Have you received a letter or online message from HMRC informing you that you’ve been signed up for Making Tax Digital (MTD) for Income Tax and you’re unsure what to do now?
It means you need to start using the MTD for Income Tax system because HMRC’s records show your qualifying income from self-employment and property was over £50,000 in the 2024/25 tax year.
In this article, we discuss what this means for you, provide an overview of MTD for Income Tax, and highlight what you need to do now.
Here’s what we cover…
An overview of Making Tax Digital for Income Tax
Since 6 April 2026, an individual generally needs to use MTD for Income Tax if they’re registered for Self Assessment, receive income from self-employment or property, their combined qualifying income was more than £50,000 in the 2024/25 tax year, and no exemption applies.
Qualifying income is the combined gross income from self-employment and property, before expenses, based on the relevant Self Assessment return. Other income and gains don’t count towards this threshold.
Those who meet that criteria (there are exceptions) need to use MTD-compatible software to keep digital records, send quarterly updates, and submit a tax return, including any other income sources that must be reported.
Quarterly updates are summaries of business income and expenses. They’re not tax returns.
MTD for Income Tax will expand in 2027 and again in 2028.
The threshold is more than £30,000 of qualifying income in 2025/26 for a 6 April 2027 start and more than £20,000 in 2026/27 for a 6 April 2028 start, subject to the other eligibility conditions and exemptions.
What’s happening with the HMRC-led sign-up to MTD?
HMRC is using tax records of sole traders and landlords to identify if they are required to use MTD for Income Tax but aren’t yet and will contact those who meet the criteria to let them know they’ve been automatically signed up.
The HMRC-led sign-up to MTD will be happening in stages over the coming months.
HMRC’s current automatic sign-up exercise applies to people required to use MTD for Income Tax for 2026/27 whose records show qualifying income over £50,000 in 2024/25 and who have not already signed up.
It’s worth noting that if you’re required to join MTD for Income Tax from April 2027 or April 2028, this automatic sign-up process won’t apply to you.
Why HMRC has signed you up for MTD
If you are required to use MTD for Income Tax but haven’t signed up for it, HMRC will contact you to let you know it has done it on your behalf.
While you’ll have been added to the MTD for Income Tax service, it’s important to note that it doesn’t mean you’re fully set up to comply.
You’ll need to follow a series of steps to ensure you meet the necessary requirements.
What to do if HMRC has signed you up for MTD for Income Tax
1. Sign in to your HMRC online account
Start by checking the records HMRC holds for you are up to date. Use the details you use for Self Assessment and log in to your HMRC online services account.
Open the MTD for Income Tax service, check the information that HMRC has for your business and take a look at your self-employment and/or property income sources to ensure they’re correct.
And if any of your circumstances have changed, make sure you get in touch with HMRC to let them know.
Check HMRC’s exemption guidance. Some exemptions apply automatically, while others must be applied for with supporting information.
If HMRC’s income-source information is wrong or your circumstances have changed, follow HMRC’s instructions to correct the record or contact HMRC.
2. Choose your MTD-compatible software
You need to use software for MTD for Income Tax.
You may use one product or a compatible combination of products, including spreadsheets with suitable bridging software, provided the overall setup meets the digital-record, update and tax-return functions you need.
Check the provider’s supported features and HMRC’s compatible-software list.
A solution such as Sage Sole Trader can help simplify the process for you.
It can help you record and categorise transactions, prepare and send supported MTD quarterly updates, and view an indicative tax estimate based on the information entered.
You remain responsible for checking that records are complete and accurate and for meeting filing and payment deadlines.
Once you’ve chosen your software, connect it to MTD for Income Tax.
3. Review your records and fill any gaps
Create and retain the required digital records from your MTD start date.
Check which quarterly updates are due for each self-employment or property income source and use MTD-compatible software to send any outstanding updates.
This might mean you need to import bank transactions, record income, enter expenses or organise any supporting documents.
If you do this sooner rather than later, it’ll be easier to ensure you have everything up to date.
4. Contact your accountant if you have one
If you’ve got an accountant, it’s likely they’ll have contacted you about MTD for Income Tax and you’re already set up.
But check to see if they’ve signed you up.
If your accountant hasn’t been in touch about the new legislation, get in touch with them now to see how they can support you with MTD.
While you don’t need to use an accountant for MTD for Income Tax, you might find professional advice helpful.
Depending on the services agreed, an accountant or tax adviser may help you review your records, software setup and filing obligations.
You remain responsible for ensuring that your tax affairs are complete and submitted on time.
Final thoughts
It might feel a bit unsettling if you’ve received a letter or online message from HMRC letting you know that you’ve been automatically signed up to MTD for Income Tax.
But you’re not the only one who will be contacted by HMRC.
HMRC is ensuring that those sole traders and landlords whose records show they’re required to use MTD have been signed up to it if they’re not using the new system already.
So what’s the best thing for you to do now? Take action early.
Start by logging into your HMRC account, check the information about your business, then choose MTD-compatible software so you can keep records digitally, make your quarterly submissions, and submit your tax return.
And if you need any support, speak to a suitably qualified adviser, such as an accountant or tax adviser.
It might feel like a big step to take to move from manual record-keeping to a digital process, but the sooner you get started, the easier it’ll be for you to stay on top of your taxes and HMRC’s requirements, so you can focus on your business.
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