Yes, news reports from late 2025 indicated that hundreds of thousands of UK taxpayers (around 350,000 or more) would need Making Tax Digital for Income Tax (MTD For ITSA) but lacked agents, with many also not using commercial software, posing significant challenges for HMRC's rollout starting April 2026 for those earning over £50k. While HMRC offered support and guidance and worked with software providers to promote MTD-compatible products — the lack of agent representation and digital readiness highlighted major gaps in taxpayer awareness and preparedness for the new digital record-keeping and quarterly reporting requirements.
This figure is not just a headline number. It highlights a structural weakness in the MTD rollout that raises serious questions about readiness, capacity, and the practical reality of compliance for self-employed individuals and landlords.
Key Details
The Challenge: A large portion of self-employed individuals and landlords in scope for MTD were unrepresented by accountants or bookkeepers.
Digital Gap: Most of these unrepresented taxpayers weren't using commercial software for filing, meaning they needed significant help with digital record-keeping for income and expenses.
HMRC's Role: HMRC acknowledged these challenges, but taxpayer engagement with published guidance remained uneven.
Agent Preparedness: Even many taxpayers with agents weren't using commercial software for their 2023/24 tax returns, posing a challenge for agents themselves.
MTD for ITSA (Income Tax Self Assessment): This system requires digital records, quarterly updates to HMRC, and a year-end declaration via compatible software, replacing traditional self-assessment for qualifying taxpayers.
In essence, the "350k taxpayers" figure highlighted a critical gap where many individuals needing MTD for Income Tax were unprepared and lacked professional guidance as the mandatory April 2026 deadline approached, requiring major efforts from both HMRC and the accountancy profession to get them compliant.
Why this group matters more than the headline suggests?
This cohort represents one of the hardest-to-reach and hardest-to-convert segments of the tax base. Unlike VAT-registered businesses, many of whom were already using software, these taxpayers often rely on:
Paper records or spreadsheets
Annual, retrospective bookkeeping
Minimal interaction with HMRC outside self-assessment deadlines
MTD for ITSA fundamentally changes this model. It moves income tax compliance from an annual event to an ongoing digital process, requiring discipline, regular record-keeping, and quarterly engagement with HMRC systems.
For taxpayers without agents, this is not a marginal adjustment. It is a complete shift in how they manage their tax affairs.
Software alone will not solve the problem!
HMRC’s collaboration with software providers, including the availability of free products, is an important step — but it addresses only part of the issue. Digital compliance is not just about access to tools; it is about:
For many unrepresented taxpayers, the learning curve is steep. Without professional guidance, the risk of incorrect submissions, omissions, or disengagement is high.
A parallel challenge: Agents under pressure
The data also highlights a less visible but equally important problem: agent readiness. Even among taxpayers who already have accountants, a significant proportion were not fully digital for the 2023/24 tax year. This means agents are simultaneously dealing with:
Migrating existing clients to MTD-compatible systems
Training clients in new processes
Managing increased submission frequency
As a result, the profession has limited spare capacity to absorb large numbers of previously unrepresented taxpayers at short notice. This is likely to lead to higher fees, tighter client selection, and increased strain on smaller practices.
Risks for compliance and policy credibility
If a substantial share of the 350,000 taxpayers fails to engage properly with MTD for ITSA, the consequences could be significant:
Missed quarterly updates
Poor-quality data submitted to HMRC
Increased penalty disputes and appeals
Integration into the “soft landing” penalty arrangements already confirmed by HMRC for the first 12 months of the MTD’s operation for quarterly updates.
At scale, these issues could undermine confidence in MTD itself and force HMRC to soften enforcement or revisit timelines — something that has already happened multiple times during the programme’s history.
Conclusion
The figure of 350,000 taxpayers without agents is not just a statistic; it is a clear signal that MTD for Income Tax faces a real-world readiness gap. It highlights the limits of digital-by-default policy when behavioural change, education, and professional capacity are underestimated.
With April 2026 fast approaching, closing this gap will require more than software and guidance notes. It will demand coordinated effort from HMRC, software providers, and the accountancy profession — and a realistic understanding of how taxpayers actually operate.
Without that, this group may become a significant pressure point influencing future policy decisions on the pace and implementation of the MTD for Income Tax.
