Sole Traders Lag in Adopting HMRC's Making Tax Digital Scheme Ahead of Deadline
Fewer than half of self-employed individuals and landlords have registered for the digital tax initiative, prompting concerns from tax authorities.
His Majesty's Revenue and Customs (HMRC) is encountering significant challenges in encouraging sole traders to comply with its Making Tax Digital (MTD) scheme, as a crucial deadline approaches next month. Despite years of advisories, fewer than half of the targeted individuals have registered.
Since the beginning of the current financial year, only 400,000 sole traders and landlords have signed up for MTD. This figure falls short of HMRC's estimate of 864,000 required registrations by the August 7 deadline. This low uptake highlights a persistent struggle for HMRC to gain compliance for the digital initiative, which was initially announced a decade ago and has faced numerous delays and criticism from business owners and accountants.
The MTD requirements were expanded to include sole traders and landlords earning over £50,000 annually starting in April 2026. Further reductions in the income threshold are planned, with the figure set to fall to £30,000 next April and to £20,000 by 2028. For VAT-registered businesses above the £85,000 threshold, MTD has been mandatory since 2019.
Data obtained through a Freedom of Information request by NFU Mutual revealed that by April 22, 2026, only 271,413 sole traders and landlords had signed up. Of these, a mere 25,808 were voluntary registrations. In the nearly three months since that initial data point, an additional 100,000 registrations have been added, yet the August deadline remains imminent.
Sean McCann, a chartered financial planner at NFU Mutual, noted the relatively low initial registration numbers, stating that only 31 percent of those estimated to be affected had registered by late April. Sole traders and landlords must submit their first MTD for income tax by August 7. Registration can only be completed online, with no dedicated phone line or chatbot support available.
An HMRC spokesperson stated that thousands of customers are registering weekly, aligning with their expectations, and anticipates a further increase before the deadline. The department has reportedly reached out to millions of customers through communications and hosted numerous events and webinars to encourage sign-ups. They urge all individuals required to join MTD this year to register promptly.
Individuals who miss the August deadline will initially receive a reminder letter. Penalties will not be applied for the 2026/27 tax year for non-compliance.