HMRC to automatically sign up taxpayers for MTD from September 2026

HMRC will begin automatically signing up eligible sole traders and landlords for Making Tax Digital for Income Tax, from September 2026. The move affects taxpayers who should already use Making Tax Digital (MTD) for Income Tax for 2026/27, but have not yet registered. HMRC will carry out the process in stages over the coming months.

Automatic registration does not fulfil your reporting obligations. If HMRC signs you up, you must still maintain digital records and submit updates through compatible software.

Why is HMRC introducing automatic MTD sign-up?

HMRC aims to bring taxpayers who have not registered into the mandatory system and help them meet their obligations. On 12 August 2026, HMRC reported more than 570,000 registrations and over 436,000 first quarterly submissions. ICAEW subsequently estimated that automatic sign-up could affect up to 294,000 taxpayers. These August figures highlight the gap in registration and reporting following the first quarterly deadline on 7 August.

Who does HMRC’s automatic MTD sign-up affect?

The September initiative targets sole traders and landlords whose combined qualifying income exceeded £50,000 in the 2024/25 tax year and who must use MTD from April 2026. Exemptions can apply. Qualifying income means gross income from self-employment and property before expenses, rather than taxable profit.

For example, £35,000 of sole trader turnover and £20,000 of gross rental income would produce combined qualifying income of £55,000. Subject to any exemption, this would bring the individual within the first mandatory group.

The announcement does not introduce automatic registration for everyone due to join in April 2027 or April 2028.

For a broader explanation, read our article on what Making Tax Digital means for self-employed individuals and landlords.

What challenges does MTD create for sole traders and landlords?

The transition can involve unfamiliar software, additional administration and changes to established bookkeeping habits. Small business owners and landlords must also make time for regular reporting alongside their day-to-day responsibilities.

ICAEW’s review of the first submissions identified difficulties obtaining client information, maintaining digital records and connecting software to HMRC. These findings show that preparing an update can present challenges even when the submission itself appears straightforward.

Why should you review your registration before HMRC acts?

Arranging registration with your accountant allows you to provide current information from the outset. HMRC’s automatic registration relies on information it already holds, which may not reflect changes since your last tax return. Correcting some details afterwards may require contact with HMRC.

ICAEW also highlights that HMRC will not send agents copies of clients’ sign-up letters. Sharing any notification with your accountant promptly allows them to check your status and agree the next steps.

Is MTD software enough to meet your obligations?

MTD software can simplify quarterly submissions, but accurate reporting depends on the information behind each update. Incomplete records or incorrect entries can affect the figures you report.

Reviewing your arrangements with your accountant can help establish a reliable process, with clear responsibility for maintaining records, checking information and submitting updates. This is particularly useful if you have several income sources or your circumstances have changed.

What happens if you missed the first quarterly update?

The first quarterly update deadline was 7 August 2026. The next deadline is 7 November 2026, so taxpayers who have fallen behind should use the intervening period to discuss any outstanding submissions with their accountant.

HMRC will not issue penalty points for late quarterly updates for 2026/27. However, penalties still apply for late tax returns and late payments. From 6 April 2027, late quarterly updates can attract penalty points, with a £200 penalty when you reach the four-point threshold.

How can your accountant help you get more from MTD?

Quarterly updates summarise your records; they do not replace your annual tax return. Completing each submission therefore forms only part of managing your tax position.

Regular reviews with your accountant can help identify missing allowable expenses and assess relevant reliefs and allowances. They also create opportunities to discuss cash flow and consider ways to minimise your tax liability within the rules before the year ends.

Viewing MTD purely as a submission exercise can mean overlooking these opportunities. Timely financial information gives your accountant a stronger basis for advice throughout the year.

FAQs on HMRC automatic MTD for Income Tax sign up

How Rayner Essex can help

Our Making Tax Digital for Income Tax services offer flexible support for sole traders and landlords. We can manage your quarterly submissions or work alongside you if you prefer to use your own software. Our advice considers your wider tax circumstances, helping you remain compliant while identifying opportunities to optimise your tax position.

Contact us today to discuss how we can help.