Over 400,000 People Missed the MTD Deadline. Now HMRC Is Coming to Find Them.
Here’s a statistic that should make every sole trader and landlord sit up. More than 864,000 people were expected to be included in the first group required to use Making Tax Digital for Income Tax. By the first quarterly deadline, just over 436,000 had actually submitted an update.
That means more than 400,000 people who were expected to submit hadn’t done so.
HMRC noticed too. From September 2026, it began automatically signing up people who should be using MTD but hadn’t registered themselves. If your qualifying income is over £50,000 and you’ve been putting this off, the letter isn’t a maybe any more. It’s coming.
Here’s what has happened, why HMRC has stopped waiting and what to do if that letter is already sitting on your doormat.
The numbers behind it
MTD for Income Tax went live on 6 April 2026 for sole traders and landlords with qualifying income over £50,000. Instead of dealing with everything once a year, those affected now need to keep digital records and send quarterly updates to HMRC using compatible software. The first update was due by 7 August 2026.
In practice, HMRC’s own figures tell a much messier story. More than 864,000 people were expected to be in scope. Just over 570,000 had signed up and only just over 436,000 had submitted their first quarterly update by the deadline.
Do the maths and it’s a stark picture. Roughly 428,000 people, about half the entire first group, missed the deadline. Around 294,000 of them hadn’t even registered. That isn’t a handful of stragglers. It’s a mass no show, and HMRC’s response is exactly what you would expect from a tax authority that is tired of waiting. It is signing people up itself.
So what happens if you get the letter
If HMRC believes you should be using MTD for Income Tax and you haven’t signed up, you may receive a letter confirming that HMRC has enrolled you.
Being automatically enrolled doesn’t remove the requirements. You will still need compatible software, digital records and quarterly submissions, and you will need to bring anything outstanding up to date.
There are exemptions in certain circumstances, so if you think you shouldn’t be included, don’t ignore the letter. Check your position or speak to your accountant.
The smarter move, if you haven’t been contacted yet, is to get ahead of it. Sign up yourself or ask your accountant to do it as your authorised agent. That gives you time to choose suitable software, set everything up properly and avoid the scramble that comes with reacting to a letter when submissions are already outstanding.
And this is only the first group
MTD for Income Tax is being introduced gradually:
From 6 April 2026, it applies to those with qualifying income over £50,000.
From 6 April 2027, the threshold reduces to £30,000.
From 6 April 2028, it reduces again to £20,000.
So even if MTD doesn’t affect you yet, it may well do over the next couple of years.
The one bit of good news and its expiry date
Here’s the silver lining. There are no penalty points for late quarterly updates during the 2026/27 tax year while the new system beds in. If you missed the first deadline, you haven’t automatically received a penalty point for it.
That breathing space has a hard stop. From 6 April 2027, the penalty points system applies to MTD for Income Tax quarterly updates:
You receive one penalty point for each missed submission deadline.
Once you reach four points, a £200 penalty is charged.
Further missed deadlines while you remain at the penalty threshold can result in another £200 penalty each time.
Penalty points can expire once you meet the necessary compliance requirements.
Late payment penalties are separate from penalties for late quarterly updates, so it is still important to make sure any tax due is paid on time.
It is also worth remembering that a quarterly update isn’t your tax return and it doesn’t create a quarterly tax payment deadline. The updates provide HMRC with information from your digital records throughout the year. Your usual Self Assessment payment deadline of 31 January hasn’t suddenly changed because you are within MTD.
The grace period is real, but it is a countdown rather than a permanent state. Treating ‘no penalties yet’ as ‘no rush’ could leave you entering the live penalty regime next April with an avoidable backlog.
If you’re playing catch up right now
Check whether you have been signed up already and whether any quarterly updates are outstanding.
Get compatible software in place and make sure your digital records are set up correctly.
Submit anything outstanding as soon as possible. There may be no penalty points this year, but the backlog only becomes harder to deal with the longer it sits.
If you believe you should be exempt or HMRC has enrolled you incorrectly, check your position rather than ignoring the letter.
How Time to Delegate can help
A letter from HMRC lands very differently when you have an accountant who can help you deal with it. If you have received a letter, missed your first quarterly update or you are simply unsure whether the rules apply to you, we can help.
As your authorised agent, we can check whether you fall within MTD for Income Tax, help with registration, get suitable software in place and manage your quarterly submissions for you.
We can also make sure your bookkeeping and digital records are set up properly, so MTD becomes part of your normal accounting process rather than another deadline to worry about.
Had a letter? Think you should have? Get in touch with the Time to Delegate team and we’ll help you work out what needs to be done and get everything back on track.
Talk to us about Making Tax Digital
Information correct at September 2026. Tax rules and HMRC guidance can change, and individual circumstances vary.
Sources
Comments