If you’re a sole trader or landlord who needs to use Making Tax Digital (MTD) for Income Tax but haven’t signed up yet, there’s an important update you need to be aware of.
From September 2026, HMRC will begin automatically signing up taxpayers who were required to join MTD from April 2026 but have not yet registered.
If you’ve been putting MTD off, now is the time to check whether it applies to you and make sure you’re prepared.
Who needs to use Making Tax Digital?
Making Tax Digital for Income Tax applies to sole traders and landlords with qualifying income above certain thresholds.
The first group was required to use MTD from 6 April 2026, where qualifying income for the 2024/25 tax year was more than £50,000.
The rules are then being introduced to more taxpayers:
Qualifying income generally includes income from self-employment and property.
It’s important to remember that it is your qualifying income, rather than your profit, that is relevant when determining whether you need to use MTD.
What happens if HMRC signs you up?
If HMRC automatically signs you up, they will contact you by letter or through your online tax account.
You should check the information HMRC holds carefully. In particular, HMRC will use information from your previous tax return to identify your income sources.
If your circumstances have changed – for example, you have stopped a business or property income source – you need to make sure HMRC has the correct information.
You will also need to connect compatible software to your HMRC account so that you can keep your records digitally and send your required updates.
Our advice? Don’t wait for HMRC to sign you up.
Signing up yourself gives you the opportunity to make sure everything is correct from the beginning and gives you more time to get your digital records in order.
What does MTD actually mean?
Making Tax Digital changes the way you keep records and report your income to HMRC.
Instead of keeping your records and simply submitting one Self Assessment tax return at the end of the year, you will need to:
The quarterly updates provide HMRC with information about your income and expenses throughout the year.
What if you haven’t submitted your first quarterly update?
If you were required to use MTD from April 2026 but haven’t yet got started, don’t panic.
HMRC has introduced a soft landing period for 2026/27. There are currently no penalty points for late quarterly updates during this first year.
However, this doesn’t mean you can ignore the quarterly updates.
You still need to keep digital records and submit the required updates, and you cannot finalise your tax return until the necessary quarterly information has been submitted.
From 2027/28, the penalty points system will apply to missed quarterly submission deadlines.
Not sure if Making Tax Digital applies to you?
We can help you understand whether MTD applies to you, get your records ready and make sure you’re using the right software and processes.
Get in touch with us and we’ll be happy to help.
