A letter has landed from HMRC telling you that you’ve been enrolled in Making Tax Digital for Income Tax. Before anything else, take a breath: this is not a new tax charge, and nothing extra is owed just because the letter turned up.
What has actually happened is a change to how you report income you already earn. From September 2026, HMRC began automatically enrolling sole traders and landlords who have not registered for MTD yet but should have. If your qualifying income was above £50,000 in the 2024/25 tax year, that’s why your name came up.
This piece is for you if that letter is sitting in your inbox right now, and you want clear, actionable steps. For the fuller picture, read our complete MTD guide.
Do I really need to use MTD?
Here’s the bit that trips people up: the £50,000 threshold is based on your gross qualifying income, not your profit. HMRC adds up your turnover from self-employment and property before you deduct any expenses. So if you turned over £58,000 but only kept £30,000 after costs, you’re still over the threshold.
HMRC works out who to enrol using your 2024/25 Self Assessment return, the latest one on file when sign-ups began. If your income or sources have changed since then, that gap matters, and you can put it right (more on that shortly).
Some people are being enrolled despite no longer trading. If you closed your business, sold a rental property, or stopped self-employment after the 2024/25 tax year, you can still land on HMRC’s list, because the system is working from historic figures rather than your current situation. Imagine a self-employed decorator who wound down his business in early 2026. He could still receive an enrolment letter months later, purely because his last tax return showed income above £50,000. If that sounds like you, you need to tell HMRC your sources have ceased, not just ignore the letter and hope it goes away.
There are also genuine exemption routes: digital exclusion, insolvency, and a handful of other specific circumstances. These aren’t automatic; you have to apply, and HMRC decides. For the exact figures, combined-income rules, and how the threshold steps down over the next two years, our thresholds guide breaks it down properly.
Check and correct the income sources HMRC holds
Before you touch software, sort out what HMRC actually thinks you do for a living. Log into your Government Gateway account and go through your registered income sources one at a time.
Start with your sole trade. Is it still listed correctly, one entry per business if you run more than one? Then move to property. HMRC treats UK property and overseas property as two separate categories, so if you have both, check they’re both there and not merged into one figure.
If you’ve picked up a new income stream since your 2024/25 return, a second rental property, a new side business, add it now. Do not wait for it to show up on next year’s return; HMRC needs your current picture to work out your quarterly obligations correctly.
Just as important is flagging anything that has stopped. Sold a property? Closed a trade? Tell HMRC formally that the source has ceased, with the date it ended. This is what stops you being chased for quarterly updates on a business that no longer exists, and it’s also your route out if ceasing a source drops you back under the threshold.
If an accountant or agent normally handles your tax affairs, this is worth doing together, or asking them to check on your behalf. Agents can see and correct these details through their own software, and many will already be reviewing client lists as HMRC works through its enrolment stages. If you don’t currently have one and you’re finding this confusing, it might be the moment to get one, particularly if you have multiple income sources to untangle.
Choose software and connect it to HMRC
If you already use accounting software, check it’s on HMRC’s list of MTD-compatible products before assuming you’re covered. Not every invoicing or bookkeeping package talks to HMRC’s systems the way MTD requires, so it’s worth checking now rather than finding out the hard way later.
Your software needs to cover every income source that applies to you. If you’re a landlord with a sole trade too, one tool needs to handle both, or two tools that report to HMRC as one combined submission. Check this before you commit; switching mid-year is more hassle than getting it right first.
Digital record keeping means exactly what it says: your income and expenses need to sit in digital form from the point they’re recorded, not scribbled in a notebook and typed up later. Once you’ve picked software, you’ll need to authorise it to connect to your HMRC account, a short online process that links the two together.
If an agent manages your tax affairs, they’ll usually need separate authorisation to act on your behalf within the software too, so loop them in early rather than at the last minute.
Broadly, you’re choosing between all-in-one software that handles your bookkeeping and submissions in one place, or bridging software that pulls figures from a spreadsheet you already use. Bridging can suit people attached to their existing spreadsheet, but it adds a step.
Catch up on your records and any overdue updates
If your MTD obligations started on 6 April 2026 and you’re only sorting this now, you have catching up to do, and the sooner you start, the less overwhelming it gets.
Go back to 6 April 2026 and work forward. Pull together your bank statements, invoices, and receipts for the months you’ve missed, and start reconciling them into your new software rather than trying to reconstruct everything from memory in one sitting. Doing this in monthly chunks is far less painful than tackling six months at once.
You’ll also need to choose your accounting period, either the standard tax year (6 April to 5 April) or the calendar quarter option some software offers. Pick one and stick with it, since switching part-way through causes its own headaches.
Once your records are current, submit your outstanding quarterly updates through your software. Each one is a running total of income and expenses for that quarter, not a full tax return, so it’s less daunting than it sounds once the figures are in front of you.
Here’s the good news: There are going to be no penalty points charged for late quarterly updates during the 2026/27 tax year. That’s a real concession, and it takes the pressure off the exact date you catch up by. But don’t read that as permission to skip updates altogether. They’re still a mandatory part of MTD, and your end-of-year final declaration and your tax bill both depend on accurate figures being submitted through the year, concession or not. Treat the breathing room as exactly that: room to get compliant properly, not an excuse to leave it until next April.
For the practicalities of what digital records need to include and how quarterly submissions actually work, HMRC’s own guidance on creating digital records and sending quarterly updates covers the mechanics step by step.
What should I do today, and what comes next?
So, where do you actually start? Here’s the order that makes sense:
- Read the letter properly and note the effective date; that’s when your quarterly clock starts, not the date you open the envelope.
- Log into your HMRC online account and check that every income source is listed correctly, adding anything new and flagging anything that’s ceased.
- Confirm whether you’re genuinely in scope, using gross qualifying income, not profit, and check the 2024/25 figures HMRC has used.
- Choose MTD-compatible software that covers all your income sources, then authorise it to connect to your HMRC account.
- Start reconciling your records from 6 April 2026 and submit any quarterly updates that are overdue.
For your next deadline, check the dates shown in your HMRC online account or software dashboard; they’ll reflect your specific accounting periods rather than a single date for everyone.
One thing worth knowing: MTD for Income Tax runs alongside, not instead of, your Self Assessment return. Your 2025/26 tax return and any tax owed for that year are still due in the normal way, by 31 January 2027, regardless of where you’re up to with quarterly updates.
