Under half of the 864,000 sole traders and landlords impacted by the new Making Tax Digital (MTD) for Income Tax system submitted their first update to HM Revenue & Customs by the 7 August deadline.
Official figures from HMRC showed that 436,000 people sent details about their income and expenses by the required date. Sole traders and landlords earning over £50,000 a year must submit a quarterly update using software. No penalties are being imposed for missing the cut-off during the first year of the new process.
Impacted people are also required to register for MTD before sending their first update and HMRC said 570,000 have done so.
In a change of strategy, the tax authority announced that from September 2026 it will begin automatically signing up those who should be using MTD rather than waiting for taxpayers to do it themselves.
New guidance will be published in late August to explain what people need to do if they receive a letter from HMRC about being signed up.
From 6 April 2027 onwards, points-based penalties will apply where taxpayers miss a quarterly deadline.
MTD applies to sole traders and landlords earning more than £30,000 from April 2027, and to those earning more than £20,000 from April 2028.
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