One week to go

Don't forget that one week tomorrow is the first major Making Tax Digital deadline (MTD).

Which means you have eight days to submit your first quarterly update to hit the Friday 7 August, 2026 deadline.

So if you are a sole trader or landlord and fall within the scope of (MTD) for Income Tax, then you have to get on with it.

Being within the MTD scope means you are generating income of £50,000 or above.

The first update covers income and expenses for the first three months of the tax year.

HM Revenue and Customs (HMRC) has said that 864,000 taxpayers should have filed the first quarter MTD report by next week.

Worryingly, it is said that over half-a-million people have yet to submit their reports.

MTD is controversial because you have to use third-party software to file your claim, an additional cost for businesses. And the admin load has effectively been quadrupled, because you still have to file a full tax return once a year, as well as the quarterly updates over the 12 months.

Another point of confusion is that the quarterly updates are just summaries of income and expenses to HMRC during the tax year. No tax payments are due resulting from the summaries.

HMRC stresses that the quarterly update is not a tax return. It is a short summary sent directly to HMRC through recognised software and, said the tax authority, takes minutes to complete.

Sidestepping the criticism, HMRC argues that this will help taxpayers, as it allows them to see an estimate of their future tax filing after each quarter.

MTD for Income Tax became mandatory from April 2026 for sole traders and landlords with qualifying income over £50,000.

The first quarterly update period runs from 6 April 2026 to 5 July 2026, for most customers. Some customers can instead use calendar update periods, the first of which runs from 1 April to 30 June.

Various exemptions from MTD do exist, including for those who are digitally excluded.

No penalty points will be issued for late quarterly updates during the first year of MTD for Income Tax.

Penalties do still apply for late Self Assessment returns and late payments.

Things get tougher after the second year, when points-based penalties will apply where taxpayers miss a quarterly deadline. Taxpayers receive one penalty point for each missed quarterly deadline. Once four points are accumulated, a £200 fixed penalty is charged. Points expire after a period of compliance.

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