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The first major deadline for Making Tax Digital for Income Tax (MTD ITS) is fast approaching. One week after the regime became mandatory for those with qualifying income over £50,000, HMRC has confirmed that 250,000 entities have signed up. However, there is a critical catch for small business owners.
According to new data, the vast majority of these registrations are from accountants and tax agents—not individual landlords or sole traders. With just four months until the first quarterly filing report (due by Friday 7 August), only 80,000 individual taxpayers have enrolled. HMRC expects a total of 864,000 taxpayers to fall under this first wave for the 2024-25 tax year.
If you are a landlord or self-employed individual earning over £50,000, this is your signal to act now.
A Last-Minute Rule Change: Is There a Way Out?
In a welcome move, HMRC introduced a last-minute change of approach. Previously, once you were in the MTD system, there was no way out. Now, if your income has dropped below the £50,000 threshold, you may be able to extricate yourself—provided you phone HMRC directly to advise them of the change.
While this offers relief for some, the bigger picture remains urgent. Nearly 600,000 taxpayers are still not signed up, raising serious questions about whether HMRC can achieve full compliance by the August deadline.
The Awareness Gap: A Major Risk for Your Business
The real challenge isn’t the technology—it’s whether clients will actually use it without hand-holding every quarter. Recent research by FreeAgent highlights a worrying trend:
- 39% of small business owners have never even heard of MTD.
- 19% say they do not understand anything about MTD for Income Tax.
- 20% of sole traders are still unclear about the MTD rules.
Despite quarterly digital reporting now being a legal requirement, awareness remains dangerously low. Don’t let your business fall into this gap.
What You Need to Do Now (It’s Not Just Quarterly Filing)
One of the biggest misconceptions is that quarterly reporting replaces the annual Self Assessment. This is false. The annual 31 January deadline remains critical. MTD is in addition to your current tax compliance requirements.
You must:
- Keep digital tax records.
- Make quarterly submissions to HMRC via MTD-compatible software.
- Still file your End of Year (EOY) return.
Why Comply? Beyond Penalties to Business Growth
The Treasury views MTD as the “biggest modernisation of the tax system for a generation.” HMRC estimates that £6bn is lost each year due to errors in Self Assessment. By keeping digital, up-to-date records, you reduce errors and protect your revenue.
As Leigh Thomas from Intuit puts it: “MTD is a growth gateway. Staying compliant isn’t just about filing on time—it’s about having accurate records, clear insight, and the confidence to make better decisions day to day.”
Don’t Panic, But Don’t Delay
There is still time to register, but you cannot afford to wait. Whether you use commercial software, bridging software, or the support of a professional, you need a plan before 7 August.
We are here to help you navigate every step.
Ready to get MTD compliant without the stress?
At Jermyn & Co, we specialise in Making Tax Digital for landlords and the self-employed. We ensure your digital records are accurate, your quarterly filings are on time, and your tax position is optimised—not just compliant.
Contact us today for a free MTD health check. We provide free initial consultation for your peace of mind.