As many as 294,000 sole traders and landlords are about to be signed up to Making Tax Digital for Income Tax whether they asked for it or not. HMRC starts working through that list this month, in batches, and it will not copy your accountant into the letter.
TL;DR: From September 2026 HMRC begins signing up sole traders and landlords it believes are within Making Tax Digital for Income Tax but have not registered themselves. Up to 294,000 people are in scope. Being signed up does not give you compatible software, and HMRC will not tell your agent it has done it.
What Changes for You From September?
HMRC stops waiting for you to register and does it itself. From September 2026 it begins signing up anyone it believes has been required to use Making Tax Digital for Income Tax since April 2026 and has not yet joined (ICAEW, 2026). Sign-ups run in batches over the following months, pausing around the 31 January 2027 Self Assessment filing date.
The trigger is HMRC's own data, not a fresh conversation with you. Once signed up, you get a letter telling you to keep digital records and report quarterly through compatible software.
Two details matter more than the letter. Your agent gets no copy and no notification, so an accountant who has not signed you up may not know your status has changed. And if you would rather do it yourself and keep control of the timing, you sign up through the GOV.UK service using your Government Gateway login, or your accountant does it through their agent services account. Note that the sign-up service is offline from 5pm on Friday 11 September to 1pm on Tuesday 15 September 2026 (ICAEW, 2026).
Who Will HMRC Sign Up?
Anyone whose combined gross income from sole trades and property in the 2024-25 tax year came to more than £50,000 and who has not already registered (GOV.UK, 2026). The test runs on gross income before expenses, added across every trade and every property, so a landlord with £32,000 of rent and a small consultancy turning over £20,000 is inside it.
More than 570,000 people have signed up so far and 436,000 have filed a first quarterly update (GOV.UK, 2026). The gap between that and the full population in scope is what HMRC is now closing.
What we see most often is people ruling themselves out on profit. A property business with £55,000 of rent and £48,000 of interest, repairs and agent fees makes very little and is still firmly caught. The threshold falls to £30,000 for 2027-28 and £20,000 from 2028-29, so sitting under it this year is temporary for most people (GOV.UK, 2026).
Being Signed Up Is Not the Same as Being Ready
Registration does nothing about the part that takes actual work. You still have to get software that talks to HMRC, authorise it against your tax account, and keep digital records of income and expenses from there on (GOV.UK, 2026).
HMRC does not supply or pick the software for you. Its own catalogue lists free products for people with simple affairs, including My Tax Digital, Clear Books Free and RentalBux Free, alongside paid packages such as Xero, QuickBooks and FreeAgent (GOV.UK, 2026). Free products usually cap transaction volume or the number of income sources, so check those limits against your real records rather than the headline price.
In our experience the software choice is rarely the hard part. The hard part is moving from a folder of receipts in April to a record you keep as you go, which is why our guide to digital record keeping for sole traders is worth reading before you buy anything.
What If HMRC Has You Wrong?
Then you have to tell it, and the route depends on why. HMRC is working from 2024-25 returns, so anyone who stopped trading or sold a rental during 2025-26 can be signed up for a business that no longer exists.
If every MTD source ceased before 6 April 2026, do not use the online sign-up process. Contact HMRC by phone or webchat, state clearly that all of your MTD sources of income have ceased, and HMRC will write back confirming that Making Tax Digital no longer applies (ICAEW, 2026).
If one source ended but another carries on into 2026-27, you stay in. You must sign up and report the remaining source through software even where that source on its own sits well below £50,000. One question clients always ask is whether closing the larger business gets them out for the year. It does not.
Can You Get Out Once You Are In?
Only slowly, or by exemption. Once you are mandated, the requirement lifts only after your qualifying income has been below the threshold for three consecutive tax years, and you can opt out once the fourth quarterly update for that third year has gone in (ATT, 2026). The rule is there to stop people joining and leaving as turnover moves around.
The faster route is an exemption, and it is narrow. It is aimed at people who are digitally excluded, whether by age, disability, location or religious observance. You apply by phone or in writing to Self Assessment general enquiries, quoting your National Insurance number and setting out why, and agents use the Agent Dedicated Line (GOV.UK, 2026).
HMRC aims to reply within 28 calendar days. If it refuses, you have 30 days to appeal in writing. Apply well before a filing date, not after one.
The Deadlines and Penalties That Follow
Being signed up in September does not reset the calendar. The remaining 2026-27 quarterly updates fall due on 7 November 2026, 7 February 2027 and 7 May 2027, with the final declaration by 31 January 2028 (GOV.UK, 2026).
There are no penalty points for a late quarterly update in 2026-27, a deliberate easement for the first year (GOV.UK, 2026). It ends on 6 April 2027. From then each missed quarterly deadline earns one point, and four points trigger a £200 fixed penalty.
The easement covers quarterly updates only. Late payment of tax and a late final declaration still carry the usual Self Assessment penalties and interest. If you want to know what actually goes into one of these submissions, our post on the first quarterly update walks through it, and our guide to what changed in April 2026 covers the wider rules.
Frequently Asked Questions
Will HMRC tell my accountant I have been signed up?
No. HMRC writes to the taxpayer and sends the agent no copy and no notification (ICAEW, 2026). Forward the letter to your accountant, or ask them to sign you up first so both sides know where you stand.
I registered months ago. Does this affect me?
No. Automatic sign-up only reaches people HMRC believes are in scope and who have not registered. If you have signed up and filed a first update, nothing about your position changes.
Can I ignore the letter if I think it is wrong?
No. Contact HMRC either way. If your qualifying income for 2024-25 was genuinely under £50,000, or every MTD source ceased before 6 April 2026, phone or webchat is the route and HMRC confirms the outcome in writing.
What does compatible software cost?
Free products sit on HMRC's catalogue for simple affairs, with limits on transactions or income sources. Paid packages aimed at sole traders and landlords generally start at a few pounds a month. Filter the GOV.UK software list by price and by the income types you actually have.
Not sure whether HMRC's data puts you in scope? Get in touch and we will check your 2024-25 qualifying income, tell you whether the letter is right, and get software and quarterly filing running before the 7 November update. You can see how we support sole traders and landlords on our services page.