If you’re self-employed, a sole trader or a landlord, you should have made your first Making Tax Digital (MTD) for Income Tax submission on 7th August. If you missed this date, you weren’t alone but it is time to get back on track.

What is MTD for Income Tax and what happened on 7th August?

Making Tax Digital (MTD) for Income Tax is a new system introduced in April 2026 for sole traders, landlords and the self-employed with qualifying income over £50,000. It requires these groups to keep digital records of their income and expenses, submit quarterly updates to HMRC, and file an end-of-year tax return using compatible software.

Only around half of the taxpayers required to file their first MTD for Income Tax quarterly update actually did so on time. Of the more than 864,000 people now in scope of the initiative, an estimated 428,000 missed that first deadline entirely. (AOL)

Industry experts determine the reason for so many people to miss the deadline includes HMRC system downtime, registration issues, confusion over exemptions and deferrals, and issues simply getting to grips with new digital submission requirements. In short, a lot of people were caught out because this is a completely new way of reporting tax.

The good news is that HMRC has confirmed there are no penalties for late filing during this first year. But this will not last. The missed information needs to be submitted and persistently missing deadlines will lead to penalties in the future.

What you need to do

MTD for Income Tax is the biggest shake-up to personal tax reporting in over 30 years, replacing the old one-a-year tax return with quarterly digital record-keeping. It’s a legal requirement, not an optional upgrade — and it’s only going to expand, with an estimated 2.9 million people expected to be in scope by 2028.

Hour Hands advice:

If you’ve missed a deadline, or you’re not yet sure whether MTD applies to you, here’s where to start:

1. Check whether you’re in scope for MTD. Thresholds and exemptions vary, you may need some guidance from your bookkeeper or accountant.
2. Install your compliant software. Free options exist but you’ll need to add in your data, and keep the required records.
3. Don’t wait for the next deadline to catch up. The sooner you submit an overdue quarter, the less work you’ll have in the longer run.
4. Use this year’s grace period wisely. No penalties now doesn’t mean any consequences. You need to ensure your filings are accurate and made on time in the future. Remember, you have to do an end-of-year tax calculation so will need this information in order to complete this.
5. Get professional support if you’re unsure. MTD isn’t about using the required software. You need ongoing accounting knowledge to get right.

How can Hour Hands help?

As experienced bookkeepers, we can help sole traders, landlords, and small business owners get set up on HMRC-compliant software, stay on top of quarterly submissions, and understand what their numbers actually mean for their tax bill.

Whether you’ve already missed a deadline and need to catch up, or you want to make sure you’re properly set up before your next one, we can take the pressure off. Real-time digital records should make your financial life easier, not more stressful, and that’s exactly what we’re here for.

If you’d like to discuss the possibility of outsourcing your MTD or any aspect of your bookkeeping, let’s talk. We’re happy to share some of our numerous testimonials and create a package that works well for you.