After a slow uptake in MTD, HMRC is set to automatically enrol people from September

The first quarterly filing deadline for Making Tax Digital (MTD) for Income Tax passed on 7 August.

Ahead of the deadline, it was expected that around 864,000 sole traders and landlords earning more than £50,000 a year would have registered and completed their first filing.

However, the reality has been quite different. HMRC is now working to encourage those who have not yet signed up to do so before the next deadline on 7 November.

What happened with the first MTD filing?

The expectation was that 864,000 sole traders and landlords earning above the £50,000 threshold would have registered for MTD and submitted their first quarterly update by 7 August.

In reality, just 570,000 eligible individuals had registered by the deadline. This leaves almost 300,000 people who had not registered at all.

Of those who did register, 23 per cent did not complete their first update. This works out to around 134,000 people who registered but failed to submit their first filing.

There are several possible reasons for the slower-than-expected uptake. One of the main factors being discussed is the fact that there are currently no penalties for missing quarterly filing deadlines during the 2026/2027 tax year.

Despite this, sole traders and landlords mustn’t overlook their end-of-year filing obligations.

The current ‘soft launch’ of MTD only applies to the quarterly updates. Missing an end-of-year filing can still result in penalty points.

What is HMRC doing about it?

Following the lower-than-expected uptake of MTD for Income Tax, HMRC has introduced a new approach to encourage eligible taxpayers to join the scheme.

From September 2026, HMRC will begin automatically signing up eligible taxpayers who have not already registered themselves.

This move sends a clear message that MTD is not going away and that businesses will ultimately need to comply with the requirements.

The automatic enrolment process will not take place all at once. Instead, HMRC plans to bring taxpayers into the scheme in stages over the coming months.

Further guidance is expected to be released throughout August, including information on what individuals should do if they receive a letter informing them that HMRC is registering them for MTD.

The process will continue as the eligibility threshold changes, with the income threshold dropping from £50,000 to £30,000 in April 2027.

Could auto-enrolment create risks?

At first glance, automatic enrolment may sound like a helpful way of taking some of the pressure off taxpayers. However, allowing HMRC to manage the registration process could create some challenges for businesses.

Some of the potential risks include:

• Limited choice over software – When individuals register themselves, they have more time to research and choose software that suits their business. If HMRC registers you automatically, there could be less time to find and set up software that meets your needs.
• Incorrect or outdated information – The automatic enrolment process will rely on information held by HMRC from previous tax returns. Registering yourself means you have the opportunity to check your details and make sure everything is set up correctly before you need to start filing.

How can we help?

Individuals need to remember that MTD is designed to make managing tax easier. The aim is to simplify the tax process, support compliance and make completing end-of-year tax returns more straightforward.

Sole traders and landlords should consider registering for MTD before HMRC automatically enrols them. Taking action early can help reduce some of the risks and give you more control over the process.

We understand that MTD can be confusing, particularly with the rules and deadlines changing over time. That is where we can help.

Our team can support you with the enrolment process, help you choose and use compliant software and make sure you stay on top of your filing deadlines.

For support with MTD, get in touch with our team today!