As of April 6, anyone who earned more than £50,000 in the 2024/25 tax year from property or self-employment was required to sign up to the Government's Making Tax Digital scheme. The scheme requires earners to file quarterly digital records of income and expenses with HMRC. The Government says the scheme will make the year-end tax return easier, but failure to file quarterly digital records can result in fines. Impacted Brits must supply their first quarterly update by August.
A £200 penalty will be issued for repeated late submissions in the future. Penalty points will be issued for every late submission, and the fine is triggered once a person receives four points. HMRC says this penalty system will prevent immediate fines for occasional slip-ups.
We are encouraging all customers who were required to sign up by April 6 to do so as soon as possible and expect sign-ups to rise through the first quarter in advance of the first quarterly update deadline on August 7. The pace of sign-ups is following an expected trajectory informed by our experience of successfully launching MTD for VAT.
HMRC has been sending emails and letters to impacted parties and using paid advertising in the run-up to the tiered roll-out. This year, sole traders and landlords earning more than £50,000 through self-employment and property will have to sign up. In April 2027, the threshold will drop to £30,000 for the 2025/26 tax year. HMRC will not issue penalty points for the first 12 months for customers joining MTD for Income Tax in April 2026 to support the transition.
Josh Toovey, senior research and policy officer at the Association of Independent Professionals and the Self-Employed, described the uptake as concerning. He noted a significant awareness gap around these requirements, particularly among those who do not have the support of an accountant. Toovey expects another wave of registrations ahead of the August deadline and said more needs to be done to raise awareness.
The exact number of sole traders and landlords who have signed up so far remains unclear, as does the effectiveness of HMRC's communication campaigns. No specific fines or penalties for non-compliance have been reported to date, and the total number of individuals affected by the £50,000 threshold is not publicly confirmed. It is also unknown whether there are any legal challenges or exemptions to the mandatory sign-up requirement.