HMRC Is Starting to Sign Up MTD Stragglers. What Sole Traders and Landlords Need to Know
HMRC is now taking action against taxpayers who should already be using Making Tax Digital but haven’t registered. If you’re a sole trader or landlord, here’s what you need to know.
Let’s be honest.
Making Tax Digital (MTD) has been talked about for years.
Some businesses have already made the switch. Others have been getting ready. And some have probably been hoping HMRC would leave them alone for a little longer.
That time is running out.
HMRC has announced that it will begin signing up taxpayers who should already be using Making Tax Digital for Income Tax but have not yet registered themselves.
The process is expected to happen in stages from September 2026, with HMRC contacting affected taxpayers directly.
So, if you’re a sole trader or landlord who falls within the first wave of MTD for Income Tax, don’t wait for HMRC to come looking for you.
What is HMRC doing?
HMRC has confirmed that it is now moving on to taxpayers who should already be using MTD for Income Tax but have not voluntarily signed up.
The move follows the introduction of mandatory MTD for Income Tax from 6 April 2026 for sole traders and landlords with qualifying income above £50,000.
HMRC says more than 570,000 taxpayers have already signed up, with more than 436,000 sole traders and landlords having successfully submitted their first quarterly update.
The message is pretty clear:
Making Tax Digital isn’t coming. It’s here.
And HMRC is now working through those taxpayers who haven’t yet made the move.
Read the full HMRC announcement
Who needs to use Making Tax Digital?
The first wave of Making Tax Digital for Income Tax applies to sole traders and landlords whose qualifying income is more than £50,000.
But the threshold is reducing.
The MTD timetable
- From 6 April 2026: qualifying income over £50,000
- From 6 April 2027: qualifying income over £30,000
- From 6 April 2028: qualifying income over £20,000
So even if MTD doesn’t affect you today, it could do very soon.
If your income is approaching one of these thresholds, it’s worth understanding the rules now rather than waiting for an HMRC letter.
“But I’m already registered for Self Assessment…”
This is an important distinction.
Being registered for Self Assessment does not automatically mean you’re registered for Making Tax Digital for Income Tax.
They are separate requirements.
MTD also isn’t simply a digital version of your existing Self Assessment tax return.
If you’re affected, you’ll need to:
- Keep digital records of your income and expenses.
- Use compatible accounting software.
- Send quarterly updates to HMRC.
- Complete your end-of-year process.
- Continue to meet your Self Assessment obligations.
And importantly, quarterly updates are not tax returns. They provide HMRC with information about your income and expenses throughout the year.
Find out more about Making Tax Digital for Income Tax on GOV.UK
What happens if HMRC contacts you?
First of all, don’t panic.
Receiving a letter from HMRC doesn’t necessarily mean you’ve done anything wrong.
It could simply mean HMRC has identified you as someone who should be using MTD for Income Tax and is now taking steps to bring you into the system.
But don’t ignore it.
Check:
- Is HMRC’s information about you correct?
- Are you actually required to use MTD?
- Have you already registered?
- Is your accounting software compatible?
- Are your records up to date?
- Do you understand what you need to submit and when?
If you’re unsure about any of these, speak to your accountant.
That’s where having a proactive accountant can make a real difference.
MTD isn’t just about ticking a box
This is perhaps the biggest misconception about Making Tax Digital.
You can’t simply register for MTD and forget about it.
The real change is how you keep and manage your financial records throughout the year.
If you’ve traditionally kept your paperwork in a drawer, updated a spreadsheet occasionally or handed everything to your accountant once a year, MTD changes things.
You’ll need to keep your records digitally and make sure they are accurate and up to date.
You’ll also need to submit quarterly updates.
That might sound like more work.
But there is a positive side.
Done properly, MTD can give you a much clearer picture of how your business is performing throughout the year.
Instead of waiting until your accounts are prepared months later, you’ll have better visibility of:
- What you’re earning.
- What you’re spending.
- How your business is performing.
- And potentially where you need to make changes.
That’s not a bad thing.
What should you do now?
If you think you might be affected by MTD for Income Tax, don’t wait for HMRC to contact you.
1. Check whether MTD applies to you
Look at your qualifying income and understand whether you fall within the current £50,000 threshold or whether you could be affected by the lower thresholds coming in 2027 and 2028.
2. Check your accounting software
You’ll need to use software that is compatible with Making Tax Digital.
If you’re currently using spreadsheets or a system that isn’t MTD-compatible, now is the time to review your options.
Check HMRC’s list of compatible software
3. Make sure your records are digital
Don’t leave it until the last minute.
Get your income, expenses and financial records organised now so you’re ready for quarterly reporting.
4. Check whether you’ve actually registered
Don’t assume you’re automatically registered for MTD because you already complete a Self Assessment tax return.
You may need to take separate action.
Sign up for Making Tax Digital for Income Tax
5. Speak to your accountant
If you’re not sure what applies to you, ask.
A good accountant should be able to tell you:
- Whether MTD applies to you.
- When you need to comply.
- What records you need to keep.
- Which software is suitable.
- What you need to submit.
- What deadlines apply.
- What you need to do next.
Don’t wait for HMRC to tell you
HMRC has confirmed that taxpayers can sign up themselves rather than waiting to be contacted.
And there’s a good reason to get ahead. The first quarterly update deadline for the 2026/27 tax year was 7 August 2026.
HMRC has also confirmed that there will be no penalty points for late quarterly updates during the 2026/27 tax year, giving taxpayers some breathing space while they get used to the new system. But don’t mistake that for a reason to put MTD off.
From 6 April 2027, the points-based penalty system will apply to missed quarterly deadlines.
In other words: You’ve got an opportunity to get organised. Use it.
What does this mean for landlords?
MTD isn’t just for sole traders. Landlords who meet the qualifying income thresholds can also be required to use Making Tax Digital for Income Tax.
If you receive rental income and are unsure whether your total qualifying income brings you within the MTD rules, it’s worth getting professional advice.
Don’t assume that because your property income is currently dealt with through Self Assessment, nothing changes.
It may. And with the income threshold falling to £30,000 in 2027 and £20,000 in 2028, more landlords will potentially be brought into the system.
Our honest advice?
Don’t bury your head in the sand.
HMRC is now actively working through taxpayers who should already be using MTD but haven’t registered.
If you’re affected, getting organised now is going to be much easier than scrambling to understand the rules after you’ve received a letter.
Making Tax Digital is becoming part of the normal way sole traders and landlords manage their tax affairs.
The right software will help.
But good accounting support can make the whole process much easier.
At Honest Accounting, we don’t believe you should have to work out what HMRC’s latest changes mean for your business on your own.
We believe your accountant should be keeping you informed, helping you prepare and making sure you understand what you need to do.
Because compliance matters.
But so does knowing what’s happening in your business.
Need help with Making Tax Digital?
If you’d like an accountant who keeps you informed rather than simply waiting for you to ask, Honest Accounting is here to help.
Call us on 0333 138 0003 to find out how we can support your business.
Thinking of switching accountants?
If your accountant is difficult to reach, slow to respond, or simply not giving you the advice you need, it might be time for a change. Switching accountants doesn’t have to be complicated either — Honest Accounting handles the entire handover for you, with fixed fees, no tie-in contract and clear, straightforward support. And if you switch and register before 30 September 2026, you’ll get your first three months at 50% off. No promo code. No hidden catches. Just better accounting, made simple. Find out how to switch and save.
Honest Accounting. Simple. Efficient. Always Compliant.
Useful HMRC resources
HMRC: Making Tax Digital for Income Tax
HMRC: Sign up for Making Tax Digital for Income Tax
HMRC: Find compatible MTD software
HMRC: 436,000 sole traders and landlords make their tax digital