Thousands of taxpayers are being urged to act as rules tighten around the roll-out of the government’s Making Tax Digital (MTD) scheme.

Tax experts at Hampshire accountancy and business advice firm HWB Chartered Accountants are calling on sole traders and landlords to check their position now regarding the requirements for registration.

It follows a warning from HM Revenue & Customs (HMRC) that the tax authority is beginning to sign up taxpayers who have yet to register for the new regime.

Martin Back, HWB’s Tax Compliance Manager, said taxpayers should not assume that being contacted by HMRC means they can leave compliance until later.

“Now is an important time for anyone who is required to use MTD but has not yet signed up for the scheme,” said Martin.

“HMRC have said they are proactively signing people up, if they have not taken action themselves. Being signed up by HMRC means you lose the opportunity to take control of the process yourself."

"By registering now, you can make sure your details are correct, choose appropriate HMRC-recognised software and give yourself time to understand what is required, rather than waiting for a letter from HMRC and then having to react to it.”

MTD for Income Tax became mandatory in April 2026 for sole traders and landlords with qualifying income of more than £50,000.

The threshold will be lowered from April 2027, extending to those with qualifying income of more than £30,000.

Under the scheme, those within scope must keep digital records and send HMRC quarterly updates through prescribed, compatible software. The quarterly updates are not tax returns, but they form an important part of the information used to establish the taxpayer’s final tax position. The existing self-assessment Tax Return and 31 January deadline remain in place.

While HMRC has confirmed that no penalty points will be issued for late quarterly updates during the 2026/27 tax year, HWB is encouraging taxpayers not to treat the first year as a grace period.

Martin said:

“MTD has presented a steep learning curve for taxpayers including some of the smallest businesses in the south. The first quarter has brought challenges around registration, software, exemptions and the practicalities of making digital submissions, so the decision to waive penalties for late quarterly updates this year is welcome."

"But the absence of penalties does not mean there are no consequences to delaying. Anyone who leaves their submissions until much later risks creating a significant administrative backlog. From April 2027, the points-based penalty regime will also apply, so taxpayers need to get into good habits now.”

From 6 April 2027, taxpayers will receive a penalty point for each missed quarterly deadline, with a £200 fixed penalty applying once four points have been accumulated.

HWB says taxpayers should take the opportunity to establish whether they are in scope, check whether an exemption applies, ensure they are using HMRC-recognised software and seek professional advice where necessary.

“MTD is much more than simply downloading accounting software and pressing a button,” Martin added.

“The information being submitted needs to be accurate, because those quarterly figures will feed into the end-of-year tax calculation. For anyone who is unsure whether they are in scope, what records they need to keep or whether their existing software is suitable, my advice is simple: speak to an accountant. Taking professional advice now can prevent problems later and can also help taxpayers make better use of the new system for tax planning and forecasting."

"The move to more frequent digital reporting is a significant change, but there are positives. Done properly, MTD can give business owners much better visibility of their financial performance and potential tax liabilities throughout the year. That information can help people plan for their tax bills rather than being surprised by them.”

Government figures show that more than 436,000 taxpayers nationally have submitted an initial MTD quarterly update for the 2026/27 tax year, while more than 570,000 have signed up to the scheme.

At the same time however, almost half of those expected to comply - around 428,000 taxpayers - missed the first three-monthly filing deadline of 7 August.

Chartered accountants HWB, based at Chandler’s Ford, near Southampton, provides business and tax advice.

For more information on MTD compliance, visit here.

Photo: Digital Roll-Out - Martin Back, Tax Compliance Manager at HWB Chartered Accountants.