New HMRC August deadline passed - taxpayers given 'act now' alert

New HMRC August deadline passed - taxpayers given 'act now' alert The first quarterly update deadline has passed Two groups of taxpayers have been warned they cannot afford to ignore a major new HMRC tax regime after a key deadline passed last week. The first Making Tax Digital quarterly update deadline was August 7, with sole traders and landlords caught by the new rules required to send details of their income and expenses to the taxman. HM Revenue & Customs has now issued a blunt warning to anyone who failed to meet the deadline. It said: “Missed the Making Tax Digital quarterly update deadline? If your combined turnover from self-employment and property was over £50,000 in the 24/25 tax year, you need to send your first quarterly update. Act now.” The deadline marks the first major stage in a huge overhaul of the tax system. From now on, affected sole traders and landlords will have to keep digital records and send HMRC updates every three months rather than simply waiting until the end of the tax year to sort out their affairs. HMRC describes it as the biggest change since Self Assessment was introduced more than 30 years ago. Have you been caught? The first wave applies to sole traders and landlords whose qualifying income was more than £50,000 in the 2024/25 tax year. Importantly, this is not necessarily the same as profit. Qualifying income includes gross income from self-employment and property before expenses and tax allowances are deducted. So someone with significant business costs could still be forced into the system even though their eventual taxable profit is much lower. HMRC says around 864,000 people were in the first group required to start using Making Tax Digital from April 2026. What happens if you missed August 7? There is some good news for those who have fallen behind. HMRC says it will not apply penalty points for late quarterly updates during the first tax year, covering 2026/27. But taxpayers should not assume the missed deadline can simply be forgotten. They still need to submit the outstanding update, and penalties continue to apply for late tax returns or late payment of tax. The next quarterly deadline is November 7. The subsequent deadlines are February 7, 2027 and May 7, 2027. And quarterly updates do not replace the annual tax return. Taxpayers will still have to submit their final Self Assessment return and pay any tax due by January 31. Millions more face the tax shake-up The £50,000 threshold is only the start. From April 6, 2027, the rules will be extended to sole traders and landlords with qualifying income above £30,000. Then, from April 6, 2028, the threshold will fall again to £20,000. That means people who may currently regard themselves as small-scale landlords or self-employed workers could soon find themselves having to comply with the new digital regime. HMRC figures indicate that another 1.077 million people with qualifying income between £30,000 and £50,000 are due to join in April 2027. A further 975,000 people with income between £20,000 and £30,000 are expected to join from April 2028. What taxpayers need to do Those already caught by the rules need to use compatible software to record their income and expenses. They then send quarterly updates to HMRC through that software. There are free and paid software options, while bridging software is available for some people who want to continue using spreadsheets. Anyone who missed August 7 should bring their records up to date and submit the outstanding quarterly update rather than waiting until the next deadline. And those who are not yet affected should check their position now. For millions of sole traders and landlords, the days of putting their tax affairs to one side until the annual Self Assessment deadline are rapidly disappearing. Instead, the taxman wants their financial records kept digitally – and their income and expenses reported four times a year. More details here.