HM Revenue & Customs (HMRC) has issued an important warning to landlords and sole traders with turnover above a certain level. The UK tax authority highlighted the looming deadline for first quarterly update deadline for Making Tax Digital in a post on X on Monday, August 3, warning that time “running out”.
“REMINDER: You need to send your first quarterly update by 7 August if you’re a sole trader or landlord with a combined turnover of over £50,000,” it said, directing people who fall into that category to learn more on their website. You need to file updates if this applied to you in the 2024/25 tax year, with four quarterly updates on income and expenses submitted using approved software now required.
HMRC introduced the MTD scheme for all VAT-registered businesses in 2022 as part of a phased transition to an all-digital service, and is now beginning a phased roll out to include individual taxpayers.
People with £50,000 of gross annual trading and/or rental income were told to sign up to the initiative for income tax before it was brought in on April 6, 2026, unless they fall into an exempt group. Some of these taxpayers will be exempted automatically, but others won’t – so it’s important to check the official guidance.
The quarterly updates aren’t don’t represent a change to the payment schedule, with tax bills still settled via annual tax return.
There are no penalties for missing a quarterly update deadline for the 2026 to 2027 tax year, a grace period put in place as people adapt to the new rules, HMRC says.
However, fines will be imposed for not keeping records at all, and existing penalties for late filing of tax returns or payment still apply.
It marks stage one of the three-phase Making Tax Digital for Income Tax programme the tax authority is bringing into effect across the next three tax years, The Chartered Institution of Taxation (CIOT) explains.
Sole traders, and landlords with qualifying income of £30,000 for the 2025 to 2026 tax year will need to start using the system from April 6, 2027.
Those with £20,000 of qualifying income for the 2026 to 2027 tax year will need to switch to the new reporting rules from April 6, 2028.
You can find the official guidance and eligibility rules on the UK Government website.