Three-quarters of landlords and self-employed individuals required to register for the government’s new digital tax system failed to do so by the April deadline, according to figures released by HMRC.
The Making Tax Digital (MTD) for Income Tax system, which launched on 6th April, requires those earning more than £50,000 in the 2024-25 tax year from property or self-employment income to use approved software for record-keeping and submit quarterly updates to HMRC.
Data provided to the Financial Times shows that of the 864,000 taxpayers who should have registered, only 218,000 had done so eight days after the deadline passed.
Awareness gap among property investors
Josh Toovey, Senior Research and Policy Officer at the Association of Independent Professionals and the Self-Employed (IPSE), said the figures reflect a significant awareness gap, particularly among those without accountant support.
“We’re concerned but not surprised at how many are yet to register,” Toovey stated. “There’s a significant awareness gap around these requirements, particularly among those who do not have the support of an accountant.”
The low registration rate adds to compliance challenges facing landlords as the sector adjusts to increased regulatory requirements.
Enforcement timeline
HMRC confirmed it will not impose penalties on those who missed the April sign-up deadline. However, the tax authority has stated that no leniency will be granted when quarterly reporting begins, with the first deadline set for 7th August.
Toovey told City A.M. he expects “another wave of registrations ahead of that deadline”, but emphasised that more needs to be done to “bring this to people’s attention”.
The development comes as letting agents voice concerns about mounting administrative burdens on the private rental sector.
HMRC said it is “encouraging all customers who were required to sign up by April 6 to do so as soon as possible” and expects sign-ups to rise through the first quarter before the August deadline.
The low compliance rate suggests many landlords may face a compressed timeline to implement new digital systems and processes ahead of the first mandatory quarterly submission in August.