The first quarterly filing deadline under Making Tax Digital (MTD) for Income Tax has highlighted the scale of the challenge facing self-employed individuals, landlords and sole traders across the UK.
Our analysis of figures from HMRC found that an estimated 428,000 taxpayers missed the first MTD deadline of 7 August 2026, with figures showing that only around half of those required to submit a quarterly update did so on time.
Why have so many taxpayers struggled?
MTD for Income Tax represents the biggest change to personal tax reporting in more than 30 years. Instead of submitting a single annual tax return, affected taxpayers must now maintain digital records and make quarterly submissions using compatible MTD software.
For many, the move has involved a steep learning curve. Challenges during the first quarter have included:
- Understanding new reporting requirements
- Registering for the service
- Navigating HMRC system issues and downtime
- Managing MTD exemptions and deferrals
- Adapting to digital record-keeping processes
- Using MTD-compatible software correctly
While HMRC has confirmed there will be no late filing penalties during the first year of the regime, the absence of fines should not be mistaken for a reason to delay action.
The risk of falling behind
Taxpayers who miss early deadlines risk creating a significant compliance burden over the next 12 months and future years.
Anyone who leaves their first filing until the 2027 deadline will need to catch up with four filings from this year at the same time as next year’s quarterly filings become due, as well as their annual declaration, so they’ll have to potentially file nine returns over the same 12-month period. This can quickly become a substantial administrative challenge and increase the risk of errors, missed deadlines and unnecessary stress.
With the next quarterly filing deadline approaching in November, now is the ideal time for affected taxpayers to review their position and ensure they are prepared.
Software alone is not enough
One of the key lessons from the first filing period is that compliance is about more than simply purchasing MTD software.
While there are free and paid MTD-compatible solutions available, successful compliance also depends on maintaining accurate records, understanding what information must be reported, and ensuring submissions are completed correctly and on time.
The quarterly updates submitted throughout the year will ultimately inform the end-of-year tax calculation. Accuracy from the outset is therefore essential to ensure the correct amount of tax is paid and that taxpayers have greater visibility over future liabilities.
Beyond compliance
Despite the initial challenges, MTD also presents opportunities.
Businesses and landlords who embrace digital record keeping can benefit from more up-to-date financial information, improved visibility of potential tax liabilities, and more informed conversations with their advisers. Over time, the new regime is expected to support better forecasting, budgeting and tax planning.
We’re here to help
MTD for Income Tax is expected to affect millions more taxpayers over the coming years. If you are unsure whether the new rules apply to you, now is the time to check. It is also important to ensure that any software being used is HMRC compliant and that digital record-keeping processes are in place ahead of future deadlines.
As the UK's number one Making Tax Digital adviser, Azets is well placed to help those impacted who have missed the first filing deadline get back on track. Whether you need support with registration, software selection, quarterly submissions, record keeping or understanding your ongoing obligations, our MTD specialists can help you stay compliant and avoid future reporting bottlenecks.
Get in touch with our MTD team today to discuss your MTD obligations and ensure your reporting, deadlines and compliance requirements remain firmly on track.
