HMRC has confirmed that 436,000 sole traders and landlords will escape penalties after successfully sending their first Making Tax Digital for Income Tax (MTD for Income Tax) quarterly update for the 2026 to 2027 tax year. This comes as over 570,000 customers have now signed up to the service.
Sole traders and landlords earning more than £50,000 have been required to keep digital records and send quarterly updates to HMRC since April 2026, with the first update covering the first three months of the tax year. HMRC has also confirmed to Birmingham Live that there are no penalty points for late quarterly updates in the 2026-27 tax year.
Sign-up drive begins in September
From September 2026, HMRC will begin signing up customers who should be using MTD for the 2026 to 2027 tax year but have not yet done so, helping them meet their requirements. New guidance will be published in late August to explain what customers need to do if they receive a letter from HMRC about being signed up.
Craig Ogilvie, HMRC’s Director of Making Tax Digital, said: "It’s fantastic to see so many sole traders and landlords successfully sending their first quarterly updates. This marks an important milestone in the move to a more modern tax system, with many customers telling us that the process is straightforward and works well through their chosen software."
Deadline remains 31 January
The Self Assessment tax return deadline remains 31 January. Quarterly updates do not replace Self Assessment, but those in scope will have to send their quarterly updates to be able to submit a tax return.
Ogilvie added: "If you haven’t yet signed up, now is the time to do so. Taking action now means you stay in control, can make sure your Making Tax Digital for Income Tax details are correct from the start, and have time to choose the software that works best for you, rather than waiting for HMRC to sign you up from September."
The confirmation from HMRC comes amid wider changes to tax rules, including recent reports on inheritance tax decisions affecting gifting allowances.
