HMRC has issued a stark reminder to sole traders and landlords earning over £50,000: the first quarterly update under Making Tax Digital (MTD) must be submitted by Friday, 7 August. The new digital tax regime, which applies to those with combined turnover from self-employment and property exceeding £50,000, is now in full effect, and HMRC is urging taxpayers to act before the deadline.
What is the Friday deadline?
In a post on X, HMRC stated: "REMINDER: You need to send your first quarterly update by 7 August if you’re a sole trader or landlord with a combined turnover of over £50,000." This marks the first of four mandatory quarterly submissions under MTD for Income Tax, which requires taxpayers to keep digital records and file updates every three months.
Quarterly updates are concise summaries of business income and expenses. Using compatible software, taxpayers' digital records are automatically totalled for each income and expense category, and these figures are transmitted to HMRC. The process is designed to replace the traditional annual tax return with more frequent, real-time reporting.
Who is affected?
According to Beyond Accounts, a tax advisory firm, MTD applies to individuals whose combined gross income from self-employment and property exceeded £50,000 in their 2024/25 tax return. Gross means turnover before expenses—so a business with £45,000 of trading income and £10,000 of rent is included, even if profit is much smaller. The net is set to widen: the threshold drops to £30,000 in April 2027 and £20,000 in April 2028. Most sole traders and landlords will be inside the system within two years.
This means hundreds of thousands of taxpayers are now required to file quarterly, a significant shift from the traditional annual Self Assessment. HMRC's Craig Ogilvie, Director of Making Tax Digital, commented: "This is a landmark moment for the tax system. Hundreds of thousands of sole traders and landlords are now keeping digital records and will be sending their first quarterly update in the coming weeks. For those already using software, this should be straightforward and take minutes. If you haven’t signed up yet, there is still time - visit GOV.UK and search ‘Making Tax Digital for Income Tax’ to get started."
Penalties for missing the deadline
While no penalty points will be issued for late quarterly updates during the first year of MTD for Income Tax, penalties still apply for late Self Assessment returns and late payments. From the second year onwards, points-based penalties will be enforced. Taxpayers receive one penalty point for each missed quarterly deadline. Once four points are accumulated, a £200 fixed penalty is charged. Points expire after a period of compliance.
Beyond Accounts warned: "Each missed update earns a penalty point; at four points, a £200 fine lands, and the clock only resets after a sustained clean streak. The old habit of doing everything the week before the deadline doesn’t survive contact with four deadlines a year."
How to comply
Taxpayers must use HMRC-recognised MTD-compatible software to keep digital records and submit quarterly updates. HMRC advises those who haven't yet signed up to visit GOV.UK and search for 'Making Tax Digital for Income Tax' to get started. The first update for those affected is due by 7 August, and HMRC stresses that the process should be quick for those already using software.
With the deadline fast approaching, HMRC's reminder serves as a critical call to action for all eligible taxpayers. Failure to comply could lead to financial penalties and increased scrutiny, so it's essential to act now.
