With four months until the first quarterly filing report, only around 80,000 individual taxpayers have signed up for the new MTD reporting system. HMRC expects a total of 864,000 individual taxpayers to fall under the first wave of MTD with qualifying income of £50,000 plus for the tax year 2024-25.

A last minute change of approach may mean that some taxpayers whose income has dropped below the £50,000 threshold can now extricate themselves from MTD regime, as long as they phone HMRC to advise them that their income has fallen. Originally there was no way out of MTD, so this was a welcome announcement from HMRC just before MTD became mandatory.

With nearly 600,000 still to sign up, so far the majority of registrations have been from tax agents and accountancy firms, raising questions about how HMRC can achieve full registration of the 864,000 affected taxpayers in time for the first quarterly filing deadline of Friday 7 August.

Craig Ogilvie, director, Making Tax Digital at HMRC, confirmed ‘69% agent sign up’, when updating the latest 250,000 sign up number.

He added: ‘On end of year (EOY) returns for 2025/26, FreeAgent have the most, followed by Untied and then Thomson Reuters. Thanks for all the efforts everyone is putting in.’

The testers in the original pilot for MTD for Income Tax are now filing their end of year returns, with Thomson Reuters confirming: ‘Our first pilot customer has successfully submitted their 2025-26 final declaration through the MTD pilot, using our HMRC-recognised Digita MTD software. This marks an important step as Making Tax Digital transitions from pilot to real-world delivery.’

Those participating in the trial are clearly up to speed, but there is still scepticism about awareness across the wider public affected by MTD.

‘The real test isn’t whether the software works. It’s whether your clients will actually use it without needing hand-holding every quarter,’ said Donna Taylor, head of customer success at practice management firm, Glasscubes.

A wider awareness level issue is definitely still a concern. Recent research by FreeAgent found that 39% of small business owners have never even heard of MTD, while 19% say they do not understand anything about MTD for Income Tax, despite quarterly digital reporting now being a legal requirement. Worryingly still, one in five (20%) sole traders are still unclear about the MTD rules.

Under MTD for Income Tax, from 6 April, sole traders, self employed and landlords with qualifying income over £50,000 for tax year 2024-25 have to keep digital tax records and make quarterly tax submissions to HMRC. Next year, the threshold drops to £30,000 from April 2027.

For the government and HMRC, they see MTD as the answer to the perennial tax avoidance and evasion challenge, stopping high level of errors and closing some of the huge tax gap.

Dan Tomlinson, Treasury minister responsible for HMRC, described MTD as ‘the biggest modernisation of the tax system for a generation’.

‘Under the current system, records are completed up to 21 months after transactions take place, increasing the risk of avoidable errors,’ Tomlinson said.

‘Around £6bn is lost each year where self assessment business customers do not pay the correct tax. Keeping digital, up to date records reduces error, protecting revenue… it will also help customers stay on top of their finances throughout the year, making the annual self assessment process quicker and easier to complete.’

What is really important to note is that quarterly reporting does not replace the annual self assessment tax return, but is in addition to current tax compliance requirements, so the annual 31 January deadline will remain a critical date regardless of MTD.

Leigh Thomas, vice president at Intuit, said: ‘For many, MTD is seen as a compliance requirement, but increasingly, we see it differently. MTD is a growth gateway. MTD is the first, crucial step on that journey. 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.’

Whatever the pros and cons, MTD is here to stay. There is still plenty of time to register so there is no need to panic, but it is important to ensure records are kept and can be submitted to HMRC via MTD commercial software, accountants, bookkeeping firms and tax agents, or using bridging software.

For a brief introduction to the ins and outs of MTD, take our 20-minute free CPD module presented by Diane Wright CTA, our in-house Croner MTD expert, Diane Wright. Extensive articles and information is available on our MTD portal.

Useful reading

NEW CPD module, Making Tax Digital, part 1 | 1 Apr 2026

HMRC clarifies how to exit MTD if income falls | 1 Apr 2026

What you need to know: MTD for Income Tax complexities | 19 Feb 2026

MTD filing deadlines at a glance | 1 Sep 2025