HMRC to Automatically Sign-Up Taxpayers for Making Tax Digital: What You Need to Know

HMRC to Automatically Sign-Up Taxpayers for Making Tax Digital: What You Need to Know

More than 294,000 taxpayers may still need to act—here is how sole traders and landlords can take control of their MTD obligations.

HMRC has confirmed that, from September 2026, it will begin automatically signing up taxpayers who should already be using Making Tax Digital (MTD) for Income Tax but have not yet enrolled. The process will take place in stages over the following months.

Although automatic enrolment may help taxpayers meet their legal obligations, HMRC is encouraging those affected to sign up themselves. Acting early gives you more control: you can check that your details are correct, select compatible software and prepare your records before quarterly reporting becomes routine.

Who needs to use MTD for Income Tax?

MTD for Income Tax is mandatory from 6 April 2026 for individuals registered for Self-Assessment whose total qualifying income from self-employment and property exceeds £50,000. The threshold reduces to more than £30,000 from April 2027 and more than £20,000 from April 2028.

Under MTD, sole traders and landlords must use compatible software to keep digital records, submit quarterly updates and complete their tax return. HMRC does not provide the software, so choosing a solution that suits your business and bookkeeping process is an important early step.

Why take action now?

More than 570,000 customers have signed up to MTD for Income Tax and over 436,000 have submitted their first quarterly update. Based on HMRC’s estimate that 864,000 taxpayers are in the first mandated group, approximately 294,000 had yet to register when the figures were published.

Signing up proactively can help you:

• confirm whether and when the rules apply to you;
• ensure your MTD registration details are correct;
• choose and configure compatible software;
• bring your digital records up to date; and
• establish a reliable process for quarterly submissions.

What about late quarterly updates?

HMRC has stated that no penalty points will be issued for late quarterly updates in the 2026–27 tax year. However, the points-based penalty regime is expected to apply from 6 April 2027.

Under that regime, a taxpayer receives one penalty point for each missed quarterly deadline. Once four points are accumulated, a fixed £200 penalty may be charged. This makes it sensible to build good digital record-keeping habits now, while there is time to refine your process.

How Kennedys Accounting can help.

Kennedys Accounting can help you understand your MTD start date, assess your current records, choose suitable software, complete registration and put a practical quarterly reporting process in place. Whether you are a sole trader, landlord or both, our team can make the transition clearer and more manageable.

Do not wait for HMRC to sign you up.

Contact Kennedys Accounting today for practical support with MTD registration, compatible software, digital record-keeping and quarterly submissions