The first quarterly deadline for Making Tax Digital (MTD) is coming up on 7 August. However, more than half of the eligible applicants still haven’t signed up.
There are supposed to be 864,000 people registered for the service, although only 375,000 people have signed up so far.
This is the first wave of MTD registrations that are set to come over the following years. This is why it is imperative for people to check their income to see if they reach the threshold ahead of the upcoming deadline.
MTD is an initiative designed to modernise the tax system by replacing paper records and annual returns with a digital process.
Self-employed individuals and landlords must keep digital records and send quarterly updates to HMRC, as well as submit one annual return.
They must do this using HMRC-approved software, such as Xero or QuickBooks
The quarterly update deadlines are:
At the end of the tax year, taxpayers must submit an End of Period Statement (EOPS) and a final declaration to confirm their total income and calculate their final tax bill.
For MTD in 2026, you are eligible if you earned more than £50,000 in gross income from self-employment or property income in the 2024/2025 tax year.
MTD aims to reduce errors, improve accuracy and help taxpayers manage their finances more easily throughout the year.
There are no penalties for missing the 7 August deadline or any quarterly updates this year, but future non-compliance could prove to be costly.
Late submission penalties will follow a points-based system, with one point issued for each missed quarterly update or tax return deadline.
Once you reach four points, you will receive a £200 penalty. Each further missed submission deadline will result in another £200 fine.
If you are registered for VAT, your penalty points will be tracked separately for each service.
Late payment penalties work differently. The amount you pay depends on how quickly you settle what you owe, with lower charges for earlier payment.
If you are a sole trader or landlord earning above the threshold, you can sign up for MTD through HMRC’s online service, although it may now be too late to do this without support.
If you do not have up-to-date MTD-compatible software, you should contact an accountant to help manage your taxes before the first quarterly deadline.
Our talented accountants can help set up HMRC-recognised software, automate record-keeping and submit quarterly updates to HMRC on your behalf.
With the deadline approaching, our team can help you stay compliant and reduce the risk of errors.
Get in touch today for a helping hand with MTD.
