More than 580,000 taxpayers who should be complying with Making Tax Digital (MTD) for Income Tax are still not registered, according to recent HMRC figures.

Making Tax Digital is now live and the first reporting deadline has already passed. If you’re a sole trader or landlord, now is a good time to review your position, understand whether the rules apply to you and ensure you’re prepared for future submissions.

Who needs to use MTD for Income Tax?

MTD for Income Tax became mandatory from April 2026 for sole traders and landlords with qualifying income above £50,000. Those within the regime must keep digital records and submit quarterly updates to HMRC using compatible software.

The rules are set to expand from April 2027, when taxpayers with qualifying income above £30,000 will also be required to comply, and again from April 2028 for those with qualifying income above £20,000.

What does this mean in practice?

MTD for Income Tax replaces the traditional annual Self Assessment process with more regular digital reporting throughout the year. Taxpayers within scope must maintain digital records and submit quarterly updates using HMRC-compatible software, followed by a final declaration.

The first quarterly reporting deadline has already passed, and while HMRC has confirmed that no penalty points will be charged for late quarterly updates during the first year of the regime, quarterly reporting remains a mandatory requirement. Taxpayers who fall behind now may find themselves needing to catch up on multiple quarterly updates, as well as their end of period statement and final declaration, creating a significant administrative burden later on.

Reviewing your position and getting up to date sooner rather than later can help avoid a backlog of reporting obligations.

Why review your position now?

With Making Tax Digital now in force, it’s important for sole traders and landlords to understand exactly what their obligations are and whether they are taking the right steps to comply.

Reviewing your position now can help you confirm whether MTD applies to you, ensure you’re using appropriate software, and avoid any last-minute issues as future reporting deadlines approach.

It’s also worth checking whether your circumstances have changed since your last tax return. For example:

• You have ceased trading
• You no longer receive rental income
• You may qualify for an exemption from MTD
• HMRC’s records may not fully reflect your current circumstances

If any of these situations apply, it’s worth reviewing your position now rather than waiting until a reporting deadline arrives.

Even if you’re already registered, taking time to review your processes and record keeping now can help make future submissions smoother and reduce the risk of problems later on.

More taxpayers will be affected

The current threshold of £50,000 will reduce to £30,000 from April 2027 and then to £20,000 from April 2028. If your income is close to these thresholds, it’s worth starting preparations now rather than waiting until the rules become mandatory for you.

What should you do now?

• Check whether your income falls within the current or future MTD thresholds
• Make sure you’re using MTD-compatible software
• Start keeping digital records if you aren’t already doing so
• Familiarise yourself with the reporting requirements
• Seek advice if you’re unsure how the rules apply to your circumstances

How can we help?

Making Tax Digital for Income Tax represents one of the biggest changes to personal tax reporting in recent years. If you’re unsure whether the rules apply to you, need help choosing software, or would like support with registration and ongoing compliance, the PM+M team can help.

Get in touch by emailing enquiries@pmm.co.uk to discuss your Making Tax Digital obligations and ensure you’re prepared for the changes ahead.