Making Tax Digital: how taxpayers are getting to grips with the new rules

More than 800,000 sole traders and landlords faced their first Making Tax Digital (MTD) deadline on Friday 7 August – and nearly half may have missed it. 

Since April 2026, sole traders and landlords with a qualifying income of more than £50,000 have been required to follow new digital reporting rules for income tax. This means keeping digital records and sending quarterly updates to HMRC using compatible software. 

The first deadline, on 7 August, covered income and expenses recorded during the first three months of the 2026-27 tax year.

Official HMRC figures show that 436,000 people submitted their first update by the deadline, out of 864,000 taxpayers expected to follow the new rules. 

Here Which? explains what to do if you missed the first deadline, how to stay on track from now on and what taxpayers have made of this major change to the system.  

How many people signed up for MTD?

Taxpayers must register for MTD in advance. 

Before the deadline, HMRC reported that 570,000 taxpayers had registered – well below the total number expected to fall within the scheme's scope.

While taxpayers were initially expected to register themselves, HMRC has announced that it will begin automatically signing up eligible taxpayers from September 2026. New guidance is expected in late August explaining what you need to do if you receive an HMRC auto-enrolment letter.

• Find out more: Making Tax Digital for income tax

Missed the deadline? Here's what to do next

Don't worry if you missed the deadline – HMRC isn't issuing penalty points just yet.

HMRC has confirmed that it will not issue penalty points for late quarterly updates during the 2026-27 tax year. However, you will need to submit if you are now mandated to do so.

So, as soon as possible, you should: 

• Sign up for MTD: If you haven’t already, sign up using your Government Gateway ID at the Gov.uk registration page.
• Choose HMRC-recognised software: Pick an HMRC-approved software.
• File out outstanding update: Submit your first quarterly update straight away to keep you on track for your Final Declaration.
• Don’t submit a nil return: Resist the urge to file a placeholder just to tick the box, this will result in a messy correction later.

It's important to note that there is no grace period for late annual final declarations.

• Find out more: 4 ways to prepare for Making Tax Digital for income tax

When is the next MTD deadline?

The quarterly deadlines are fixed, so knowing them in advance can help you stay on track.

If you use HMRC's standard update periods, the deadlines are:

• Quarter one (6 April to 5 July): deadline 7 August  2026
• Quarter two (6 July to 5 October): deadline 7 November 2026
• Quarter three (6 October to 5 January): deadline 7 February 2027
• Quarter four (6 January to 5 April): deadline 7 May 2027

Alongside this, you will need to submit an 'End of Period Statement (EOPS) and your ‘Final Declaration’ by the self-assessment deadline on 31 January.

An EOPS applies annual accounting adjustments – such as claiming expenses and capital allowances – to finalise the net profit or loss for each of your businesses or properties. Your final declaration then combines these figures with any non-business income, such as employment earnings, dividends, and savings interest, to give you your overall tax return. 

These are then submitted by the usual self-assessment deadline of 31 January following the tax year. HMRC says both filings will give it a complete picture of your total earnings and the tax you owe on them. 

• Find out more: new HMRC penalty system coming for late tax returns

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How did the first MTD deadline go?

Millions of sole traders and landlords are not yet required to comply with MTD reporting rules. We spoke to a few taxpayers who are part of that cohort to hear about their experience:

‘I’ve joined earlier than I need to, but I’d rather be prepared’

Glen Kelly, 24, left his sales job this year to become a full-time professional bagpiper. Though he is not yet required to adopt digital tax reporting, he signed up early to stay ahead of upcoming thresholds so he will be 'completely prepared and in control' when it becomes mandatory for him. 

Previously using spreadsheets when bagpiping was a side hustle, Glen switched to the online accountancy service QuickBooks upon going full-time to avoid the 'stress' of once-a-year self-assessment filings. 

He signed up under a discounted introductory sole trader plan after hearing about it through his professional networks. He now uses the platform to log expenses, manage receipts, automatically calculate business mileage, and track estimated tax liabilities in real-time. 

Glen says the software is more 'cost-effective' than hiring an accountant, particularly as he is just starting his business. 

If he had been required to submit an update in August, Glen says he was confident that he could easily pull together his income and expenditure records for HMRC for the April to June 2026 period. 

• Find out more: how to fill in a self-assessment tax return

‘I’ve had to make a new routine after 20 years of self-assessment’

Having been a self-employed builder for over 20 years, Stuart Bogazzi says he was initially concerned about the new reporting rules, fearing it would add extra administrative work to his day. 

Stuart chose to use Sage as his MTD software, choosing the platform primarily because it was free. He adapted to the new rules by establishing a regular logging routine, processing transactions daily or weekly rather than leaving paperwork for his annual tax return. 

He takes photos of paper receipts on his phone, uploads them to the app, and throws the physical paper away, calling the process 'fairly simple.' 

Because the software links directly to his business bank account, it automatically categorises expenses like materials, fuel and wages. Stuart notes that this real-time tracking makes identifying and claiming eligible business expenses much easier.

He also says keeping his digital records up to date has actually reduced his accountant's workload, saving him money on fees.  

Stuart says his new routine meant he was able to complete the first quarterly update entirely on his own. His advice to other sole traders is to download MTD software early and adopt a new routine or regular habits to get used to things before it becomes mandatory. 

• Find out more: what MTD software should you use?

'I needed a lot of help to get started'

Michael, 70, is a buy-to-let landlord with several properties across east and southeast London. While he manages his properties hands-on, his accountant handled his finances and taxes. 

Ahead of the changes from April 2026, Michael had to part ways with his accountant after their annual rates rose to cover the new reporting requirements. He has yet to find another, and managed the first MTD deadline with his daughter's support. 

Michael found the search for MTD software difficult due to sponsored ads on platforms like Google. He initially signed up for a free MTD platform but is now looking for software that better supports his multi-property portfolio and mixed income.

Michael is confident that his first update was accurate, however he said he had to lean on his daughter for more support than he wanted to. Now he is aware of what is required from him, he is working to make the next update smoother. 

Despite the initial friction, Michael sees benefits in changing to quarterly updates and says he wants to be more hands-on with the finances going forward.

• Find out more: 7 tricky questions answered for landlords