The 31 January 2026 HMRC Deadline: 5 Critical Actions You Must Take Now To Avoid Fines And Prepare For MTD

The HMRC January 2026 deadline is one of the most critical tax dates in the UK calendar, but for 2026, it carries a double weight of importance. As of today, December 19, 2025, this date marks the final cut-off point for filing and paying your Self Assessment tax return for the 2024/2025 tax year. Missing this deadline will trigger immediate financial penalties. However, the true significance lies in its position as the last major reporting requirement before the monumental shift to Making Tax Digital for Income Tax Self Assessment (MTD for ITSA) begins just two months later, fundamentally changing how sole traders and landlords manage their finances. This article provides an urgent, up-to-date guide on the immediate requirements for the 31 January 2026 deadline and, crucially, outlines the essential preparation steps for the MTD regime starting in April 2026. Understanding this transition period is vital for millions of UK taxpayers, as the new digital landscape demands a complete overhaul of traditional record-keeping methods. Preparation now is the only way to ensure compliance and avoid severe future penalties.

The Immediate Urgency: Self Assessment for the 2024/2025 Tax Year

The primary function of the 31 January 2026 deadline is the submission and payment of the Self Assessment (SA) tax return for the tax year covering 6 April 2024 to 5 April 2025. This annual obligation applies to millions of individuals, including sole traders, company directors, those with property rental income, and anyone with significant untaxed income.

Key Filing and Payment Deadlines

The deadline is split into two main components, both falling on the same date:

• Online Filing Deadline: The deadline for submitting your online Self Assessment tax return is 11:59 PM on 31 January 2026.
• Payment Deadline: The deadline for paying any remaining tax liability for the 2024/2025 tax year is also 31 January 2026. This includes your main tax bill and the first Payment on Account for the 2025/2026 tax year.
• Paper Return Deadline: For those who still file a paper return, the deadline has long passed (31 October 2025).

Severe Penalties for Late Filing and Payment

HMRC enforces strict penalties for both late submission and late payment. These fines escalate rapidly, making a last-minute rush a costly gamble.

Late Filing Penalties:

• 1 Day Late (1 February 2026): An automatic initial penalty of £100 is charged.
• 3 Months Late: Daily penalties of £10 are applied for up to 90 days, potentially adding up to £900.
• 6 Months Late: A further penalty of 5% of the tax due, or £300, whichever is greater.
• 12 Months Late: Another penalty of 5% of the tax due, or £300, whichever is greater.

Late Payment Penalties:

If you file on time but fail to pay the tax owed, the penalties are applied to the unpaid amount:

• 30 Days Late: A penalty of 5% of the unpaid tax.
• 6 Months Late: A further penalty of 5% of the tax owed.
• 12 Months Late: A third penalty of 5% of the tax owed.

HMRC also charges interest on all overdue tax payments from the day after the deadline until the debt is settled.

The MTD for ITSA Revolution: The Post-January 2026 Reality

While the 31 January 2026 deadline is an immediate concern, the biggest change looming is the start of Making Tax Digital for Income Tax Self Assessment (MTD for ITSA). The new regime officially begins on 6 April 2026 for the first group of taxpayers, making the January 2026 return the final one under the old system for those affected.

Who Must Comply with MTD for ITSA from April 2026?

The initial phase of MTD for ITSA applies to individuals who are:

• Sole Traders (Self-Employed)
• Landlords (with UK or foreign property income)
• Partnerships (from a later date)

The mandatory requirement to join MTD for ITSA from 6 April 2026 is based on a qualifying income threshold:

Mandatory Starting Threshold: Businesses and landlords with annual gross income from self-employment and/or property exceeding £50,000.

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A second phase will commence in April 2027, bringing in those with income over £30,000. Exemptions include trustees, personal representatives, and non-resident companies.

The Four Pillars of MTD Compliance

MTD for ITSA fundamentally replaces the single annual tax return with a new, continuous reporting system. Compliance rests on four key requirements:

1. Digital Record Keeping

Paper records will no longer be sufficient. Taxpayers must use MTD-compatible software to keep digital records of all business and/or property transactions. This includes recording income and expenses accurately and contemporaneously.

2. Quarterly Updates (QUs)

Instead of one annual submission, businesses must send summary updates of their income and expenditure to HMRC four times a year via their MTD software. The standard quarterly deadlines are fixed:

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• Quarter 1: 6 April to 5 July – Deadline 7 August
• Quarter 2: 6 July to 5 October – Deadline 7 November
• Quarter 3: 6 October to 5 January – Deadline 7 February
• Quarter 4: 6 January to 5 April – Deadline 7 May

3. End of Period Statement (EOPS)

After the final quarterly update, an End of Period Statement (EOPS) must be submitted for each source of income (e.g., one for self-employment, one for property). This allows for final adjustments and claims for allowances or reliefs.

4. Final Declaration

The Final Declaration is the equivalent of the old Self Assessment return. It consolidates all quarterly updates and EOPS data, includes any other income (such as dividends, interest, or pensions), and confirms the final tax liability for the year. This must be submitted by 31 January following the end of the tax year (e.g., 31 January 2027 for the 2026/2027 tax year).

5 Critical Actions to Take Before the January 2026 Deadline

The next few months are a crucial window for preparation. Meeting the January 2026 deadline is the immediate task, but laying the groundwork for MTD is essential for future compliance.

1. Finalise Your 2024/2025 Records Now

Do not wait until January. Gather all your income and expense records for the 2024/2025 tax year immediately. This includes bank statements, invoices, receipts, and P60s. The earlier you submit, the more time you have to arrange payment or set up a Time to Pay arrangement with HMRC if necessary.

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2. Check Your MTD Eligibility and Income Threshold

If you are a sole trader or landlord, calculate your gross income from the 2024/2025 tax year. If it is over £50,000, you are in the first wave of MTD compliance starting in April 2026. Even if your income is slightly below, you should prepare, as the threshold will drop in 2027.

3. Select and Implement MTD-Compatible Software

MTD requires the use of approved commercial software. Identify a package that suits your business size and complexity (e.g., QuickBooks, Xero, or other HMRC-recognised software). Start migrating your current record-keeping system to this new digital platform now. Familiarising yourself with the software before the 6 April 2026 start date is vital.

4. Review Your Payments on Account (POA)

The January 2026 payment includes the second Payment on Account for the 2024/2025 tax year and the first POA for the 2025/2026 tax year. If you expect your income to be significantly lower in 2025/2026, you can apply to reduce your POA, but this must be done carefully to avoid underpayment penalties.

5. Consult a Tax Professional or Accountant

The transition to MTD for ITSA is complex. Engaging with an accountant who is already MTD-ready can save significant time and prevent costly errors. They can advise on software selection, ensure your digital records are compliant, and manage the quarterly reporting process from April 2026 onwards. This professional guidance is an invaluable investment in future compliance.

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