HMRC is now automatically signing taxpayers up for Making Tax Digital

Making Tax Digital for Income Tax became compulsory from 6 April 2026 for many sole traders and landlords with qualifying income above £50,000.

HMRC has now moved to the next stage of the rollout. From September 2026, it is automatically signing up taxpayers who should already be using Making Tax Digital but have not yet registered themselves or been registered by their accountant. This will happen in stages over the coming months.

Who is HMRC signing up?

For 2026/27, Making Tax Digital applies to individuals whose combined gross income from self-employment and property was more than £50,000 in the 2024/25 tax year.

Importantly, the £50,000 test looks at income before expenses rather than taxable profit.

HMRC is using information from taxpayers' previous Self Assessment returns to identify those who should be within the regime. Anyone automatically enrolled will be contacted by HMRC through their online account or by post.

Check HMRC's guidance on whether and when you need to use Making Tax Digital

What if HMRC signs you up?

Being automatically enrolled does not remove the need to comply with Making Tax Digital.

If HMRC signs you up, you will need to check that the self-employment and property income sources held on its system are correct. This is particularly important if a business or rental activity has started or ceased since your last tax return.

You will also need to use compatible software and catch up your digital records from the start of the 2026/27 tax year.

Where quarterly updates are already overdue, HMRC says these should be submitted as soon as possible.

The standard quarterly update deadlines for 2026/27 are:

• 7 August 2026;

• 7 November 2026;

• 7 February 2027; and

• 7 May 2027.

There is some breathing space on penalties

HMRC will not award penalty points for late quarterly updates during the 2026/27 tax year.

However, this does not mean the quarterly updates can simply be ignored. The required updates must still be submitted before the 2026/27 tax return can be completed.

Penalties can also still apply if the final tax return is filed late or tax is paid late.

Read HMRC's guidance for taxpayers who have been automatically signed up

What if your circumstances have changed?

Because HMRC may be relying on information from your 2024/25 tax return, its records may no longer reflect your current position.

For example, you may have stopped trading, sold a rental property or started another source of self-employment or property income.

If all relevant income sources ceased before 6 April 2026, you should not normally need to use Making Tax Digital for 2026/27, although HMRC's records will need to be updated.

There are also exemptions in certain circumstances, including where someone is digitally excluded.

The thresholds are falling

Making Tax Digital will apply to an increasing number of taxpayers over the next two years.

The qualifying income threshold falls to more than £30,000 from 6 April 2027, based on 2025/26 income, and to more than £20,000 from 6 April 2028, based on 2026/27 income.

Landlords and sole traders who are not yet within the rules should therefore check when they are likely to become affected and make sure their bookkeeping arrangements are suitable well in advance.

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Please contact us to find out how the above applies in your circumstances and how we can help you.

Please note that the above is for general information only and does not constitute financial or tax advice. You should not rely on this information to make or refrain from making any decisions. You should always obtain independent professional advice in respect of your own situation.