216,000 landlords and traders haven’t signed up for Making Tax Digital

More than 200,000 landlords and sole traders have yet to sign up for Making Tax Digital (MTD), with the first quarterly deadline now less than a month away.

Research commissioned by business management platform Tide found that 25% of landlords and sole traders earning more than £50,000 had not registered with HMRC for the new system.

Around 864,000 people are expected to qualify during the first year, which would leave an estimated 216,000 still needing to register and submit their first quarterly update.

Making Tax Digital deadline

The firm’s chief executive, George Schmidt, said: “No one wants to be thinking about tax over summer, but we can’t escape the fact that Making Tax Digital is here, and the first deadline is just days away.

“The first wave of business owners need to ensure they are signed up with HMRC and file on time, to avoid penalties that accumulate with each missed deadline.”

He added: “It is a worry that so many still aren’t ready for the switch.”

MTD takes five filings

Most respondents in the survey of 500 landlords and sole traders, were also unclear about how frequently they would have to report their income.

Making Tax Digital requires four quarterly updates followed by a final annual submission, taking the total to five filings each year.

However, 85% did not know they would need to file five times, while 31% believed they would have to make at least eight submissions.

Awareness has changed little since Tide carried out similar research in February, when 83% of sole traders did not realise that five submissions would be required each year.

Distraction for landlords

The additional administration is also expected to take time away from running businesses and managing properties.

Some 44% said they expected to complete MTD work during their usual working hours, while 32% believed they would have to deal with it during their time off.

Respondents estimated that the new tax requirements would take up the equivalent of six full working days during the next 12 months.

Tide calculated that the time spent on the work could result in £1.5 billion of lost business revenue during the first year.