Delaying Making Tax Digital for Income Tax registration could cost you more than you think

With less than three weeks away until Making Tax Digital (MTD) for Income Tax begins, the majority of affected taxpayers have still not registered.

Out of 864,000 sole traders, landlords and self-employed individuals expected to fall into the first wave, only around 81,000 taxpayers have registered. That means 90 per cent are still yet to act.

Time is nearly up and delaying registration is not an option. It will only create more pressure and disruption as the new system comes into effect.

What is Making Tax Digital for Income Tax?

MTD for Income Tax will change how many sole traders, landlords and self-employed individuals report their earnings to HMRC.

From 6 April 2026, individuals with a qualifying income above £50,000 must keep digital records and submit quarterly updates of their income and expenses, as well as a final annual declaration using compatible software.

Why are so many taxpayers delaying registration?

Whether it is due to concern or a lack of awareness, something seems to be holding individuals back from registering.

HMRC is offering a helping hand to taxpayers entering the first year of MTD for Income Tax and announced a soft-landing period.

This means penalties for late quarterly submissions will generally not apply during the 2026/27 tax year.

However, this welcome act should not be confused with a lack of compliance.

The full penalty regime will begin from April 2027 and those that have not prepared in advance will struggle once enforcement increases.

If you choose to ignore your obligations, you could face:

• Failure to file penalties
• Point-based penalties for late submissions
• Late payment penalties
• Interest charges
• Increased HMRC scrutiny

What are the main concerns around MTD for Income Tax?

It is natural to feel uncertain about the change in your reporting requirements.

One of the biggest worries for many is the cost of investing in compatible software or paying for professional support to help manage these new requirements.

Others may feel unsure about their ability to manage digital systems, especially if they are less familiar with technology.

On top of that, the move from annual reporting to quarterly updates can feel like an increase in admin and there is the added concern of making mistakes while getting used to a different way of working.

These worries altogether might be a reason for you to hold back from registering, but delaying preparation and seeking support will only make the change more difficult.

How can you benefit from MTD for Income Tax?

These concerns should not overshadow the benefits of registering for MTD for Income Tax.

The move to digital reporting will make it easier to stay organised and reduce the risk of lost or incomplete information.

Compatible software can also take away the risk of the errors that manual processing brings and improve accuracy by automating calculations.

Alongside software, digital submissions can streamline the process and save you time on preparing tax returns and organising paperwork.

Perhaps most importantly, having up-to-date financial data allows for better planning and cash flow management, so you can truly feel more in control of your finances.

How can we help you prepare for MTD for Income Tax?

The clock is ticking and this is your last chance to get ahead and prepare for your new MTD for Income Tax obligations.

Seeking professional support now can help you iron out those concerns, stay compliant and ensure you are ready for the first reporting deadline.

We can help you register, choose the right MTD compatible software, maintain digital records and submit quarterly updates on your behalf.

We want to take some of the pressure off moving to digital reporting and give you peace of mind that your tax returns are accurate.

For further advice or support on your Making Tax Digital for Income Tax requirements, get in touch.