Dext Data Reveals 65% of Accountants Missed First MTD for Income Tax Deadline

Quick Summary

Dext research reveals that 65% of accountants missed the first MTD for Income Tax deadline for at least one client. As HMRC prepares for auto-enrolment in September, chasing client records remains the primary obstacle, affecting 33% of professionals navigating the new digital tax regime.

How is MTD for Income Tax affecting accounting deadlines?

MTD for Income Tax has introduced significant administrative pressure on the accounting sector. Data from Dext indicates that 65% of accountants and bookkeepers were unable to submit at least one client's quarterly update on time during the first cycle. This struggle is largely attributed to data collection issues rather than technical registration hurdles. While only 9% of professionals cited HMRC registration as their main difficulty, 33% identified chasing client records as the single biggest challenge to meeting the August 7 deadline.

• 65% of accountants missed at least one client deadline
• 33% cited chasing records as the top challenge
• 60% of Q1 submissions occurred in August, indicating a late rush
• 9% of respondents struggled with HMRC registration

What does HMRC auto-enrolment mean for sole traders?

HMRC is set to begin the auto-enrolment process in September for individuals who are required to use MTD but have not yet signed up. However, being enrolled in the system does not equate to being prepared for the reporting requirements. As Paul Lodder, VP of Accounting Expertise at Dext, noted: “Auto-enrolment will get people onto the system but it won't make them MTD-ready.” Sole traders and landlords must maintain up-to-date financial records throughout the year to comply with the quarterly update mandate.

How will the 2027 threshold change impact the market?

The scope of MTD for Income Tax is set to expand significantly in April 2027 when the eligibility threshold drops from £50,000 to £30,000. This adjustment will bring a substantial number of additional sole traders and landlords into the mandatory digital reporting regime. The current challenges faced by accountants suggest that early preparation is vital for those falling into this new bracket to avoid missing their first quarterly deadlines.

FF NEWS TAKE:

This data from Dext highlights a critical friction point in the UK's digital tax transition: the human element of data collection. While the technology for MTD for Income Tax is largely in place, the fact that 65% of professionals missed deadlines suggests that auto-enrolment alone won't solve the compliance gap. The industry must shift focus from simple registration to continuous digital record-keeping if the 2027 expansion is to succeed without widespread disruption.