HMRC deadline approaches as more than 580,000 taxpayers still not properly registered

More than 580,000 self-employed workers and landlords have yet to sign up for HMRC's Making Tax Digital for Income Tax scheme, despite less than a month remaining before the August 7 registration deadline.

A Freedom of Information request has revealed that of the 864,000 people required to register for the scheme by April 6 this year, only 282,637 had signed up by May 20.

The figures, obtained by international accountancy firm Azets and confirmed by HMRC, show that around two-thirds of those required to join the new digital tax system had not yet registered when the data was compiled.

HMRC said this week it expects registration numbers to continue increasing ahead of the August 7 deadline.

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Fraser Campbell, UK head of accounts and business advisory services at Azets, said the introduction of Making Tax Digital for Income Tax marks the biggest change to the personal tax system in almost 30 years.

Mr Campbell 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."

He said the low registration rate could be explained by a lack of awareness, people forgetting to register or some taxpayers being reluctant to embrace the new reporting requirements.

Mr Campbell warned that although HMRC has confirmed there will be no penalties for missing quarterly filing deadlines during the first year of the scheme, delaying registration could create additional administrative burdens.

Mr Campbell said: "By not registering now and by delaying it further, anyone who is in scope of MTD will need to catch up with this year's four filings at the same time as next year's quarterly filings become due."

He warned this could leave some taxpayers facing as many as nine separate submissions within a single 12-month period.

An HMRC spokesperson said registration numbers are continuing to rise as the deadline approaches.

They said: "Thousands of customers are signing up for Making Tax Digital every week, in line with our expectations, and we expect further increases ahead of the August 7 deadline."

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The spokesman added: "We've written to millions of customers and delivered hundreds of events and webinars."

"We encourage all those required to join MTD this year to take that first step and sign up now."

Making Tax Digital for Income Tax was introduced in April and changes how self-employed workers and landlords report their earnings to HMRC.

Instead of completing a single annual self-assessment tax return, those affected must submit four quarterly digital updates throughout the tax year.

The changes currently apply to taxpayers with gross annual income of more than £50,000.

The income threshold will fall to £30,000 in 2027 before reducing again to £20,000 in 2028, with around 2.9 million people expected to be covered by the scheme by that point.

Under the new system, taxpayers must keep digital records and submit information using software approved by HMRC, before completing a final year-end declaration that replaces the traditional self-assessment process.

Mr Campbell urged anyone who could be affected to check whether they need to register and ensure their accounting software is compatible with HMRC's requirements.

Mr Campbell said: "Preparation, planning and taking advice at the right time are key for compliance and staying on top of the UK's ever-evolving tax landscape."

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