New HMRC 2026 deadline for workers is just weeks away | Personal Finance | Finance
Sole traders and landlords are facing a critical deadline as HMRC pushes ahead with its controversial overhaul of the tax system.
The taxman is scrambling to bust “myths” about its Making Tax Digital (MTD) regime after evidence emerged that huge numbers of those affected have yet to sign up – just weeks before their first submission is due. In a post on social media, HMRC issued a blunt reminder to the self-employed, stressing that every three months they are required to use compatible software to provide digital records of income and expenses.
The message went on to spell out who is affected. Importantly, anyone signed up to MTD must send an update for each source of income, including self-employment and property income.
Millions dragged into ‘digital’ net
The shake-up affects sole traders and landlords with a combined turnover above £50,000 a year – with HMRC estimating that 864,000 people would fall into this initial wave, all required to file their first quarterly update through HMRC-approved software by August 7.
But early signs suggest many are being caught napping. Figures show that just a week after the system went live, only 250,000 people had registered – and the vast majority of those, nearly 170,000, had signed up through tax agents and accountancy firms rather than individuals themselves. Campaigners fear the real number of stragglers could run into the hundreds of thousands.
Perhaps sensing trouble ahead, the Chancellor moved last year to soften the blow, announcing that there would be no penalties for filing overdue quarterly updates in the 2026/27 tax year – a concession seen by critics as tacit admission that the system’s rollout has been chaotic.
A long and troubled road
Making Tax Digital is not new. The project was first consulted on back in 2016, as part of HMRC’s drive to modernise how it manages taxpayer data. Elements of the scheme, such as MTD for VAT, have been running for years, but the income tax version has been repeatedly kicked into the long grass following a number of deferrals due to its complexity.
Under the rules finally taking effect this year, the days of the shoebox stuffed with crumpled receipts are numbered. Taxpayers dragged into the regime must ditch pen-and-paper record keeping and instead log every transaction digitally, submitting running totals to HMRC four times a year rather than filing a single annual return.
Officials insist the change is designed to give taxpayers a clearer, more up-to-date picture of what they owe. According to HMRC’s own guidance, once a quarterly update has been filed, users will be able to see an estimate of their tax bill for their self-employment and property income in their software or in their HMRC online services account.
The key dates
The first cohort – those already trading with income above £50,000 – must have started keeping digital records from 6 April 2026.
The critical dates that follow are:
- August 7, 2026 – deadline for the first quarterly update
- November 7, 2026 – second quarterly update
- January 31, 2027 – last “old style” Self Assessment return, covering 2025/26
- February 7, 2027 – third quarterly update
- May 27, 027 – fourth quarterly update
- January 31, 2028 – first year-end declaration filed directly through MTD software, covering 2026/27
A second wave of taxpayers, with lower turnover thresholds, will be dragged into the system in the following two years.
Penalties on the horizon
While there is a grace period for late quarterly filings this year, taxpayers have been warned not to get complacent. From next year, a new points-based penalty system kicks in, similar to driving licence endorsements – rack up too many points for missed deadlines, and a fixed fine follows.
Accountants have urged clients not to leave things until the last minute, warning that errors in the first submission can carry through every later filing, since each quarterly update builds cumulatively on the last rather than standing alone.
For now, HMRC’s message to those affected is simple: get signed up, get your software sorted, and don’t let August 7 catch you out.
