HMRC is dispatching letters to over 580,000 taxpayers who have not yet enrolled in the Making Tax Digital (MTD) for Income Tax initiative, as a new August 2026 deadline approaches. According to a Freedom of Information (FOI) request submitted by international accountancy and business advisory group Azets, 864,000 individuals and landlords were required to register for MTD for Income Tax by April 6 this year. However, only 282,637 have complied, leaving a significant shortfall of 581,363 non-compliant taxpayers.
Two-Thirds of Eligible Taxpayers Not Registered
The figures reveal that two-thirds of those who should have registered have not done so, raising concerns about compliance and potential penalties. Fraser Campbell, UK head of accounts and business advisory services at Azets, commented: "MTD for Income Tax represents the most significant change in the personal tax system in nearly 30 years – but two-thirds of those who should be registered aren't." He added that there could be multiple reasons for non-compliance, including lack of awareness, forgetfulness, or denial about the need to register.
No Penalties Yet, But Future Risks Loom
HMRC has stated that there will be no penalties for missing a quarterly return date this year, but Campbell warned that delaying registration could lead to "stress, trouble and, potentially, fines." Taxpayers who fail to register now will face a backlog of filings: they will need to catch up on the current year's four quarterly returns simultaneously with the next year's quarterly filings and the annual declaration. This could result in having to file nine returns over a 12-month period.
Benefits of Timely Registration
Campbell emphasized the advantages of registering promptly, including access to near real-time digital information about business performance and projected tax bills. He said: "Preparation, planning and taking advice at the right time are key for compliance and staying on top of the UK's ever-evolving tax landscape." Taxpayers with queries or concerns about MTD are advised to speak to an advisor to understand eligibility and compliance requirements.
