Category: Digital Advisory

Sole traders and landlords are increasingly asking what happens if they do not respond to Making Tax Digital sign-up letters. From September 2026, HMRC is beginning a new phase of the rollout by signing up people who need to use MTD for Income Tax for 2026/27 but have not already done so themselves.

This change forms part of the wider MTD for Income Tax requirements for 2026, which include digital record-keeping, quarterly updates and an annual tax return through compatible software.

The main concern is not simply that HMRC may sign you up first. Automatic sign-up relies on information HMRC already holds, so recent changes to your self-employment or property income may not be reflected. Signing up yourself gives you more opportunity to check that your details are correct before quarterly reporting begins.

HMRC reported in August 2026 that more than 570,000 customers had signed up and more than 436,000 had already submitted their first quarterly update.

Key Takeaways

• From September 2026, HMRC is beginning to sign up people who need MTD for Income Tax for 2026/27 but have not signed up themselves.
• The £50,000 threshold is based on qualifying income shown on your 2024/25 Self Assessment return. Qualifying income means gross self-employment and property income before expenses, not profit.
• 11 September 2026 is not a legal sign-up deadline. However, the MTD sign-up service will be unavailable from 5pm on 11 September until 1pm on 15 September for planned maintenance.
• No penalty points will be issued for late quarterly updates during 2026/27, although the updates are still required.
• If your circumstances have changed since your last tax return, checking your details before HMRC completes the sign-up can prevent additional work later.

What is MTD for Income Tax auto-registration?

MTD for Income Tax auto-registration refers to HMRC signing up taxpayers who are required to use Making Tax Digital but have not completed the process themselves.

Making Tax Digital for Income Tax became mandatory from 6 April 2026 for qualifying sole traders and landlords with more than £50,000 of qualifying income.

The underlying obligation has therefore not changed. What has changed is HMRC’s approach to people who remain outside the system despite meeting the criteria.

According to HMRC’s August 2026 MTD update, automatic sign-up will take place in stages over the coming months.

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Who gets auto-registered for MTD?

For the 2026/27 tax year, MTD applies to sole traders and landlords whose qualifying income for 2024/25 was more than £50,000.

HMRC’s qualifying income rules confirm that this is based on gross income before expenses rather than taxable profit.

For sole traders, this means Making Tax Digital affects more than the way tax is ultimately calculated. It changes how business records are maintained, how income and expenses are reported and how frequently information is submitted to HMRC.

What counts as qualifying income?

Qualifying income generally includes:

• Gross self-employment income before expenses
• Gross property income before expenses
• Income from multiple self-employment or property sources added together
• Certain income from a source that has since ceased, where another qualifying source continues

What does not normally count?

The following income is not included when calculating the MTD qualifying-income threshold:

• Employment income through PAYE
• Dividends
• State Pension or private pension income
• An individual’s share of partnership profit

For example, if you received £27,000 from self-employment and £25,000 in gross rental income during 2024/25, your qualifying income would be £52,000.

You would therefore fall above the £50,000 threshold even if your expenses reduced your taxable profit considerably.

What are the risks of waiting for HMRC to sign you up?

Automatic sign-up does not remove your responsibility to ensure the information held by HMRC is correct.

The biggest issue is that HMRC may be working from your previous Self Assessment return rather than your current circumstances.

Ceased income sources

If you stopped a self-employment activity or ceased receiving income from a property after submitting your previous return, HMRC’s records may still show the old source.

Closing one source does not necessarily mean you are outside MTD if another qualifying source continues.

New income sources

You may also have started a new business or begun receiving rental income since your previous tax return.

If HMRC does not yet hold that information, you may need to add the new source yourself.

All qualifying income has ceased

If you have stopped all self-employment and property activities, contact HMRC rather than assuming an automatic MTD registration can simply be ignored.

HMRC may need to update its records and confirm whether you are still required to use the service.

Software still needs to be arranged

Being signed up by HMRC does not automatically configure accounting software for you.

You still need compatible software, appropriate digital records and a process for submitting quarterly updates.

How do you sign up for MTD for Income Tax yourself?

HMRC’s MTD sign-up guidance explains the information needed to complete the process.

You generally need to be registered for Self Assessment and to have submitted a tax return within the previous two years.

If you sign up yourself, you use the Government Gateway account associated with your Self Assessment record.

Before completing the process, check that you can:

• Confirm the tax year from which MTD applies to you
• Review your self-employment and property income sources
• Add any sources that are missing
• Provide the relevant business or property start dates
• Confirm your business details where required
• Choose suitable MTD-compatible software

If an accountant or tax agent handles the process, they use their own Agent Services Account and the relevant HMRC authorisation rather than your personal Government Gateway password.

What is the MTD service downtime in September 2026?

HMRC has scheduled maintenance for the MTD for Income Tax service from 5pm on Friday 11 September until 1pm on Tuesday 15 September 2026.

This means the service will temporarily be unavailable, but 11 September is not a statutory MTD registration deadline.

HMRC’s current MTD service availability information also lists another maintenance period from 7pm on Saturday 26 September until 9am on Monday 28 September 2026.

If you want to complete your registration before the first maintenance window, you should therefore do so before 5pm on 11 September.

If you have not registered by then, the service is scheduled to reopen on 15 September. The important question is whether HMRC has already completed the automatic sign-up by that point.

What happens if you are late with quarterly updates?

HMRC will not issue penalty points for late quarterly updates during the first mandatory MTD tax year, 2026/27.

That does not mean quarterly updates are optional. Outstanding submissions still need to be dealt with, and separate penalties can apply to late annual tax returns and late tax payments.

From 2027/28, HMRC’s MTD penalty system begins applying to quarterly updates.

If you remain below the four-point threshold, a penalty point normally expires 24 months after the missed deadline.

Once the threshold is reached, however, the points do not simply disappear after two years. You generally need to complete a period of compliance and bring outstanding submissions up to date before the points are reset.

If you missed the first quarterly update in August 2026, dealing with it early is preferable to allowing reporting problems to accumulate. This may involve correcting your MTD records and checking that your bookkeeping is ready for the next submission.

Are there exemptions from MTD for Income Tax?

Yes. Some taxpayers may be exempt from Making Tax Digital.

One important category is digital exclusion. This can apply where it is not reasonably practical for someone to use digital tools because of factors such as:

• Age
• Disability
• Health conditions
• Religious beliefs
• Lack of suitable internet access
• Other circumstances making digital reporting unreasonable

HMRC’s MTD exemption guidance explains who may qualify and how applications are considered.

Being exempt from MTD does not mean the underlying income no longer needs to be reported. You must still meet your normal Self Assessment obligations.

If you are already using MTD and your qualifying income later falls below the threshold, one lower-income year will not usually remove you from the system immediately.

HMRC generally requires qualifying income to remain below the relevant threshold for three consecutive tax years before you can choose to leave MTD, subject to the circumstances applying to you.

How should sole traders and landlords prepare for the next thresholds?

MTD will expand further over the next two years.

From 6 April 2027, individuals with qualifying income above £30,000 will be brought into the system based on their 2025/26 tax return.

From 6 April 2028, the threshold will fall again to more than £20,000 based on qualifying income for 2026/27.

If your income falls into these ranges, preparation should start before the mandatory date.

Practical steps include:

• Checking your gross self-employment and property income
• Making sure all relevant income sources appear correctly on your Self Assessment return
• Choosing compatible software in advance
• Keeping business and property records digitally
• Reconciling records regularly rather than waiting until a quarterly deadline
• Confirming your MTD start date with your accountant

Consistent digital bookkeeping can make this easier by keeping income, expenses and supporting records organised throughout the year.

This becomes especially important because errors made during routine record-keeping can carry through into quarterly updates and ultimately affect the annual tax return.

Voluntary MTD sign-up is also available before your mandatory start date, but it should not be treated simply as a consequence-free trial. Once you enter the system, you need to understand the digital record-keeping and reporting obligations that apply.

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Frequently Asked Questions

What if HMRC auto-registers me with the wrong details?

Check your MTD account as soon as you receive confirmation that HMRC has signed you up.

Automatic registration relies on information HMRC already holds, so changes made since your most recent tax return may not appear immediately.

Some details can be updated through the service, while more significant changes may require you to contact HMRC.

Do I still need to file a Self Assessment tax return under MTD?

Yes.

Quarterly updates do not replace your annual tax return. MTD users still complete an annual Self Assessment tax return through compatible software.

Other income, gains, allowances and reliefs that are not included in the quarterly updates are dealt with before the final return is submitted.

Can my accountant sign me up for MTD?

Yes.

An authorised accountant or tax agent can complete the registration process on your behalf using HMRC’s agent services.

They can also check that your income sources are correctly listed, connect suitable software and manage ongoing quarterly reporting.

How much does MTD-compatible software cost?

Costs vary depending on the provider and the features you need.

Some platforms are designed for straightforward sole-trader bookkeeping, while others include invoicing, bank feeds, receipt capture, property management and more advanced accounting features.

The important point is that the software must be compatible with MTD for Income Tax and suitable for the records you need to maintain.

What happens if I miss the 11 September sign-up date?

Nothing automatically happens simply because 11 September passes.

It is not a legal MTD sign-up deadline.

The significance of the date is that HMRC’s sign-up service is scheduled to become unavailable from 5pm on 11 September until 1pm on 15 September.

When the service reopens, you can still sign up if HMRC has not already completed the process on your behalf.

Will MTD for Income Tax apply to limited companies?

No.

MTD for Income Tax applies to individuals with qualifying self-employment or property income, including sole traders and landlords.

Limited companies have separate Corporation Tax and VAT obligations.

However, a company director may still fall within MTD personally if they also receive sufficient qualifying self-employment or property income.

How Apex Accountants Can Help

If you are unsure whether HMRC has already signed you up, whether your income sources are correct or whether your records are ready for quarterly reporting, our Making Tax Digital accountants can help with registration, software setup and ongoing submissions.

MTD should also be considered alongside your wider personal tax position, particularly where you receive income from several sources or have additional Self Assessment obligations.

If you want to confirm where you stand before HMRC completes an automatic sign-up or before the next quarterly deadline, you can book a consultation to review your qualifying income, current registration position and MTD setup.

A sole trader may have completed the first MTD quarterly update without realising that the next deadline is already approaching. A landlord with a second income stream may also be above the threshold once both sources are combined. Making Tax Digital for Income Tax 2026 is no longer a distant reform: for the first mandatory group, the rules began on 6 April 2026.

This guide explains who is in scope, what has changed, which deadlines matter, and what to do if your records or software are not ready. It is based on current HMRC guidance checked on 28 August 2026. If you want professional support with setup and ongoing reporting, Apex Accountants’ Making Tax Digital accountants can help you prepare and manage the process.

Key Takeaways

• Sole traders and landlords with qualifying income over £50,000 for 2024–25 should have started using MTD from 6 April 2026.
• The next start dates are 6 April 2027 for qualifying income over £30,000 in 2025–26 and 6 April 2028 for qualifying income over £20,000 in 2026–27.
• Quarterly updates are sent through compatible software and are cumulative. They do not replace the annual Self Assessment tax return.
• HMRC will not apply penalty points for late quarterly updates during 2026–27, but digital records and quarterly updates are still required.
• From September 2026, HMRC will start signing up people who need to use MTD for 2026–27 but have not already signed up, with enrolment taking place in stages.

What Is Making Tax Digital for Income Tax 2026?

Making Tax Digital for Income Tax requires qualifying sole traders and landlords to keep digital records and send quarterly updates to HMRC using compatible software. The updates provide HMRC with totals of self-employment and property income and expenses during the year, while the taxpayer still submits one annual Self Assessment tax return.

The obligation applies to people registered for Self Assessment who receive income from self-employment, property, or both and whose qualifying income exceeds the relevant threshold. HMRC’s official MTD eligibility guidance explains who needs to use the service and when.

MTD does not mean paying Income Tax four times a year. Quarterly updates are reporting obligations, not tax returns or payment demands. The normal Self Assessment payment timetable remains in place, with the full tax bill generally due by 31 January following the end of the tax year.

Who Must Use MTD for Income Tax and When?

You need to use MTD if you are a sole trader or landlord registered for Self Assessment, receive self-employment or property income, and your qualifying income is more than the relevant threshold for the tax year.

Qualifying income is your total gross income from self-employment and property before expenses. If you have more than one relevant income source, those amounts are normally combined. HMRC explains the calculation in its guidance on working out qualifying income for MTD. You can also read Apex Accountants’ guide to Making Tax Digital income thresholds for a practical explanation of how the thresholds operate.

Partnerships do not currently need to use MTD for Income Tax as partnerships. HMRC says it will set out their timetable at a later date. A partner’s share of partnership profit also does not count towards that individual’s qualifying income, although their separate personal self-employment or property income may still bring them into scope.

Once you have started using MTD, falling below the threshold for one year does not automatically remove the obligation. HMRC says you can choose to opt out if your qualifying income remains below the relevant threshold for three tax years in a row. Different rules can apply if all self-employment or property income sources cease, so your position should be checked rather than assumed.

How Do Quarterly Updates Work for Sole Traders and Landlords?

Quarterly updates are totals of your self-employment and property income and expenses created from your digital records. HMRC’s current rules make these updates cumulative, meaning each update covers from the start of the tax year to the end of that update period. If you correct your digital records, the correction can flow through a later cumulative update without having to resend every earlier update.

For taxpayers using standard tax-year update periods, HMRC lists the following dates for 2026–27:

You can check the full rules, including calendar update periods, in HMRC’s quarterly update guidance.

A quarterly update is only an in-year report. It does not complete your Self Assessment. After the end of the tax year, you still need to check the full-year information, make any necessary adjustments, add other income or gains, claim relevant reliefs and allowances, and submit your tax return through compatible software. For the 2026–27 tax year, the tax return and tax payment are due by 31 January 2028.

What Records and Software Do You Need?

You need digital records for the self-employment and property income and expenses covered by MTD. HMRC requires each digital income or expense record to include the:

• amount
• date the income was received or the expense was incurred
• relevant income or expense category

You must also continue keeping the supporting records you normally retain for Self Assessment, such as invoices and bank statements. HMRC’s guidance on creating digital records for MTD explains the detailed record-keeping requirements.

If you use more than one software product, the products used to create your digital records and make submissions must be digitally linked. If you use a single product for the whole process, no separate digital link between products is needed.

HMRC does not provide the bookkeeping software itself. You or your agent must use software that works with MTD for Income Tax to create and store records, send quarterly updates, and submit the annual tax return. You can review HMRC’s guidance on choosing MTD-compatible software or use its MTD software finder.

You can continue using spreadsheets, but a spreadsheet on its own cannot submit the required information to HMRC. You will need compatible bridging software or another compatible product that connects to the spreadsheet. If keeping digital records accurately is becoming difficult, Apex Accountants’ bookkeeping services can help keep income and expenses organised throughout the year.

What Happens If You Miss an MTD Deadline in 2026–27?

HMRC has confirmed that it will not apply penalty points for late quarterly updates during the 2026–27 tax year. You still need to keep digital records and send any outstanding quarterly updates before you can submit your tax return.

This temporary treatment only applies to quarterly update penalties. Penalty points can still apply to a late tax return, and separate late-payment rules apply if tax is not paid on time. HMRC’s MTD penalty guidance confirms that late-payment interest runs from the first day a payment is late.

For your first year under the new late-payment penalty regime, HMRC gives you 30 days from the payment due date to either pay in full or contact HMRC to arrange a payment plan before late-payment penalties start. This 30-day period is available only once; after the first year, the initial period reduces to 15 days.

For tax years after 2026–27, missed quarterly update deadlines can generate late-submission penalty points. The threshold for mandatory MTD quarterly obligations is four points. Reaching four points triggers a £200 penalty, and each further missed submission deadline while at the threshold can trigger another £200 penalty.

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What Should You Do If You Are Not Ready for MTD?

If you are already in the first mandatory group:

1. Check your qualifying income against the correct tax year.
2. Confirm that your Self Assessment details and income sources are up to date.
3. Choose compatible software or appoint an authorised tax agent.
4. Reconcile bank transactions, self-employment income, rental income and expenses.
5. Correct any inaccurate digital records and keep a clear audit trail.
6. Send any outstanding quarterly update as soon as possible.
7. Prepare for the next quarterly deadline rather than waiting until the filing date.

From September 2026, HMRC will start signing up people who need to use MTD for the 2026–27 tax year but have not already signed up. HMRC says this will happen in stages. If HMRC enrols you, its guidance explains what to do after HMRC has signed you up for MTD.

Even if you have not received a letter, you remain responsible for checking whether the rules apply to you.

Some taxpayers are exempt. This includes certain people who are digitally excluded, as well as a number of automatic and temporary exemption categories. HMRC’s MTD exemption guidance explains the current rules. Being exempt from MTD does not remove the requirement to report taxable income and gains through Self Assessment.

How Can an Accountant Help With MTD for Income Tax?

An accountant can check the threshold calculation, review mixed self-employment and property income, recommend suitable software, and create a process for keeping records and meeting each quarterly deadline.

This can be particularly useful where you have several income sources, jointly owned property, changing business activities, or records spread across different bank accounts and systems. A regular review can identify missing expenses, duplicated transactions and income assigned to the wrong activity before the figures reach HMRC.

Professional support can also help keep quarterly updates consistent with the final Self Assessment tax return and make sure adjustments and reliefs are dealt with at the correct stage.

How Apex Accountants Help

If you are a sole trader or landlord affected by Making Tax Digital for Income Tax 2026, the immediate priorities are confirming your threshold, setting up a compliant digital record-keeping process and preparing your next quarterly update.

Apex Accountants can help with:

• checking whether and when MTD applies to you
• software selection and setup
• digital record keeping and bookkeeping
• quarterly update preparation
• Self Assessment tax-return preparation
• ongoing deadline and compliance support

If you are unsure whether your current setup is ready, you can book a free consultation to review your position with Apex Accountants.

The Sensible Next Step

If you are a sole trader or landlord affected by Making Tax Digital for Income Tax 2026, confirm your qualifying income, check that your software and digital records meet HMRC requirements, and prepare for the next quarterly deadline now.

If you have missed an update or are unsure whether your records are accurate, deal with the issue while the 2026–27 quarterly-update penalty easement is still in place rather than allowing problems to build up before the next tax year.

Frequently Asked Questions

Can I Still Sign Up for MTD If I Missed the First Quarterly Deadline?

Yes. If you are required to use MTD and have not signed up yet, you should sign up and catch up with your digital records and quarterly updates as soon as possible. HMRC will not apply penalty points for late quarterly updates during 2026–27, but the reporting requirement still applies.

Does MTD Replace My Self Assessment Tax Return?

No. Quarterly updates are summaries, not tax returns. You still submit one Self Assessment tax return each tax year. Once you are using MTD, the return must be completed and submitted through compatible software by 31 January following the end of the relevant tax year.

Do Landlords With One Property Need MTD Software?

Possibly. The number of properties is not the test. A landlord may need MTD if their total qualifying income from property and self-employment exceeds the relevant threshold and the other conditions are met.

For UK property, HMRC generally treats one or more UK properties as a single UK property business for MTD record-keeping purposes.

What If My Income Is Close to £50,000?

Use your actual qualifying income rather than profit or a rounded monthly estimate. Qualifying income is generally the gross amount from self-employment and property before expenses, based on the relevant Self Assessment tax return. Include the relevant sources together when checking whether you exceed the threshold.

Do I Need an Accountant for Making Tax Digital for Income Tax 2026?

No. An accountant is not legally required. However, you do need compatible software and must meet the digital record-keeping, quarterly update and annual tax-return requirements if MTD applies to you. An accountant can help reduce the risk of software setup errors, incorrect categorisation and missed reporting obligations.

What Happens If I Get the Figures Wrong?

You should correct inaccurate digital records as soon as you identify the error. Because quarterly updates are cumulative, corrected records can be reflected in a later update without resending every earlier quarterly update. Before submitting your annual tax return, you should check that the full-year figures are correct and make any required adjustments.