Less Than 10% Ready: What the Latest MTD Sign-Up Numbers Really Tell Us

As the countdown to Making Tax Digital for Income Tax (MTD IT) enters its final stretch, a striking statistic has emerged.

Only 81,000 taxpayers have signed up so far.

That might sound like a healthy number. But when you consider the scale of the change coming, the picture looks very different.

The first wave of MTD for Income Tax will affect around 864,000 sole traders and landlords from April 2026.

Which means fewer than one in ten people expected to join the system have actually registered.

And the deadline is approaching fast.

What Is Happening in April 2026?

According to HMRC Making Tax Digital statistics, HMRC publishes regular statistics on MTD sign-up and usage across VAT and Income Tax.

Making Tax Digital is HMRC’s long-running plan to move the UK tax system onto a fully digital reporting model.

VAT has already moved to MTD.

Income tax is next.

From 6 April 2026, businesses with qualifying income above £50,000 from self-employment or property will need to:

• keep digital records of income and expenses
• submit quarterly updates to HMRC
• send a final end-of-year submission confirming their tax position

This replaces the traditional system where everything is submitted once a year through Self Assessment.

The change is significant because it introduces continuous digital reporting rather than a single annual return.

Why the First Cohort Is So Large

The first group entering the system is substantial.

HMRC estimates that 864,000 taxpayers fall into the initial category with income above £50,000.

Most of them are:

• sole traders
• landlords
• or individuals with both business and property income

In total, around 2.9 million people will eventually move into MTD as the thresholds fall.

The rollout looks like this:

So the first wave is just the beginning.

Why Are Sign-Ups So Low?

The fact that fewer than 10% have registered isn’t entirely surprising.

Anyone who works with small businesses will recognise a familiar pattern:

People tend to leave tax preparation until the last possible moment.

This behaviour was also seen during the rollout of Making Tax Digital for VAT, where many businesses only registered shortly before the mandate came into force.

But there are other reasons too.

1. Many people still don’t realise they are affected

MTD applies based on total qualifying income, not profit.

That means someone earning £55,000 in turnover could be pulled into the system even if their actual profit is much lower.

2. Software confusion

MTD requires compatible digital record-keeping software.

Many sole traders currently rely on:

• spreadsheets
• paper records
• or basic bookkeeping

Switching to digital systems can feel like a big step if it’s something they’ve never used before.

3. The tax return still exists (for now)

One reason some businesses haven’t rushed to sign up is that the Self Assessment tax return doesn’t disappear immediately.

Taxpayers entering MTD in April 2026 will still file a normal tax return for the 2025–26 tax year by January 2027.

The Real Issue Isn’t Sign-Ups

The low registration figure might sound worrying, but it doesn’t necessarily mean businesses are unprepared.

Many accountants and software providers expect a large spike in sign-ups closer to the deadline.

In other words:

the system may follow the same pattern seen every January.

A quiet start… followed by a sudden rush.

Still, the number does highlight a wider issue.

Many small businesses don’t actively manage their tax systems during the year.

They deal with tax when they absolutely have to.

Making Tax Digital is designed to change that behaviour by encouraging continuous record-keeping rather than annual catch-ups.

What This Means for Sole Traders

For businesses entering the first wave in 2026, the key changes are:

Instead of one tax submission per year, you will now typically have:

• four quarterly updates
• one end-of-year declaration
• plus digital record-keeping throughout the year

In practice, this means the focus shifts from January panic to year-round tracking of income and expenses.

For many businesses, the biggest adjustment won’t be the software.

It will be the habit change.

Why This Matters Now

Even though MTD launches in April 2026, the timing matters.

The system determines eligibility based on income from the 2024–25 tax year.

The Bigger Picture

Making Tax Digital has been one of the most ambitious reforms to the UK tax system in decades.

Originally planned years earlier, the programme has been delayed several times before finally settling on the phased rollout now approaching.

The long-term goal is clear:

A tax system where income and expenses are tracked digitally throughout the year, reducing errors and improving accuracy.

Whether that vision works in practice remains to be seen.

But the numbers emerging so far tell an interesting story.

Despite years of discussion, the majority of businesses affected by the first wave still haven’t signed up yet.

Summary

The latest figures from HMRC show that only around 81,000 taxpayers have signed up for Making Tax Digital for Income Tax, representing less than 10% of the first cohort expected to join the system.

From April 2026, around 864,000 sole traders and landlords with income above £50,000 will need to start using digital records and quarterly reporting.

Although sign-ups remain low, previous tax reforms suggest many businesses may wait until much closer to the deadline before registering.

What is clear is that the way small businesses handle tax reporting in the UK is about to change significantly, with digital record-keeping and more frequent updates becoming the new normal.