What you need to know

Sole traders and landlords earning more than £50,000 have been required to keep digital records and send quarterly updates to HMRC via Making Tax Digital (MTD) since April 2026.

For those who haven’t, HMRC is preparing to step in and sign you up.

HMRC will automatically sign up taxpayers who are required to use Making Tax Digital (MTD) for Income Tax from 2026-27 but have yet to register, and they have published guidance setting out the steps affected individuals should take if they are affected.

What happens when HMRC automatically signs up a taxpayer?

Once HMRC have signed someone up, they will contact them directly, either by post or digitally depending on their contact preferences, asking them to complete a ‘checking step’.

This checking step can be carried out in the ‘Making Tax Digital for Income Tax’ section of the individual’s relevant HMRC online services account; this will be their Personal Tax Account or Business Tax Account. If they have never used an HMRC online services account, they will need to set up an account.

The ‘checking step’ will involve verifying HMRC’s information on active businesses and property income and notifying HMRC of any changes. It is important to remember that HMRC’s information derives from historical data for 2024-25. This means it is possible that HMRC could include details for businesses that have ceased.

It will not be possible to update the business address, description or name. HMRC need to be contacted directly to change this information.

For those who are signed up, it is then a case of using compatible software to catch up and create digital records from the start of the tax year. Any overdue quarterly updates will need to be submitted as soon as possible (the first quarterly submission was due on 7 August 2026) with future quarterly reports submitted when necessary.

HMRC have confirmed there will be no penalty points for missing a quarterly update for 2026-27. A final quarterly update will be required before the 2026-27 tax return can be submitted, and penalties will be charged if the tax return is submitted late.

If someone has been signed up but does not need to use MTD, it is simply a case of contacting HMRC to rectify the situation.

If you are signed up and need any help dealing with HMRC or Making Tax Digital, please get in touch and we would be happy to help you.