exciting opportunity for you and your money, paving the way to smarter financial decisions in the future.
If you have any questions about software, we can help set you up with MTD-compliant software that suits your needs and budget.
Non-compliance will bring with it penalties, but will also see your accounts suffer from inefficiencies that a well-kept system could serve to expose.
MTD is already mandatory, but there is still time to get set up and register before the first quarterly update deadline on 7 August.
