HMRC has started automatically signing up certain sole traders and landlords for Making Tax Digital (MTD) for Income Tax. The change affects taxpayers who should already be using MTD but have not yet registered themselves.
Why is HMRC doing this?
Since April 2026, sole traders and landlords with qualifying income above £50,000 have been required to use MTD for Income Tax. HMRC is now signing up taxpayers whose records show they were required to join for 2026/27 but have not yet registered.
Only taxpayers who were mandated to join from 2026/27 are currently being signed up automatically. Those who fall into MTD in later years are still expected to register themselves or through an agent.
What should you do if HMRC signs you up?
After registration, HMRC will contact you by post or through your online tax account and ask you to complete a checking step.
The checking step can be completed through your Personal Tax Account, Business Tax Account or by your accountant through an Agent Services Account. If you do not already have access to HMRC's online services, you'll need to set up an account first.
Check HMRC's information carefully
One of the most important parts of the process is checking that HMRC's records are correct.
HMRC uses information from previous tax returns when carrying out automatic registrations. As a result, their records may not reflect changes that have happened recently.
During the checking step, you should review:
- Self-employment businesses.
- UK property income.
- Overseas property income.
- Any businesses or income sources that have started or ceased.
You can notify HMRC about new or ceased income sources during this process. However, changes to a business name, address or description must still be made directly with HMRC.
If your circumstances have changed
If all self-employment and property income ceased before 6 April 2026, you will generally not need to use MTD for 2026/27, although you will still need to submit your 2025/26 tax return.
If income ceased after 6 April 2026, MTD obligations will continue until the relevant quarter covering the cessation date, and you'll still need to complete your 2026/27 tax return.
Where a new business has started, it will not usually fall into MTD immediately. In most cases it must first be reported on a tax return before entering the MTD regime.
Software and overdue submissions
MTD requires compatible software (like TaxDash) for keeping digital records and submitting quarterly updates.
If you've been signed up after the start of the tax year, you may need to create digital records from the beginning of the year and catch up on any overdue quarterly updates. Your HMRC account should show both missed submissions and upcoming deadlines.
HMRC has confirmed that penalty points will not apply for missed quarterly updates during the 2026/27 tax year. However, taxpayers must still comply with their MTD obligations and late tax return penalties can still apply.
The key message
Being automatically signed up by HMRC is not the end of the process. Taxpayers should review the information HMRC holds, complete the checking step, ensure their digital records are up to date and deal with any overdue quarterly reporting as soon as possible. If you believe you've been signed up incorrectly, or may qualify for an exemption, it is worth speaking to your accountant promptly.
Source
This article has been adapted from guidance published by Ross Martin, with additional reference to guidance published by HMRC and the Association of Taxation Technicians (ATT): https://rossmartin.co.uk/sme-tax-news/9090-guidance-for-hmrc-led-mtd-sign-up