Fewer than half of sole traders required to join MTD have registered. Only 400,000 sign-ups have occurred since the start of the financial year, compared with 864,000 needed by 7th August. HMRC has been trying to implement MTD for a decade, but the programme has faced delays and criticism from business owners and accountants.
Since 2019, MTD for VAT has been mandatory for all VAT-registered businesses above the £85,000 threshold, including voluntary registrants.
From April 2026, MTD applies to sole traders and landlords earning over £50,000. Those thresholds will fall further: £30,000 from April 2027 and then £20,000 from April 2028.
HMRC faces a significant challenge persuading smaller businesses and landlords to adopt digital record-keeping and quarterly reporting. The slow registration rate suggests many affected taxpayers may not be prepared for the upcoming mandatory deadlines. For now, customers who miss this deadline will be sent a reminder letter with no penalties for the 2026/27 tax year.
