MTD First Quarter is Complete – So, What Have We Learned?

We did it – the first quarterly deadline for Making Tax Digital (MTD) for Income Tax has been and gone.

For sole traders and landlords with qualifying income over £50,000, MTD became mandatory on 6th April 2026, with the first quarterly update due by 7th August. And considering the amount of preparation, discussion and, let’s face it, uncertainty that surrounded MTD before it arrived, it’s useful to finally have some real figures to look at.

More than 436,000 sole traders and landlords successfully submitted their first quarterly update by the deadline, and by 12th August more than 570,000 people had signed up for MTD for Income Tax.

So, plenty of people have successfully made the transition.

But there’s another side to those figures.

HMRC previously estimated that around 864,000 taxpayers would need to use MTD from April 2026, which leaves a sizeable number who appear not to have signed up yet.

And you need to be aware that HMRC has decided it isn’t going to wait for them!

Haven’t signed up? HMRC will do it for you

From September, HMRC will begin signing up taxpayers it believes should already be using MTD for Income Tax but haven’t registered themselves yet.

If HMRC believes that includes you, it will contact you in writing. And this is one of those letters you really don’t want to put in the pile to deal with another day!

If you’re a sole trader or landlord and think you may fall within the MTD rules, we highly recommend you speak to your accountant now rather than waiting for HMRC to make the first move.

There could be a perfectly good reason why you haven’t registered – perhaps you don’t actually fall within the rules, or you might qualify for an exemption. Equally, you may simply have missed something and need to get yourself caught up.

Whatever the reason, it’s much easier to work out where you stand now rather than ignore the letter and hope the problem goes away – because believe us, it won’t!

And please watch out for scams

Whenever HMRC introduces a major change, unfortunately it also creates an opportunity for scammers.

With HMRC now contacting people about MTD registration, we wouldn’t be surprised to see convincing emails, texts or calls claiming that you need to click a link, make a payment or provide information to avoid a penalty.

So BE CAUTIOUS and remember, HMRC will only ever contact you in letter format sent directly to you through the post.

If something doesn’t feel right, do not under any circumstances use the contact details or links in any message you’ve received. Check independently with HMRC or speak to your accountant.

Honestly, we’d much rather you send something suspicious to us and ask, “Is this genuine?” than discover afterwards that it wasn’t.

What did the first quarter teach us?

The positive news is that hundreds of thousands of people successfully submitted their first update and MTD is working.

However, as we mentioned before, the figures also show that a significant number of taxpayers still haven’t fully made the transition.

And perhaps that’s the biggest lesson from quarter one – MTD isn’t something that’s going away.

For those within the rules, keeping digital records and sending quarterly updates is now part of running your franchise business, rather than something to think about once a year when the Self-Assessment deadline rolls around.

While that change of habit may take a little getting used to, once your software is set up properly and you’re keeping your records up to date throughout the year, those quarterly updates should become part of the normal rhythm of your accounts.

What if you missed the first deadline?

If you should have submitted an update by 7th August and didn’t, don’t panic – and equally don’t ignore it either.

HMRC has confirmed that it won’t issue penalty points for late quarterly updates during the 2026/27 tax year. That gives taxpayers some breathing space while everyone gets used to the new system.

However, and this is a big however, that doesn’t mean the quarterly updates are optional.

You’ll still need to bring them up to date before you can submit your tax return, and the usual consequences for late tax returns and late tax payments haven’t disappeared either.

From the 2027/28 tax year, the position also becomes less forgiving. Missed quarterly deadlines will begin attracting penalty points, and once four points have accumulated, a £200 penalty will be charged.

So, we’d recommend you treat this first year as exactly what it is: an opportunity to get your processes working properly before penalties for quarterly updates become part of the picture.

And another group is coming next year

Another reason why the first-quarter experience matters is because, from April 2027, MTD for Income Tax expands to sole traders and landlords with qualifying income over £30,000.

If that’s you, the experience of this year’s first group gives you something they didn’t have the luxury of – time to learn from what’s already happened.

It’s so important that you don’t wait until April. Talk to your accountant, make sure you know whether you’ll be affected, get the right software in place, and start getting comfortable with keeping your records digitally throughout the year.

Whether it’s with MTD or any other changes HMRC decides to bring in, one thing you’ll hear us say time and time again is this: these things are much easier when you’re prepared well before the deadline arrives.

MTD is here – now it’s about making it work

Reaching this first quarterly deadline feels like something of a milestone.

After years of talking about MTD for Income Tax, postponements, changing dates, and preparation, we’re finally seeing it working in the real world. And while there are clearly still people who need to catch up, hundreds of thousands have successfully made that first submission.

At The Franchise Accounting Specialists, we’ve been preparing our clients for MTD for some time, helping them understand whether they’re affected, getting suitable software in place, and supporting them with the move to quarterly reporting.

So, if you think you should already be registered and aren’t, if you’ve missed your first quarterly update, or if you’ve received a letter from HMRC and aren’t quite sure what it means, please don’t ignore it. Get in touch with us and we’ll help you work out exactly where you stand and what needs to happen next.

And if you’re likely to join MTD from April 2027, now is the time for us to start getting you ready. Because if the first quarter has taught us anything, it’s that MTD isn’t something to leave until the last minute.