HM Revenue & Customs has confirmed that the first quarterly update deadline under Making Tax Digital for Income Tax passed on 5 August, with the majority of mandated sole traders and landlords filing on time. The obligation applies to individuals with qualifying trading or property income above £50,000 in the 2024/25 tax year, who moved onto the digital regime from 6 April 2026. In a statement, HMRC said penalty notices had already been sent to a portion of those who missed the window, under the points-based late-submission system that now covers quarterly MTD updates as well as annual returns.
What the August deadline covered
The window in question ran from 6 April to 5 July 2026 — the first of four quarterly periods mandated taxpayers must now report under MTD for Income Tax. Because each quarter carries its own one-month filing gap, the update for that period was due by 5 August. Taxpayers in scope are required to keep digital records of income and expenses throughout the year and submit a summary through HMRC-recognised software rather than waiting for a single annual return.
HMRC's published guidance lists more than 30 compatible software products, ranging from full accounting packages such as Xero, QuickBooks and IRIS Elements to simpler bridging tools built for taxpayers who still keep spreadsheets and only need a way to transmit the totals. In the final week of July, software providers reported a spike in support queries, concentrated among landlords filing MTD returns for the first time rather than existing self-assessment users switching format. Separately, a handful of agents told the Association of Taxation Technicians that clients with income split across joint property ownership took the longest to onboard, since each owner needs their own digital record set even where a single spreadsheet previously covered the whole let.
Early penalty activity
Under the points-based penalty regime that HMRC extended to quarterly MTD submissions, a missed deadline adds one point to a taxpayer's record; a financial penalty of £200 is triggered once four points accumulate within a 24-month rolling window. HMRC said the number of taxpayers who missed the 5 August deadline was a small proportion of the estimated 780,000 individuals mandated into the first phase, though it did not publish a precise figure ahead of its usual quarterly statistics release.
The Institute of Chartered Accountants in England and Wales flagged concerns in the run-up to the deadline that some landlords with multiple small lettings had underestimated the record-keeping burden, particularly where rent is collected through a letting agent that issues its own statements separately from the landlord's own bank records. A points-based penalty can still be appealed on reasonable-excuse grounds, the same standard HMRC applies to late annual self-assessment filings, and points expire automatically after two years of consistent on-time filing.
What happens next
The second quarterly window, covering July to September 2026, is due by 5 November. Not yet in scope are self-employed individuals and landlords with qualifying income between £30,000 and £50,000 — that group joins the regime from 6 April 2027, with a further threshold reduction planned for 6 April 2028.
- Income above £50,000 (2024/25 basis): mandated from 6 April 2026, first quarterly deadline already passed
- Income between £30,000 and £50,000: joins from 6 April 2027
- The £20,000 threshold group follows from 6 April 2028, subject to confirmation in a future fiscal statement
HMRC has said it will publish full compliance figures for the first quarterly cycle alongside its autumn self-assessment statistics, giving accountants and software providers a clearer picture of how the rollout performed before the next threshold group is brought into scope.