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HMRC tax reporting shake-up hits major milestone as 436,000 sole traders and taxi drivers submit digital updates for first time
More than 436,000 sole traders and landlords have submitted their first quarterly update under Making Tax Digital for Income Tax for the 2026/27 tax year, according to HM Revenue and Customs.
The reporting system became mandatory in April 2026 for sole traders like taxi drivers with qualifying annual revenue above £50,000. The measure is likely to include thousands of self-employed taxi and private hire drivers operating above the threshold.
More than 570,000 taxpayers have registered for the service. Those covered must maintain digital records and submit quarterly summaries using HMRC-recognised software alongside completing their annual Self Assessment return.
The first quarterly period ran from 6 April to 5 July 2026 for most taxpayers, with a submission deadline of 7 August. Customers using calendar quarters reported income and expenses covering 1 April to 30 June.
HMRC said taxpayers who missed the first deadline can still submit their update through compatible software. No penalty points will be issued for late quarterly updates during 2026/27, although existing penalties for late Self Assessment returns and tax payments continue to apply.
From September, HMRC will begin registering taxpayers who are required to use the system but have not enrolled themselves. The process will be carried out in stages over several months, with new guidance expected in late August for people receiving an HMRC registration letter.
Craig Ogilvie, HMRC’s Director of Making Tax Digital, said: “It's fantastic to see so many sole traders and landlords successfully sending their first quarterly updates. This marks an important milestone in the move to a more modern tax system, with many customers telling us that the process is straightforward and works well through their chosen software.
“If you haven't yet signed up, now is the time to do so. Taking action now means you stay in control, can make sure your Making Tax Digital for Income Tax details are correct from the start, and have time to choose the software that works best for you, rather than waiting for HMRC to sign you up from September.”
Quarterly updates are summaries of income and expenditure rather than separate tax returns. Taxpayers within the scheme must submit the updates before they can complete their Self Assessment return, for which the 31 January deadline remains unchanged.
The reporting requirement will expand further from April 2027, when sole traders and landlords with qualifying income above £30,000 will enter the system. This is expected to bring more self-employed drivers and small transport businesses within its scope.
A points-based penalty regime will also begin on 6 April 2027. Taxpayers will receive one point for each missed quarterly deadline, with a £200 fixed penalty imposed after four points have accumulated. Points can expire following a sustained period of compliance.
Exemptions are available in some circumstances, including for taxpayers considered digitally excluded. Applications and quarterly submissions must be completed through the relevant HMRC processes and recognised software.
