HMRC has reported a low initial registration level for its new income tax regime, signaling widespread hesitation or lack of awareness among self-employed individuals and landlords.
A little over 11 years after ‘Making Tax Easier’ was first announced in the March 2015 Budget, Making Tax Digital for income tax self assessment (MTD for ITSA) finally went live on 6 April 2026. The subtle rebranding along the way—replacing ‘easier’ with ‘digital’—hints at the decade-long struggles to develop and launch the system.
The 2015 Budget Red Book confidently stated:
“…the government will transform the tax system over the next Parliament by introducing digital tax accounts, removing the need for annual tax returns. By the end of the next Parliament [2020], over 50 million individuals and small businesses will be able to see and manage their tax affairs online”.
It has certainly not worked out that way. Annual tax returns are very much still with us, and the digital transition is proving to be a slow climb.
Who Was Required to Register by April 2026?
As a reminder, the first group of taxpayers who were legally required to register with HMRC for MTD before the 6 April 2026 deadline consists of individuals registered for self-assessment who meet the following criteria:
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They receive income from self-employment, property, or a combination of both.
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They had a qualifying gross income from these sources of more than £50,000 during the 2024/25 tax year.
HMRC estimated that roughly 864,000 people would fall into this initial wave. All individuals within this bracket are required to deliver their first quarterly update of income and expenses to HMRC using HMRC-approved MTD software by 7 August 2026.
Following that initial submission, further quarterly updates must be submitted by 7 November, 7 February, and 7 May, culminating in a final tax return under the MTD framework by the subsequent 31 January.
A Stark Shortfall in Registrations
According to HMRC data released a week after the launch of MTD, total registrations numbered just 250,000. Crucially, nearly 170,000 of those sign-ups came directly from tax agents and professional accountancy firms acting on behalf of clients.
Only 80,000 registrations came directly from individuals. Given that professionals are the most likely group to comply precisely with the 6 April deadline, these numbers strongly suggest that around 614,000 individuals failed to register on time.
The Soft Landing: Penalties and Pitfalls
Perhaps in anticipation of a sluggish initial take-up, the Chancellor announced in last November’s Budget that there will be no penalties for filing overdue quarterly updates throughout the 2026/27 tax year.
However, taxpayers should not view this temporary reprieve as a reason to delay. Penalties will still apply for the final, unabolished end-of-year tax return. Under the strict rules of the MTD process, this final declaration can only be filed after all four preceding quarterly updates have been successfully submitted. Leaving everything to the last minute will inevitably trigger compliance bottlenecks.
Successive governments may have taken over a decade to actually introduce MTD, but if your income places you within its scope and you have not yet registered, procrastination is no longer a viable option.
Navigate Complex Tax Transitions with Chartwell Wealth Management
The introduction of Making Tax Digital represents one of the biggest structural changes to the UK tax system in a generation. For high-earning self-employed individuals and property investors, staying compliant while managing day-to-day business operations requires careful planning and the right digital infrastructure.
If you are unsure whether you fall within the £50,000 threshold, or if you need strategic guidance on how to structure your accounts, property portfolio, and wider financial planning around these new digital requirements, the team at Chartwell Wealth Management is here to assist.
Contact Chartwell Wealth Management today to ensure your wealth strategy remains compliant, efficient, and optimized for the future.
Tax treatment varies according to individual circumstances and is subject to change. The Financial Conduct Authority does not regulate tax advice.
