436,000 sole traders and landlords sent HMRC their first quarterly update by 7 August. HMRC expected around 864,000 people to be in scope.
You can do that subtraction yourself.
If you are one of the people who let that date slide past, or you have not signed up at all yet, I want to start with the reassuring bit. Nothing bad happened to you on 8 August. No fine landed. No letter arrived. HMRC has switched off late submission penalties for quarterly updates for the whole of the 2026 to 2027 tax year.
That is the good news, and it is genuinely good.
The less comfortable bit is that the amnesty is temporary, it does not cover everything, and the next deadline is 7 November. Which is closer than it sounds when you are running a business through the autumn.
This post covers what actually happens if you missed the first update, which penalties are still live right now, what signing up late involves, and the three dates you need in your diary before Christmas. I work with sole traders, landlords and construction firms across Dover, Deal and Folkestone, and the same handful of questions keep coming up. So let us go through them properly.
The Gap Between Signing Up and Actually Filing Is Bigger Than Anyone Admits
Here is the figure that surprised me.
HMRC published its first proper set of numbers on 12 August 2026. Over 570,000 people had signed up to Making Tax Digital for Income Tax. Only 436,000 of them sent a quarterly update by the deadline.
So roughly 130,000 people did the paperwork, got themselves registered, felt organised about it, and then still missed the actual filing.
Signing up is not the finish line. It is the starting gun. I have seen this pattern before with MTD for VAT back in 2019 and 2022 — people register, tick it off mentally, then discover months later that registering and reporting are two separate jobs.
Craig Ogilvie, HMRC’s Director of Making Tax Digital, put it plainly in that same announcement: “If you haven’t yet signed up, now is the time to do so. Taking action now means you stay in control, can make sure your Making Tax Digital details are correct from the start.”
Your action this week: log into your software, not your HMRC account. Check whether a submission actually left your system for the quarter ending 5 July. If your software shows the period as open or draft, it did not go.
The Rule That Catches People Out Is Not the One They Think
Most people who told me “MTD does not apply to me” had done the maths on their profit.
Qualifying income is not profit. It is your gross income from self-employment and property, before you take a single expense off it. And it combines both.
A landlord with £28,000 of rent and a bit of freelance consulting bringing in £24,000 is at £52,000. In scope. Even if the mortgage interest, letting agent fees, and van costs mean the actual taxable profit is a fraction of that.
HMRC decided who was in the first wave by looking at the Self Assessment return for the 2024 to 2025 tax year. If that return showed qualifying income over £50,000, you should have started using Making Tax Digital for Income Tax from 6 April 2026.
Note the tense there. “Should have started.” Not “will need to start.”
Your action this week: pull out your 2024/25 tax return and add the turnover box and the property income box together. Before expenses. If the total clears £50,000, you are in, whatever your profit said. If you are not sure which boxes to look at, my post on Self Assessment basics walks through the structure of the return.
Why Nobody Got Fined on 8 August, and Why That Ends Faster Than You Expect
HMRC’s guidance is unusually direct on this point: “There are no penalties for missing a quarterly update deadline for the 2026 to 2027 tax year.”
That is the whole of your first year. Four quarters, no late submission penalties.
From the 2027 to 2028 tax year, a points system switches on. Miss a quarterly update deadline and you collect a penalty point. Collect four points and you get a £200 penalty. Every further miss after that costs another £200.
Four missed deadlines in a year is exactly four quarterly updates. So a single sloppy year from April 2027 onwards puts you at the threshold.
I think the amnesty is being read by a lot of people as “MTD is not really happening yet.” It is happening. You are just being given a year to get bad at it without paying for it, which is a rather generous way to run a tax system, and not one that repeats.
Your action this week: treat 7 November as though the penalty were already live. Building the habit during the free year is the entire point of the free year.
The Penalty That Is Not on Holiday
Here is the part that gets missed in the relief about quarterly updates.
Late payment penalties still apply. They have nothing to do with the submission amnesty.
For the 2026 to 2027 tax year, if you pay your tax late:
- Up to 15 days late — no penalty
- 16 to 30 days late — 3% of the tax owed at day 15
- 31 days or more — that 3%, plus another 3% charged at day 30, plus an annual rate of 10% accruing daily from day 31
From the 2027 to 2028 tax year those first two charges rise to 4% each.
There is a first-year concession worth knowing about. In your first year under the new penalties you get 30 days from the payment due date to pay or contact HMRC before the clock starts. After that it drops to 15 days.
So the submission side is forgiving this year. The payment side is not.
Your action this week: separate the two dates in your head and in your calendar. Quarterly updates are information. They do not create a tax bill and they do not change when you pay. Your payment deadlines have not moved.
Signing Up in October Means Catching Up on July
If you have not signed up yet, you are not simply starting fresh from the next quarter.
HMRC’s guidance is clear that when you join partway through the year you must use compatible software to send any missed quarterly updates for the year so far. Your first submission may be two quarters at once.
That is not a punishment. It is just how the cumulative reporting works — each update covers the year to date, so the data has to exist.
To sign up you will need to be registered for Self Assessment, have filed a return in the last two years, and have your Self Assessment user ID and password to hand. HMRC may put you through identity verification. If you are a sole trader, have your business name, trading address and a description of what you do ready.
The practical problem is rarely the sign-up. It is that the underlying records for April to July are sitting in a carrier bag, a banking app and a slightly optimistic memory. Getting three months of transactions categorised properly takes longer than the twenty minutes people budget for it.
Your action this week: if your April to July records are not yet digital, start there rather than with the HMRC sign-up page. My bookkeeping service exists largely for this exact situation, and catching up a quarter is far quicker than catching up a year.
Your Records Now Need Three Specific Things, Every Time
Digital records under MTD are not just “I have a spreadsheet.”
For every transaction, HMRC wants the amount, the date it was received or spent, and the category it belongs to, matched to the Self Assessment categories. That last one is where most people come unstuck. A bank feed gives you the amount and the date automatically. It does not know whether that £340 was materials, subcontractor cost or drawings.
For construction firms this matters more than most. If you are handling CIS deductions alongside quarterly updates, miscategorised transactions do not stay a small problem for long.
I use Xero, FreeAgent, QuickBooks, Sage and VT with different clients depending on what suits the business. There is no single right answer, though there is definitely a wrong one, which is picking the cheapest thing you can find in a hurry three days before a deadline.
Your action this week: spot-check twenty transactions in your software and see how many are sitting in a suspense or uncategorised bin. If it is more than two or three, your quarterly update is going to be wrong even if it is on time. I wrote more about building this into a routine in my post on record-keeping for small businesses.
The Three Dates That Matter Between Now and Next Spring
Put these in whatever you actually look at. Phone calendar, wall planner, back of the hand.
- 7 November 2026 — quarterly update for 6 July to 5 October
- 7 February 2027 — quarterly update for 6 October to 5 January
- 7 May 2027 — quarterly update for 6 January to 5 April
- 31 January 2028 — final declaration for the 2026/27 tax year
That last one is the one people forget entirely. Quarterly updates do not replace your tax return. You still make a final declaration where you claim your reliefs and allowances, add any other income, and settle the bill.
Four submissions plus a final declaration. Five touchpoints a year where there used to be one.
Your action this week: set the reminders for two weeks before each date, not the day itself. Nobody has ever benefited from finding out on 6 November that their bank feed stopped syncing in September. And if January is already your worst month for cash, my post on managing cashflow through the January slump is worth ten minutes.
Under £50,000 Today? You Are Probably in the Next Wave
If MTD has not touched you yet, do not file this away as someone else’s problem.
The threshold drops to £30,000 of qualifying income from 6 April 2027, based on your 2025/26 tax return. It drops again to £20,000 from 6 April 2028, based on your 2026/27 return.
Twenty thousand pounds of gross rental income is a single decent property in Kent. A part-time trade alongside a job clears £30,000 without much trouble.
The people joining in April 2027 have one advantage the first wave did not: they can watch how this year went for everyone else. They also have one disadvantage — no penalty amnesty. The free year applies to the 2026 to 2027 tax year, not to your first year personally.
Your action this week: work out which wave you are in and count backwards. If you are in the April 2027 group, your records need to be digital by then, which means starting the habit around the turn of the year rather than the week before. Getting your business finances onto a system that works is a lot less painful with six months of runway.
Where to Go From Here
The headline is simpler than the rules suggest.
If you missed 7 August, you have not been fined, and you will not be for this tax year. Get signed up, catch up the missed quarters, and hit 7 November properly. If you are under the threshold today, check which year pulls you in and start the record-keeping habit before it does.
And keep the two clocks separate. Submissions are forgiven this year. Payments are not.
Craig Ogilvie described the first quarter as “an important milestone in the move to a more modern tax system.” From where I sit, watching clients go through it, the ones who found it easy were the ones whose bookkeeping was already tidy. MTD did not create their advantage. It just made it visible.
If your records are behind, or you are staring at a sign-up page wondering what happens next, get in touch. I am AAT-licensed with nine years of this behind me, and I work with sole traders, landlords and construction businesses across Dover, Folkestone, Sandwich and Deal.
Better to sort a missed quarter in August than a missed year in January.