The deadline for the first quarterly submission under Making Tax Digital for Income Tax (MTD for IT) has now passed, but thousands of taxpayers who are required to use the new system have yet to sign up. Of the estimated 864,000 individuals with qualifying income over £50,000 who fall within the first wave, around 294,000 have not yet enrolled.
To address this gap, HM Revenue & Customs (HMRC) has, for the first time, announced plans to automatically sign up taxpayers who are required to use MTD for IT but have not yet done so.
Automatic sign-up: what happens next?
Those who are required to use MTD for IT but have not yet signed up will be automatically enrolled in stages from September.
HMRC has said that individuals can avoid automatic sign-up by registering themselves now, giving them time to prepare and choose the software that best suits their needs, rather than waiting for HMRC to sign them up.
New guidance is due to be published in late August explaining what customers need to do if they receive a letter from HMRC notifying them that they are being signed up.
Quarterly updates
The first quarterly update period ran from 6 April to 5 July 2026, with the deadline for submission being 7 August 2026. Unlike a tax return, a quarterly update is a short summary of income and expenses submitted through compatible software.
Quarterly updates do not replace the Self Assessment tax return, which still needs to be submitted by 31 January. However, those within MTD for IT must submit their quarterly updates before they can complete their tax return.
· More than 436,000 sole traders and landlords have now submitted their first quarterly update for 2026-27;
· With more than 570,000 customers signed up, this means around 134,000 have signed up but have yet to submit their first update; and
· There are currently no penalties for late quarterly updates during 2026-27, but taxpayers should use this first year to get familiar with the process.
How will the MTD for IT penalty points system work?
From 6 April 2027, the penalty points system will apply. Taxpayers will receive one penalty point for each missed quarterly deadline, with a £200 penalty once four points have been accumulated. Points can expire after a period of compliance.
For more information on the new penalties, download our Making Tax Digital for Income Tax: Penalty Regime Overview factsheet.
How M+A Partners can help
If you have any questions about Making Tax Digital for Income Tax, quarterly updates or whether you need to register now or in a later phase, please speak to your usual M+A Partners’ contact or email enquiries@mapartners.co.uk