# Making Tax Digital for Income Tax: Low Sign-Ups and Compliance Hurdles in Q1 2026/27
## Introduction
Making Tax Digital (MTD) for Income Tax Self Assessment (ITSA) rolled out on 6 April 2026 for the 2026/27 tax year, mandating digital record-keeping and quarterly updates for sole traders and landlords with combined gross income exceeding £50,000 from self-employment and property. Early data reveals significant non-compliance: only a quarter of affected landlords and sole traders have signed up, per [AccountingWEB](https://www.accountingweb.co.uk/tech/tech-pulse/three-quarters-miss-digital-tax-debut). With the first quarterly update due on 7 August 2026 for the period 6 April to 5 July, urgency is critical.
This post outlines who is affected, current challenges, requirements, and practical steps for CFOs and business owners to achieve compliance without disruption.
## Who Is Affected?
MTD ITSA phases in based on gross income thresholds from specific SA return boxes (SA103F/S boxes 9-10, SA105 boxes 5,20,22,23, SA106 boxes 14,16):
– **April 2026**: >£50,000
– **April 2027**: >£30,000
– **April 2028**: >£20,000
Income is aggregated across trades and properties (UK/foreign separate). New businesses join after three years above threshold.
Exclusions (some claimable):
– Partnerships (future extension)
– Trusts/estates, pension schemes, companies on income tax
– Digital exclusion (age/disability/location/religion)
– No UK NINO, powers of attorney, etc.
Use [ICAEW’s spreadsheet tool](https://www.icaew.com/-/media/corporate/files/insights/tax-news/2025/is-my-client-in-mtd.ashx) to check.
[Full ICAEW TAXguide 01/25](https://www.icaew.com/technical/tax/tax-faculty/taxguides/2025/taxguide-01-25).
## Sign-Up and Current Status
Taxpayers must sign up via HMRC portal before first update. Recent reports indicate low adoption:
– Three-quarters of landlords/sole traders missed deadline ([AccountingWEB](https://www.accountingweb.co.uk/tech/tech-pulse/three-quarters-miss-digital-tax-debut)).
– Peak planning phase underway ([AccountingWEB](https://www.accountingweb.co.uk/tax/hmrc-policy/mtd-for-income-tax-reaches-peak-planning)).
HMRC’s [Agent Update Issue 129](https://www.gov.uk/government/publications/agent-update-issue-129/issue-129-of-agent-update) stresses agent preparation.
Non-sign-up risks penalties post-‘soft landing’ for first year.
## Digital Record-Keeping Requirements
Keep digital records of:
– Income/expenses by category (matching SA103F/SA105)
– Dates, amounts, transaction details
Paper receipts OK, but transactions digital in MTD-compatible software or API-enabled spreadsheet. Retailers can use daily gross takings.
No real-time mandate, but quarterly batching allowed. Digital links required if multiple tools.
[HMRC digital records guidance](https://www.gov.uk/guidance/use-making-tax-digital-for-income-tax/create-digital-records).
## Quarterly Updates
Four standard quarters:
– 6 Apr – 5 Jul: due 7 Aug
– 6 Jul – 5 Oct: due 7 Nov
– 6 Oct – 5 Jan: due 7 Feb
– 6 Jan – 5 Apr: due 7 May
Calendar quarters optional if software supports (extra 5 days).
Submit cumulative YTD totals by category (3-line for