MTD: HMRC Reveals First Quarterly Submission Figures
Making Tax Digital for Income Tax (MTD ITSA) became mandatory in April 2026 for sole traders and landlords with qualifying income over £50,000.
We’ve now had the first quarterly submission deadline — and HMRC has released some interesting figures showing how the first wave of MTD is progressing.
More than 570,000 have registered – but only 436,000 submitted
According to an HMRC press release, more than 570,000 sole traders and landlords had registered for Making Tax Digital for Income Tax. However, only 436,000 had successfully submitted their first quarterly update. That means more than 130,000 people who had registered had not yet successfully submitted their first quarterly update.
The first quarterly reporting period ran from 6th April to 5th July 2026 for most taxpayers, with submissions due by 7th August 2026.
HMRC has confirmed that it will begin automatically signing up taxpayers who should already be using MTD but have not registered themselves.
What happens if you missed the first quarterly deadline?
There is some good news for those affected. HMRC has confirmed that no penalty points will be issued for late quarterly updates during the 2026/27 tax year.
This gives taxpayers some breathing space during the first year of the new system.
However, this does not mean MTD can simply be ignored.
From 6th April 2027, the points-based penalty system will apply to missed quarterly deadlines. A taxpayer will receive a penalty point for each missed quarterly deadline and, once four points have accumulated, a £200 penalty will be charged.
Normal penalties for late Self Assessment tax returns and late tax payments continue to apply.
And MTD is about to affect many more people
Perhaps the most important point for anyone currently outside MTD is that the qualifying income threshold is reducing. From April 2027, MTD for Income Tax will become mandatory for sole traders and landlords with qualifying income over £30,000.
So, if your combined gross income from self-employment and property is above £30,000, now is the time to start thinking about how you will comply.
Under MTD you will need to:
keep appropriate accounting records digitally;
use HMRC-compatible software;
submit quarterly updates to HMRC; and
continue to complete your annual tax return requirements.
Quarterly updates do not replace your Self Assessment tax return. They are summaries of your income and expenses submitted to HMRC using compatible software throughout the year.
Don't leave it until April 2027
If you are likely to fall within MTD from April 2027, my advice is to start preparing now.
One of the simplest things you can do is make sure your business or property transactions are easy to identify and record. If you currently have business or rental income and expenses mixed through your personal bank account, consider opening a separate bank account now.
It doesn't necessarily need to be a business bank account — the important thing is having a dedicated account for the transactions that will need to be captured for MTD. This can make digital record keeping significantly easier and reduce the amount of sorting required each quarter.
At Freedom Financials, we're already preparing for the next stage of Making Tax Digital and helping clients understand what the new requirements will mean for them.
If you're a sole trader or landlord with qualifying income above £30,000 and you're unsure whether MTD will apply to you from April 2027, please get in touch.
Freedom Financials
AAT Licensed Accountant
Dorking, Surrey
WhatsApp: 01306 400 480
Source: HM Revenue & Customs, “436,000 sole traders and landlords make their tax digital”, published 12 August 2026.
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