HMRC automatic MTD sign-up, what sole traders and landlords need to do
Overview
From September 2026, HMRC is automatically signing up sole traders and landlords who must use Making Tax Digital (MTD) for Income Tax for 2026/27 but have not already registered. Sign-up is taking place in stages over the following months, with HMRC contacting taxpayers after they have been signed up.
For this first mandatory year, MTD generally applies where combined qualifying income from self-employment and property exceeded £50,000 in 2024/25, subject to exemptions. Automatic sign-up does not provide software, create digital records or submit updates for you. You must check the details HMRC holds, arrange compatible software and catch up on outstanding requirements.
HMRC will not apply penalty points for late quarterly updates for 2026/27. However, digital records and quarterly reporting remain required, and the relaxation does not cover late annual tax returns or late tax payments.
Who is affected?
Qualifying income is generally your combined gross self-employment and property income before expenses, rather than your profit. Salary, pensions, dividends and savings interest do not count towards this threshold, although they may still need to appear in your annual tax return.
For example, gross sole-trader income of £35,000 and qualifying property income of £20,000 normally combine to £55,000. Looking at either source alone could incorrectly suggest that you are outside MTD.
Check the relevant reference year and any special rules, including jointly owned property, rather than relying only on current turnover. Exemptions can apply, including where it is not reasonable for someone to use digital systems because of their circumstances. Some exemptions require an application to HMRC.
Not receiving a letter does not remove your responsibility to check whether MTD applies. If you disagree with HMRC's decision, contact HMRC or your adviser rather than ignoring the notification.
What does automatic sign-up mean?
HMRC uses information it already holds, including your 2024/25 return and, where submitted before sign-up, your 2025/26 return. These records may not reflect recent changes.
After receiving confirmation online or by post, you should:
Sign in to HMRC online services and select MTD for Income Tax, or ask your authorised adviser to check your position.
Confirm your self-employment and property businesses, add missing sources and report sources that have stopped.
Choose suitable software and authorise it to connect to HMRC.
Create digital records from the start of the relevant reporting year and send overdue quarterly updates as soon as possible.
If all your self-employment and property sources ceased before 6th April 2026, update HMRC's records: you should not need MTD for 2026/27, but may still need your 2025/26 tax return. If all sources ceased on or after that date, MTD reporting obligations can remain for the period up to cessation and for your 2026/27 annual return.
If HMRC has not yet signed you up and you are required to use MTD, you or your adviser can still register. Do not wait for automatic sign-up before preparing.
What must you submit?
You normally send four quarterly updates for each self-employment and property business, followed by an annual tax return through compatible software. Four updates is not necessarily the total number of submissions where you have several businesses.
Quarterly updates are cumulative summaries of digitally recorded income and expenses, not full tax returns. Each covers the start of the reporting year to the end of the relevant update period. You do not normally need to make accounting or tax adjustments before sending an update.
For 2026/27, quarterly deadlines are:
7th August 2026, first update, already passed.
7th November 2026, second update.
7th February 2027, third update.
7th May 2027, fourth update.
The second standard update covers 6th April to 5th October 2026 cumulatively. If you use calendar periods, it covers 1st April to 30th September 2026. Both have the same November deadline.
After the year ends, complete corrections and tax adjustments, check other income and gains, and submit your 2026/27 annual tax return by 31st January 2028. This year-end submission is sometimes called the final declaration. MTD does not remove the annual return.
Your separate 2025/26 online Self Assessment return normally remains due by 31st January 2027. Quarterly updates do not change tax-payment dates or create quarterly tax bills; payments on account may still apply.
Which software can you use?
Use software compatible with MTD for Income Tax, not simply a product that supports MTD for VAT. Check that your chosen product or combination of products supports your income sources, records, quarterly updates and annual return.
Spreadsheets can remain part of your record-keeping if used with suitable bridging software and a compliant digital-link arrangement. A spreadsheet on its own cannot submit MTD updates. HMRC does not provide MTD software, but its software finder lists free and paid options.
What are the penalty risks?
There are no late-quarterly-update penalty points for 2026/27, but you still need to catch up and complete the reporting requirements before submitting your annual return.
After 2026/27, mandatory users can receive points for missed quarterly-update or annual-return deadlines. Reaching four points triggers a £200 penalty. Late annual returns, tax payments and interest have separate consequences; the first-year quarterly relaxation is not a general exemption from penalties. Different rules apply while someone participates voluntarily.
How to get ready
Check your starting date. Review qualifying income for the relevant reference year and any exemption.
Confirm sign-up status. Read HMRC correspondence and check your online account with your adviser if needed.
Correct your income-source details. Confirm existing businesses, add new ones and report cessations.
Set up and authorise software. Check Income Tax compatibility, supported income and update periods.
Catch up your records and updates. Include the period from the start of the year, not just transactions after automatic sign-up.
Agree responsibilities and deadlines. Decide who maintains records, reviews figures and submits each update and the annual return.
Frequently Asked Questions
Who is HMRC automatically signing up?
People required to use MTD for Income Tax for 2026/27 who have not already signed up. This generally means sole traders and landlords with qualifying income over £50,000 in 2024/25 who are not exempt.
Does automatic sign-up mean everything has been done?
No. You still need to confirm your details, arrange compatible software, keep digital records, catch up on updates and submit your annual return.
Will I be penalised for missing the first quarterly deadline?
HMRC will not apply quarterly-update penalty points for 2026/27. You must still address outstanding updates. Late annual tax returns and late tax payments are not covered by this relaxation.
Can I keep using a spreadsheet?
Yes, if it forms part of a compliant arrangement with suitable bridging software. A spreadsheet alone cannot make the submissions.
When will the thresholds fall?
The published timetable is qualifying income over £30,000 in 2025/26 for entry from 6th April 2027, and over £20,000 in 2026/27 for entry from 6th April 2028, subject to eligibility and exemptions.
Do quarterly updates replace Self Assessment or change payment dates?
No. You still submit an annual tax return through compatible software and meet the applicable payment dates. Updates are summaries, not quarterly tax returns or demands for payment.
How can 360 Accounts & Bookkeeping help?
We can help check your obligations, organise digital bookkeeping, choose suitable software and establish a practical reporting timetable. Contact us promptly if HMRC has signed you up or you have outstanding updates, so we can agree the support you need.