While the deadline for Making Tax Digital’s (MTD) first quarterly Income Tax filing arrives on 7 August, nearly half of qualifying sole traders and landlords are on track to miss it.
Out of a cohort of 864,000 people who need to submit an update to HMRC, over 400,000 have not even signed up.
As this many people are yet to register, what can be done to manage MTD deadlines and brace for future changes?
Who does this MTD deadline apply to?
This MTD deadline is mandatory for sole traders and landlords whose combined income from self-employment and property was over £50,000 in the 2024/25 tax year.
The information that is due is not a tax return, rather a quarterly update of income and expenses for the first three months of the current tax year.
The August 7 deadline also isn’t optional, as MTD submissions are now a legal requirement for taxpayers who meet the income criteria.
MTD’s scope will soon be broadened to millions more taxpayers.
As of April 2027, the MTD threshold will drop to £30,000 of qualifying income and then to £20,000 of qualifying income for the 2028/29 tax year.
This deadline should be a warning for taxpayers who aren’t currently affected but will soon be included in the MTD catchment in following years.
It is important to get prepared, get compliant and get ready to make the transition to MTD.
What happens if I submit late?
In addition to a broadened MTD catchment, April 2027 will see the introduction of a points-based penalty system for taxpayers.
Each missed quarterly deadline incurs one point, with a balance of four points resulting in a £200 fixed penalty for late submissions.
If an individual stays compliant over a series of submissions, point balances can be reset to zero and unnecessary penalties can be avoided.
Should I speak to an accountant?
Overall, MTD filings on HMRC compliant software can be relatively easy and quick.
However, it has been reported by HMRC that 69 per cent of the 100,000 MTD taxpayers who have already signed up used an agent or accountant.
With a penalty system for late submissions and guidance that keeps changing, it makes sense that most people are seeking financial advice to stay compliant.
Speaking to an accountant can help you keep on top of digital record keeping and ensuring filings are submitted before deadlines.
A fresh pair of expert eyes can make sure you avoid mistakes that could be costly and result in penalties.
Busy business owners and landlords could benefit from freed up time, which can instead be spent on what’s more important.
In addition, for individuals used to paper reporting for tax submissions, accountants can make the transition to MTD compliant software seamless.
Our experts can remove the burden of MTD, ensuring your software is compliant, your books are up to date and your quarterly updates are submitted by the deadline.
If you feel unprepared for the upcoming submission or just feel like you don’t know enough about the changes, our accountants can advise you on the transition.
We can guide you through what MTD means for you and your business, so you can hit the ground running and avoid late submission penalties.
Become MTD-ready today – Get in contact with our team.
