MTD for Income Tax: Over 400,000 Not Yet to Register as 7 August Deadline Approaches

Out of the 864,000 landlords and sole traders required to comply with the new rules in phase one, HMRC data reveals that 435,000 have successfully enrolled. However, as of 17 July, a staggering 429,000 taxpayers have still not registered. If you earn qualifying gross income from self-employment, property, or both, here is what you need to know about this major shift in the UK tax system—and what steps you must take right now.

What Is Happening on 7 August?

The deadline on Friday 7 August marks the first quarterly update submission under MTD for Income Tax.

• Who it affects: Anyone with a qualifying gross income of more than £50,000 (based on their 2024–25 tax return).
• What it covers: Income and allowable expenses for the first three months of the tax year (6 April to 5 July).
• What it is NOT: A quarterly update is not a full tax return. It is simply a short summary of your digital records submitted through HMRC-recognised software.

 Is MTD for Income Tax Mandatory?

Yes. MTD for Income Tax is a legal requirement for taxpayers within scope. Except for a tiny number of specific statutory exemptions (such as digital exclusion), signing up and submitting quarterly updates is compulsory.

Important Note on Penalties: HMRC has confirmed a grace period for the 2026/27 tax year, meaning no penalty points will be issued for late quarterly updates during this first year. However, standard penalties for late annual returns and late tax payments still apply, and a points-based penalty system for quarterly updates will take effect from year two.

What You Need to Do Before the Deadline

If you are among the 429,000 who have not yet signed up, do not panic—there is still time to act before 7 August.

Step 1: Check Your Eligibility
Review your 2024–25 Self Assessment tax return. If your total qualifying gross income (before expenses) from self-employment and property combined was over £50,000, you are legally required to comply.

Step 2: Get MTD-Compatible Software
You cannot file MTD updates directly through the standard HMRC online portal without compatible software or bridging software. Choose an HMRC-recognised accounting tool that fits your business or property setup.

Step 3: Register with HMRC
Sign up for MTD for Income Tax via GOV.UK using your Government Gateway account, or instruct your accountant to enrol you on your behalf.

Step 4: Submit Your First Quarterly Update
Ensure your records for 6 April to 5 July are entered into your digital software and submit the quarterly summary to HMRC.

Don't Forget: The Annual Tax Return Remains

Submitting quarterly updates does not mean your annual Self Assessment is gone. You will still need to complete a final declaration and pay any tax owed by 31 January 2027.The primary benefit of filing quarterly updates is that your software provides real-time estimates of your tax liability throughout the year, making budgeting far easier and eliminating year-end surprises.

Need Help Getting MTD-Ready?

Navigating software setup, digital record-keeping, and HMRC sign-ups can feel overwhelming, especially with only two weeks remaining.If you need assistance getting signed up or filing your first quarterly return before the 7 August deadline, get in touch with our expert tax team today.