Making Tax Digital: Have You Signed Up Yet?

With the first deadline fast approaching, a surprising number of affected taxpayers have still not registered.

HMRC has estimated that around 65% of taxpayers affected by MTD, who will be required to submit quarterly updates, have not yet registered.

Why are people not signing up?

Many taxpayers may not be signing up because they do not think MTD applies to them.

One reason for the slow uptake in registration may be a lack of awareness around MTD. Taxpayers may either believe that MTD does not apply to them, or may not fully understand what is required.

For taxpayers who do not use an accountant, they may not have realised that MTD applies to them.

This may also reflect the limited communication some taxpayers have received from HMRC. In some cases, the only information a qualifying taxpayer may have received about MTD is a letter sent earlier this year asking them to check their qualifying income.

What is Making Tax Digital?

Taxpayers who earned more than £50,000 from sole trade and/or landlord income in the 2024/25 tax year are now required to keep digital records and submit quarterly updates to HMRC.

The purpose of Making Tax Digital is for qualifying taxpayers to report their sole trade and/or landlord income to HMRC every three months. This requires taxpayers to keep their records up to date throughout the year, rather than waiting until the end of the tax year.

The first quarterly update deadline is 7 August 2026.

Will I receive a penalty if I miss the filing deadline?

Usually, yes.

HMRC has updated its penalty system with the introduction of penalty points. Taxpayers will not automatically receive a financial penalty for one missed deadline. Instead, penalty points build up, with a financial penalty applying once the relevant points threshold is reached.

However, for the introductory year of MTD, HMRC will not issue penalty points for late quarterly updates.

Could this be one reason for the lack of registrations?

As there are no immediate penalty points for missing quarterly updates in the first year, some taxpayers may feel there is less urgency to sign up and submit their reports.

Will I need to sign up for MTD?

Your qualifying income is assessed by looking at your income from the relevant previous tax year.

If your income from your sole trade and/or landlord business was more than £50,000 in the 2024/25 tax year, you will be required to sign up for MTD. Your qualifying income is your total turnover before expenses are deducted.

The threshold will reduce to £30,000 from 6 April 2027, which will bring more taxpayers into MTD. The Government has also published legislation to reduce the threshold further to £20,000 from 6 April 2028.

How do I sign up for MTD?

You can sign up through your Government Gateway account.

If you have an agent, they can sign you up on your behalf.

Frequently asked questions

Who needs to sign up for Making Tax Digital?

You will need to sign up if your qualifying income from sole trade and/or landlord income was more than £50,000 in the 2024/25 tax year.

What is qualifying income?

Qualifying income is your total turnover before expenses are deducted.

When is the first MTD quarterly update deadline?

The first quarterly update deadline is 7 August 2026.

Can my accountant sign me up for MTD?

Yes. If you have an accountant or tax agent, they can sign you up for MTD on your behalf.

Further reading

You may also find our other Making Tax Digital guides useful:

• Making Tax Digital: What Is It and Does It Apply to You?
  A helpful starting point if you are unsure whether MTD applies to you.
• Making Tax Digital: Will You Be Exempt from Completing Quarterly Reports?
  A guide to the exemption rules and when you may not need to submit quarterly updates.
• Making Tax Digital: Submitting Your MTD Returns
  A practical overview of what submitting under MTD will involve.
• Making Tax Digital: How the New HMRC Penalty System Will Work
  More detail on penalty points and how the new system applies.

Need help with Making Tax Digital?

If you are unsure whether MTD applies to you, or you need help with registration, digital record keeping or quarterly updates, Stratos can help.

Get in touch with our team today and let us help you navigate the way through Making Tax Digital.