Despite Making Tax Digital (MTD) for Income Tax becoming mandatory from 6 April 2026 for sole traders and landlords earning over £50,000, around 65% of those affected are still not registered.
Speaking at Accountex London 2026, HMRC has started to outline why registration levels remain lower than expected and what this could mean as implementation continues.
At PM+M, this is not entirely surprising. For many, MTD represents one of the most significant changes to personal tax administration in recent years. While awareness is improving, there is still uncertainty around what the new requirements mean in practice and the steps needed to prepare.
The key question is whether this slow uptake reflects a gradual transition – or a wider compliance challenge ahead.
Why is Making Tax Digital uptake still so low?
From our experience supporting clients through tax and regulatory changes, there are several reasons why uptake may be slower than expected.
Limited awareness and understanding
Many individuals are still unclear on whether MTD applies to them, particularly as eligibility is based on qualifying income rather than profit.
Perceived complexity
For those using spreadsheets or manual processes, the move to digital records and compatible software can be daunting – although, with the right support, the transition is often more straightforward than expected.
Unclear benefits
Much of the conversation has focused on compliance, meaning the wider benefits – such as improved visibility of tax liabilities and better financial insight – are not always recognised.
Mixed messaging
HMRC has indicated that quarterly updates are simply summaries rather than formal tax returns. While intended to reassure, this may also reduce the urgency to act.
Are we heading towards mass non-compliance?
While the headline figures are striking, it is too early to conclude that mass non-compliance is inevitable.
In many cases, taxpayers only fully engage with major changes as deadlines approach. We expect the first quarterly update deadline of 7 August 2026 to act as a key trigger point.
The penalty regime is also likely to influence behaviour. Although there are no penalty points for missed quarterly updates in the first year, a points-based system will apply from April 2027.
In our view, the greater risk is not deliberate non-compliance, but delayed preparation. Leaving implementation too late can result in rushed systems, disorganised records and unnecessary pressure.
Why acting now still matters
Although there is some flexibility during the transition period, preparing early puts you in a much stronger position.
MTD is more than a compliance requirement. When implemented effectively, it can provide better visibility over your financial position and support more informed decision-making.
Taking action now can help you:
- Gain real-time visibility of your tax position
- Improve the accuracy of your records
- Reduce pressure at year-end
- Avoid last-minute implementation challenges
- Build confidence in your reporting processes before penalties apply
How PM+M can help
Whether you are just starting to explore MTD, or considering software options, our team can support you at every stage.
We can help by:
- Confirming whether MTD applies to you
- Reviewing your current record-keeping processes
- Recommending suitable MTD-compatible software
- Assisting with implementation and training
- Supporting or managing your quarterly submissions
We take a practical, tailored approach based on your specific circumstances.
Get ahead of MTD
While uptake may currently be slower than expected, the requirement to comply is firmly in place.
Our advice is simple: don’t wait until reporting deadlines arrive. Early preparation can save time, reduce stress and help you get the most value from digital reporting.
If you would like to discuss how MTD could affect you or your business, get in touch with the PM+M team.
