Responding to a Freedom of Information (FOI) request from Azets, the UK’s specialist business advisor to SMEs, HMRC data shows that 864,000 individuals and landlords should have registered for MTD for Income Tax by 6 April 2026, but as of 20 May just 282,637 had done so.

The introduction of MTD this April brought the personal tax system closer to real-time and is expected to affect 2.9 million people by 2028. It introduced quarterly digital record keeping and reporting obligations for hundreds of thousands of landlords, sole traders and the self-employed, who previously only had to submit one tax return a year.

Following its introduction, qualifying individuals and businesses have been required to keep digital records, use MTD-compatible software and submit updates every quarter, as well as a final declaration, which replaces the existing self-assessment tax return.

Taxpayers will no longer be able to file using HMRCs self-assessment portal. 

Those with gross income above £50,000 per year must comply, the threshold dropping to £30,000 in 2027 and £20,000 in 2028.

Fraser Campbell, UK Head of Accounts & Business Advisory Services at Azets, which has its Scottish offices in Glasgow, Edinburgh, Aberdeen, Perth, Inverness and Ayr, said: “MTD for Income Tax represents the most significant change in the personal tax system in nearly 30 years – but two-thirds of those who should be registered aren’t.

“There are a multitude of reasons why people may not have signed up. Whatever their reason, not signing up creates potential problems in the future.

“HMRC has said there are no penalties for missing a quarterly return date for this year, but people are setting themselves up for stress, trouble and, potentially, fines by not taking action to register and keep up to date with the quarterly filings now.

“HMRC requires an end-of-tax-year declaration which requires the data from the four quarters to be aggregated.”