HMRC is signing sole traders and landlords up to MTD: what to do

What HMRC has changed

HMRC has begun signing people up for Making Tax Digital for Income Tax automatically. From September 2026, HMRC signs up anyone who needs to use MTD for Income Tax and has not done so. The department has also published a checklist page for those affected. The guidance, published on 9 September 2026, is titled Check what to do if HMRC has signed you up for Making Tax Digital for Income Tax. The change means that some sole traders and landlords will find that an MTD for Income Tax record has been created for them without a separate application.

Those contacted by HMRC are asked to complete a checking step. This involves signing in to their HMRC online account, confirming income sources and checking details are correct. The step is designed to make sure the information HMRC holds matches the person's actual trading and property income. People can check whether they have been signed up by signing in to HMRC online services. A message confirms if they are signed up. If no message appears, they are not signed up yet. Agents can sign clients up through the agent services account. Exemptions exist and must be applied for.

Who is in scope this year

From 6 April 2026, sole traders and landlords with qualifying income over £50,000 in the 2024 to 2025 tax year, who are not exempt, must use Making Tax Digital for Income Tax for 2026 to 2027. The £50,000 figure is a threshold based on qualifying income, not profit. Qualifying income is total turnover from self-employment and property before expenses, based on the previous year's tax return. That means the test looks at gross amounts rather than the net figure after costs. A landlord with rental turnover above the threshold is in scope even if mortgage interest or other expenses reduce the taxable profit. A sole trader with sales above the threshold is in scope even if the business makes a small profit or a loss.

The previous year's tax return is the source for the qualifying income figure. For the 2026 to 2027 tax year, the relevant return is the one for 2024 to 2025. Someone whose turnover was below £50,000 in that year is not brought in by this particular test. Exemptions exist and must be applied for. That means a person who believes they should not have to use MTD for Income Tax cannot simply ignore the requirement. An application is needed. The same applies to those who have been signed up automatically but consider themselves exempt. The checking step in the HMRC online account is the point at which income sources and details are confirmed.

The checking step

The checking step is the first practical task for anyone contacted by HMRC. It requires signing in to the HMRC online account, confirming income sources and checking details are correct. This is not a tax return. It is a confirmation exercise. The aim is to ensure HMRC has the right picture of a person's self-employment and property income before quarterly updates begin. People who have been signed up automatically should look for a message in their HMRC online services account. A message confirms that they are signed up. If no message appears, they are not signed up yet. That distinction matters because the sign-up process is being run in stages rather than all at once.

Agents can sign clients up through the agent services account. That route is separate from the individual online sign-up service. An agent acting for a sole trader or landlord can therefore manage the process on the client's behalf. Exemptions exist and must be applied for, whether the client has been signed up automatically or expects to be. The published guidance from 9 September 2026 sets out what to do if HMRC has signed someone up. The checking step is the point at which income sources are confirmed and details are checked. Anyone who finds an error in the details held by HMRC should address it before quarterly updates begin.

Quarterly updates and software

Users need compatible software to keep digital records, send quarterly updates every three months and submit the tax return by 31 January the following year. The quarterly updates are summaries of income and expenses, not tax returns. Each update covers a three month period. Four updates are sent across the tax year. The year-end tax return is then submitted by 31 January the following year. For the 2026 to 2027 tax year, that means a deadline of 31 January 2028 for the return. The digital records requirement means that records must be kept in compatible software rather than on paper alone.

The distinction between a quarterly update and a tax return is important. A quarterly update is a summary of income and expenses for the period. It is not a full return and does not involve the same calculations as the annual submission. The annual tax return remains the point at which the final figures are reported. Software choice therefore matters from the start. Compatible software is needed to keep digital records and to send the updates. Without it, the quarterly obligations cannot be met in the required way. The first tax year of the new system is 2026 to 2027, and the first annual return under it falls due by 31 January 2028.

Sign-up outage this weekend

The online sign-up service has planned maintenance from 5pm on Friday 11 September 2026 to 1pm on Tuesday 15 September 2026. Sign-up is not possible during that window. Anyone who has been contacted by HMRC and wants to complete the process online will need to wait until the service returns. The outage covers the weekend and runs into the following Tuesday. It affects the online sign-up service specifically. The agent route through the agent services account is separate. Agents can sign clients up through the agent services account, and that route is not the same as the individual online sign-up service.

The timing of the outage is notable because it follows the publication of HMRC guidance on 9 September 2026 and the start of automatic sign-ups from September 2026. People who receive a message confirming they are signed up do not need to use the sign-up service again. Those who find no message in their HMRC online services account are not signed up yet and may need to act once the service is available. The maintenance window means that any sign-up planned for that weekend cannot go ahead. Checking whether a sign-up has already happened can still be done by signing in to HMRC online services, because that is a separate action from the sign-up service itself.

Penalties in year one

HMRC will not apply penalty points for late quarterly updates in the first tax year, 2026 to 2027. That means the quarterly update obligations apply, but late submission of those updates will not attract penalty points during that first year. The concession is limited to quarterly updates in 2026 to 2027. It does not remove the requirement to send the updates. It does not remove the requirement to submit the annual tax return by 31 January the following year. The annual return deadline for 2026 to 2027 is 31 January 2028.

The first year therefore combines a live obligation with a softer penalty position on quarterly updates. Users still need compatible software to keep digital records and to send quarterly updates every three months. The updates are summaries of income and expenses, not tax returns. The annual return remains the final reporting step. Anyone who has been signed up automatically should complete the checking step: sign in to their HMRC online account, confirm income sources and check details are correct. Those who are exempt must apply for an exemption. Agents can sign clients up through the agent services account. The published guidance from 9 September 2026 remains the reference point for what to do after an automatic sign-up.

Related coverage on Kael Tripton: Making Tax Digital: First Quarterly Update Due 7 August, Making Tax Digital for Landlords: The 2028 Threshold Explained, Self Assessment: register by 5 October or face a penalty, HMRC July 2026 Self Assessment Deadline: Second Payment on Account Due 31 July, Sole trader vs limited company: how your insurance needs and personal liability change.

Frequently asked questions

Who must use Making Tax Digital for Income Tax from 6 April 2026?

Sole traders and landlords with qualifying income over £50,000 in the 2024 to 2025 tax year, who are not exempt, must use Making Tax Digital for Income Tax for 2026 to 2027.

What counts as qualifying income?

Qualifying income is total turnover from self-employment and property before expenses, based on the previous year's tax return.

What happens from September 2026?

From September 2026 HMRC signs up anyone who needs to use MTD for Income Tax and has not done so. Those contacted are asked to complete a checking step: sign in to their HMRC online account, confirm income sources and check details are correct.

How can someone tell whether they have been signed up?

People can check whether they have been signed up by signing in to HMRC online services. A message confirms if they are. If no message appears, they are not signed up yet.

What do users need to do each quarter?

Users need compatible software to keep digital records, send quarterly updates every three months and submit the tax return by 31 January the following year. The quarterly updates are summaries of income and expenses, not tax returns.