Fear of perfection or lack of penalties – Why are 65 per cent of people still not registered for Making Tax Digital?

From 6 April 2026, it has been mandatory for sole traders, landlords and self-employed individuals with qualifying incomes over £50,000 to register for Making Tax Digital (MTD) for Income Tax.

However, 65 per cent of those affected have not registered yet, leading to HMRC expressing concern at Accountex London 2026.

Mass non-compliance does not happen for no reason, so it is worth understanding what is going wrong and what is at stake if things do not improve.

Do enough people care about Making Tax Digital?

Seemingly, there are still a lot of people who need to care about MTD that currently do not.

The seismic shift in the way that taxes will be filed under MTD cannot be overstated and the intensity of the change may be off-putting for those who have done things a certain way for many years.

HMRC may not have effectively communicated the value of MTD, but there is now a change in communication aimed at reducing the stress faced by those who are avoiding responsibility.

The statements made at Accountex outlined a new approach to the quarterly updates, with HMRC insisting that perfection was not expected.

Instead, the quarterly updates are supposed to be a reflection of finances at a given point in time and can be amended or updated later on without issue.

A casual approach to what appeared to be a daunting mass of administrative work could be the thing to inspire more MTD compliance, were it not for the looming threat of penalties.

Can I relax about quarterly updates or will I get fined?

Penalties for MTD take effect in 2027 and their absence this year may explain the lack of immediate registration.

When they do come into effect, the casual view on quarterly updates may not sit well with the penalties themselves.

Penalty points will be awarded for missing a quarterly update deadline but with no penalties attached to missing, erroneous or incomplete data, there is a risk that a toxic culture could develop.

To avoid penalties, quarterly updates could end up being rushed and sloppy.

This would see the annual tax filing become more difficult as it would be necessary to rectify the data at that point, amend the previous updates and get everything filed away to ensure compliance.

Ultimately, a view that was designed to make MTD seem more appealing and less arduous may end up undercutting the value and increasing the stress of staying compliant.

Is Making Tax Digital good?

MTD is supposed to be an exciting opportunity for people to take control of their finances and cut back on the stress of an annual tax scramble.

Quarterly updates form part of an ongoing relationship with your finances, where you should be continually aware of how you stand and your tax obligations.

Through this information, it will be possible to be more decisive with your money, cutting back when lean times approach and investing when the future looks bright.

This will only work if you take quarterly updates seriously, so while it is good that they will not be strictly governed, you should not be too casual with the data.

Instead, getting support from a trusted accounting team can be an effective strategy for making the most of MTD while cutting back on the challenges of implementation.

We can review your systems and advise you on what needs to change to stay compliant with the new system.

If you are not set up with software or are dissatisfied with the one you use, we can help you find the right technology to match your needs and budget.

The first quarterly update is due 7 August 2026 and it would be great to see as many people registered as possible before then.

We want to help you stay compliant and start making the most of MTD.