More than 800,000 landlords and self-employed individuals have yet to register for HMRC’s Making Tax Digital (MTD) scheme as the compliance deadline rapidly approaches. The new tax system mandates that landlords and self-employed workers earning over £50,000 annually submit four quarterly returns, in addition to a year-end adjustment and final declaration.
Despite an estimated 864,000 taxpayers needing to enroll this year, only around 50,000 have signed up so far, representing just over 5% of the total, according to HMRC insiders.
Rachael Griffin, a tax and financial planning specialist at Quilter, warned that many people still do not fully grasp what quarterly reporting entails. She cautioned that this lack of understanding could lead to a rush of late registrations as the deadline nears, especially among those with mixed income sources who may mistakenly believe the new reporting cycle is optional.
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Mike Warburton, tax expert at Telegraph Money, emphasized that while HMRC may commend its initial signup numbers, this does not reflect taxpayers’ actual acceptance of the system’s efficiency. “Taxpayers are registering because they have no choice,” he said. “Accountants report significant additional work helping clients prepare on time.”
Nimesh Shah of accountancy firm Blick Rothenberg pointed out the government’s goal with MTD: to reduce the £47 billion tax gap by encouraging more frequent, accurate reporting and minimizing errors. However, he noted that this overlooks the increased administrative burden and costs faced by millions required to file five tax returns annually. Shah warned that the volume of submissions raises the risk of mistakes and resulting penalties.
An HMRC spokesman responded that thousands of sole traders and landlords are signing up every week. He urged affected taxpayers to consult guidance on GOV.UK and highlighted that HMRC has sent direct communications clearly explaining the requirements.
With just weeks remaining, it is crucial for eligible taxpayers to register promptly to avoid penalties and ensure compliance with the new MTD regulations.