Three-quarters of landlords and sole traders who should have signed up to the Government’s new digital tax system failed to do so by its launch this month, revealing a widespread lack of awareness as the new rules come into force.

From 6th April, those earning more than £50,000 in the 2024 to 25 tax year from property or self-employment income must use approved software to keep digital records and submit quarterly updates to HMRC under Making Tax Digital (MTD) for Income Tax.

Figures provided to the Financial Times by HMRC show 864,000 taxpayers should have registered, but eight days after the deadline, just 218,000 had done so.

We’re concerned but not surprised at how many are yet to register.”

Josh Toovey (pictured), Senior Research and Policy Officer at the Association of Independent Professionals and the Self-Employed (IPSE), said: “We’re concerned but not surprised at how many are yet to register.

“There’s a significant awareness gap around these requirements, particularly among those who do not have the support of an accountant.”

Penalty reprieve

HMRC has confirmed it will not penalise those who missed the April sign-up deadline, but that there will be no second chances when quarterly reporting begins in early August.

Toovey told City A.M. he expects “another wave of registrations ahead of that deadline”, but added more needs to be done to “bring this to people’s attention”.

HMRC said: “We are encouraging all customers who were required to sign up by April 6 to do so as soon as possible and expect sign-ups to rise through the first quarter in advance of the first quarterly update deadline on August 7.”