HMRC has issued a warning that more than 864,000 sole traders and landlords must submit their first quarterly update under the Making Tax Digital (MTD) for Income Tax system by August 7, 2026. This deadline applies despite the change in Prime Minister to Andy Burnham, who succeeded Sir Keir Starmer earlier this year.
No Changes to MTD Rollout Under New PM
Contrary to speculation, there have been no alterations to the rollout of the MTD system under the new Labour government. The legal requirement, which came into force under Sir Keir Starmer's administration, continues as planned. Craig Ogilvie, HMRC’s Director of Making Tax Digital, described the upcoming deadline as "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," Ogilvie said.
Who Is Affected and When
The first phase affects sole traders and landlords with income exceeding £50,000. The system will extend to those earning more than £30,000 from April 2027, and to those earning more than £20,000 from April 2028. The quarterly updates cover income and expenses for the first three months of the tax year.
It is important to note that the annual tax return deadline remains January 31, 2027. Quarterly updates do not replace the tax return; customers must still submit their return and pay any tax owed by that date.
Case Study: Smooth Transition for Some
HMRC provided a case study of Natasha, a sole trader who found the process straightforward. "I was expecting there to be some hurdles and I wanted to give myself time to work through any issues but was pleasantly surprised to find the process very smooth and straightforward," she said.
"I went back to check I did it right about three times, but it really was very straightforward. Everything made sense and was logical - it wasn’t overwhelming, even though it was all new to me. If you can complete your Self Assessment tax return, this is much easier. As far as tax submissions go, it was probably as pleasant as they come," she added.
Implications for Taxpayers
HMRC urges all affected individuals to ensure they are signed up to MTD and ready to submit their first quarterly update by August 7. Failure to comply may result in penalties. The system aims to modernize tax reporting, making it more efficient and reducing errors.
