94% of Businesses Weren't Ready for MTD. Are You Sorted Yet?

Hardly anyone was ready

A survey by accountancy firm Azets found that 94% of businesses were either unprepared or only partially prepared for Making Tax Digital. That's not a typo. More than 63% hadn't even started preparing. Another 31% had "started" but weren't there yet.

Meanwhile, a separate study by IPSE found that only 30% of sole traders had a clear understanding of what MTD actually involves.

MTD went live on 6 April 2026. If you're reading this and you haven't set things up, your first quarterly update (covering 6 April to 5 July) is due by 7 August 2026. You've got time, but not loads of it.

Who needs to act right now?

If your gross income from self-employment or property (or both combined) was over £50,000 in the 2024/25 tax year, you're in the first wave. Around 864,000 people fall into this group.

If you're below £50,000 but above £30,000, your turn comes in April 2027. Below £30,000 but above £20,000? April 2028.

If you still haven't done anything

If you haven't done anything yet, here's the order:

1. Sign up with HMRC. You need to register for MTD for Income Tax through your Government Gateway account. This isn't automatic. You have to do it yourself or ask your accountant to do it for you.

2. Get software. You need HMRC-recognised software to keep your digital records and submit quarterly updates. There are free options (QuickFile, Clear Books Free, FreeAgent if you bank with NatWest/RBS). Or paid options like Xero, QuickBooks, and Sage. Full comparison in our best free MTD software guide.

3. Start recording. Every business transaction from 6 April 2026 onwards needs a digital record: date, amount, category. If you haven't been doing this since April, you'll need to backfill from your bank statements. Do it now while you can still remember what each payment was for.

4. Set your deadlines. Q1 is due 7 August. Q2 is due 7 November. Q3 is 7 February. Q4 is 7 May. Final declaration by 31 January 2028.

5. Talk to your accountant. If you have one. If they haven't contacted you about MTD, ring them. A separate IRIS survey found that 42% of accountants themselves weren't fully prepared either.

At least there's a grace period

HMRC has confirmed that penalty points won't be applied to late quarterly updates during your first year. So if your Q1 submission is a few days late in August, you won't pick up points. But this grace period only covers the 2026/27 tax year. From April 2027, the full penalty system kicks in.

This doesn't mean you can ignore the deadlines. It means HMRC is giving you breathing room to get the hang of things. Use it wisely rather than treating it as permission to procrastinate.

Why waiting makes it worse

The longer you leave it, the more painful the setup. If you start recording in July, you'll need to reconstruct three months of transactions before your first submission. If you'd started in April, you'd just be clicking "submit."

Pick your software this week. Connect your bank account. Start logging transactions. The process takes about an hour to set up, and then maybe 10 minutes a week to keep on top of.

Hardly the ordeal some people are making it out to be.

Not sure where to start? Read our complete guide to Making Tax Digital.