(UNITED KINGDOM) – Nearly 864,000 individuals and landlords were due to register for Making Tax Digital for Income Tax (MTD for ITSA) by April 6, 2026, but only 282,637 had registered by May 20, 2026, leaving a large majority unregistered.

That gap means roughly two-thirds of those expected to sign up had still not done so more than six weeks after the deadline. The figures, highlighted by Azets, point to a slow start for one of HMRC’s biggest reporting changes for sole traders and landlords.

Making Tax Digital for Income Tax changes how affected taxpayers keep records and send updates to HMRC. Instead of relying only on an annual Self Assessment cycle, people within scope generally need digital records, quarterly updates, and an end-of-period process through compatible software.

Chris Etherington, a tax partner at Azets, described the shift as the biggest change to the personal tax system in nearly 30 years. His warning was practical. Leaving registration late may create a backlog, especially where taxpayers and agents need time to set up software, check digital records, and align reporting periods.

Delays carry an administrative risk even in a year when HMRC says it will not charge penalties for missed quarterly return dates. A person who signs up late may still face several filing obligations close together, followed by the annual declaration. That compression of deadlines can create avoidable pressure.

Landlords and self-employed people also face a moving target on eligibility. The current entry point is based on gross income, not profit. Anyone looking only at net earnings may misread whether the rules apply. That distinction matters because the threshold is set to fall twice in the next two years.

HMRC’s registration numbers show the scale of the shortfall . Most eligible taxpayers had not joined the system by late May, despite the April 6, 2026 start date already having passed.

The threshold question is central to who enters the system next. At present, MTD for ITSA applies from a gross-income threshold of £50,000. HMRC is then set to widen the population by lowering that figure to £30,000 in 2027 and £20,000 in 2028.

Gross income means turnover or rental income before expenses. That is often where confusion starts. A landlord with high rental receipts but modest profit may still be pulled into the rules. The same applies to a sole trader whose business costs cut taxable profit sharply.

Each threshold drop increases the number of taxpayers who may need digital records and software. People below £50,000 today may still be affected soon. Waiting until the year a lower threshold arrives may leave less time to test systems, fix record gaps, and decide whether an agent should handle submissions.

HMRC has said there will be no penalties for missing a quarterly return date this year. That offers some short-term relief. It does not remove the need to register, keep compliant records, or make sure the reporting system works before future deadlines harden.

Azets has urged affected taxpayers to act now rather than treat the penalty position as a reason to wait. That advice tracks the practical problem raised by Chris Etherington. Software setup, agent authorisation, and digital bookkeeping changes may take time, especially where records have not been kept in a form that can feed directly into quarterly updates.

HMRC-approved software is another key point. MTD for ITSA does not simply mean sending figures online in any format. The system generally requires compatible software that can maintain digital records and submit information to HMRC in the required way. Taxpayers who have not checked whether their product is approved may need to do that before they can file properly.

Some people may assume the first year is largely symbolic because of the no-penalty stance on missed quarterly deadlines. That reading is too relaxed. Registration, software choice, and record quality still shape how difficult the next filing cycle becomes. A late start may not trigger a penalty this year, but it can still create a pile-up of work.

Remote-work tax issues and digital nomad arrangements sit in a different area of policy. They may affect where income is taxed, but they do not change the core MTD for ITSA rules for UK taxpayers within scope. Mixing those topics can cause confusion, particularly for landlords or sole traders with cross-border income.

Anyone close to the threshold, or expecting income changes before 2027 or 2028, may want to check gross receipts early and confirm whether existing bookkeeping software is HMRC-approved. The threshold drops to £30,000 next year and £20,000 the year after, which means the pool of affected taxpayers is set to widen quickly.

This article covers tax policy changes and should not be construed as personal tax advice.

Consult a qualified tax professional for individualized guidance on MTDIT compliance.