The UK’s transition to Making Tax Digital represents one of the biggest changes to the tax system in recent decades. However, recent figures suggest that many taxpayers who will soon be affected by the new rules have not yet taken the necessary steps to prepare.

According to analysis by the Low Incomes Tax Reform Group (LITRG), more than 100,000 taxpayers expected to fall within the scope of Making Tax Digital (MTD) from April 2026 have still not registered. This has raised concerns that many individuals may be unaware of their obligations or underestimate the time required to prepare for the new reporting requirements.

At Care Accountancy, we are encouraging clients to review their position now rather than waiting until reporting deadlines approach.

Why Making Tax Digital Matters

Making Tax Digital is HMRC’s initiative to modernise the UK tax system through digital record-keeping and more frequent reporting. Instead of relying solely on an annual Self Assessment tax return, affected taxpayers will need to maintain digital records and submit updates throughout the year using compatible software.

From April 2026, individuals with gross income exceeding £50,000 from self-employment and/or property income will generally be required to comply with the new rules unless they qualify for an exemption. The threshold will reduce to £30,000 from April 2027 and then to £20,000 from April 2028, bringing many more taxpayers into the system over the coming years.

For many sole traders and landlords, this means a significant change in how tax information is recorded and reported.

Thousands Still Have Not Registered

Recent estimates suggest that approximately 216,000 taxpayers expected to enter the MTD regime from April 2026 do not currently use professional tax advisers. Of these, around 111,000 may still need to register and prepare for the transition.

This is particularly concerning because many unrepresented taxpayers may not realise that they fall within the scope of the new requirements. While HMRC has contacted many affected individuals, some taxpayers may not have received or acted upon the correspondence.

The challenge is not simply registration. Taxpayers must also understand the practical changes involved, including maintaining digital records, selecting suitable software and meeting quarterly reporting obligations.

What Taxpayers Should Do Now

If you are self-employed or receive rental income, now is a good time to review your income figures from previous tax years and determine whether the new rules apply to you.

Those who may be affected should:

• Review their 2024/25 tax return and income levels.
• Check whether they qualify for any exemptions.
• Explore MTD-compatible software options.
• Begin maintaining accurate digital records.
• Seek professional advice if they are unsure about their obligations.

HMRC requires taxpayers within scope to use approved third-party software to meet their reporting requirements, making early preparation particularly important.

For additional guidance, taxpayers can visit the official HMRC Making Tax Digital page.

The Benefits of Early Preparation

Although the transition may initially seem challenging, there are benefits to adopting digital systems. Better record-keeping can improve financial visibility, reduce errors and make it easier to monitor business performance throughout the year.

Many business owners currently leave tax administration until filing deadlines approach. However, the new system encourages ongoing record management, helping taxpayers stay organised and avoid last-minute stress.

By preparing early, taxpayers can familiarise themselves with the software, understand reporting requirements and resolve any issues before quarterly submissions begin.

For businesses already using cloud accounting software, the transition may be relatively straightforward. For others, now is the ideal time to start implementing suitable systems.

You can also explore our internal resources on:

• Self Assessment Tax Returns
• Bookkeeping Services
• Tax Planning Support
• Limited Company Accounting

at Care Accountancy.

How Care Accountancy Can Help

The introduction of Making Tax Digital is creating uncertainty for many sole traders and landlords. Understanding eligibility rules, selecting software and maintaining compliance can feel overwhelming, particularly for those who currently manage their own tax affairs.

At Care Accountancy, we help clients navigate changing HMRC requirements with confidence. Our team can assist with digital bookkeeping, Self Assessment returns, software setup and ongoing compliance support.

Whether you are preparing for April 2026 or planning ahead for future MTD thresholds, professional guidance can help ensure a smooth transition.

Conclusion

The latest figures suggest that a significant number of taxpayers are still not ready for Making Tax Digital, despite the approaching deadlines. While there is still time to prepare, delaying action could lead to unnecessary stress and compliance challenges later.

If you are self-employed or earn rental income, now is the perfect opportunity to assess your position and start preparing for the future. The sooner you understand the requirements, the easier the transition will be.

For expert support with Making Tax Digital, contact Care Accountancy today and let our experienced team help you stay one step ahead of the changes.

 

Disclaimer

The information on this Blog is for general purposes only on matters of interest. The Company assumes no responsibility for errors or omissions in the contents of the Blog. Even if the Company takes every precaution to ensure the Blog’s content is current and accurate, errors can occur. Given the changing nature of laws, rules, and regulations, there may be delays, omissions, or inaccuracies in the information on the Blog. The Company is not responsible for errors, omissions, or results from using this information. The Company reserves the right to make additions, deletions, or modifications to the Blog’s contents without prior notice.

In no event shall the Company be liable for any special, direct, indirect, consequential, or incidental damages or any damages whatsoever, whether in an action of contract, negligence, or another tort, arising out of or in connection with the use of the Blog or the contents of the Blog. The Company does not warrant that the Blog is free of viruses or other harmful components.

Please read our disclaimer policy.