The first Making Tax Digital (MTD) for Income Tax quarterly update deadline has now passed, but HMRC is already turning its attention to those who have not yet joined the system.
HMRC has announced that, from September 2026, it will begin automatically signing up taxpayers who it believes should have been using MTD for Income Tax since April but have not yet registered.
More than 570,000 people have registered so far, with over 436,000 successfully submitting their first quarterly update. However, this still leaves a significant number of sole traders and landlords who may need to take action.
Who could be signed up by HMRC?
MTD for Income Tax became mandatory from 6 April 2026 for sole traders and landlords whose combined qualifying income from self-employment and property exceeded £50,000.
HMRC will use information from 2024/25 Self Assessment tax returns to identify people it believes are within the rules. Automatic sign-up will take place in stages from September over the following months.
This announcement currently applies only to people who should have joined MTD for the 2026/27 tax year. Those due to enter MTD from April 2027 or April 2028 will still be expected to sign up themselves, or ask their accountant to do it for them.
Will HMRC signing you up make you compliant?
No. Automatic sign-up only places you within the MTD system. It does not complete the work needed to meet your ongoing responsibilities.
Once registered, you may still need to:
- Check that HMRC has listed the correct businesses and property income sources.
- Tell HMRC if a business has ceased or your circumstances have changed.
- Choose and connect HMRC-recognised software.
- Create digital records dating back to the beginning of the 2026/27 tax year.
- Send the required quarterly updates through compatible software.
- Submit your 2026/27 tax return through MTD-compatible software.
HMRC expects to contact automatically registered taxpayers by letter or digital message, explaining what has happened and what they need to do next. Further official guidance is expected later in August.
Why checking HMRC’s records matters
HMRC is identifying taxpayers using information it already holds, including historic tax return data. That information may not reflect more recent changes.
For example, HMRC could still have a trade or property business recorded as active when it has since ceased. If its records are not corrected, it may expect quarterly updates for an income source that no longer exists.
Some taxpayers may also qualify for an exemption that HMRC does not know about. Although certain exemptions are applied automatically, others must be requested. This includes exemptions for people who are digitally excluded and unable to use digital systems because of factors such as age, disability, location or another reasonable circumstance.
If you believe you should not be within MTD, it is important to check your position and contact HMRC as soon as possible.
What if you missed the first quarterly update?
HMRC has confirmed that no penalty points will be issued for late quarterly updates during the 2026/27 tax year. This provides some breathing space for those still getting ready.
However, the updates are not optional. Digital records must still cover the period from the beginning of the tax year and the relevant information will need to be brought up to date.
Because quarterly updates contain cumulative totals, it may be possible to catch up through a later update rather than sending every missed update separately. At least the fourth quarterly update will need to be filed before the 2026/27 tax return can be completed through MTD-compatible software.
Penalties may still apply if the annual tax return is late or the tax due is not paid on time.
Should you wait for HMRC to register you?
If you know that MTD applies to you, our advice is not to wait.
Signing up now allows you to check that your information is correct, choose suitable software and prepare your records before HMRC contacts you. It also gives you greater control over the registration process and reduces the likelihood of receiving an unexpected letter.
What should you do now?
If you are self-employed, receive property income or act for someone who does, you should:
- Check whether combined gross income from self-employment and property exceeded £50,000 in 2024/25.
- Confirm whether any businesses or property income sources have started or ceased since that return was filed.
- Check whether an exemption or temporary deferral could apply.
- Register for MTD if required rather than waiting for HMRC.
- Put compatible software and digital record-keeping processes in place.
- Bring your records up to date from the start of the 2026/27 tax year.
Need help with Making Tax Digital?
Being automatically registered does not automatically make you compliant. If you are unsure whether MTD applies to you, have missed the first quarterly update or need help choosing the right software, our team can review your position and help you take the necessary next steps.
Contact us today to discuss Making Tax Digital for Income Tax and make sure you are ready.