HMRC registered me for MTD for income tax. What should I do now?

Have you received a letter or online message from HMRC informing you that you have signed up for Making Tax Digital (MTD) for income tax and don’t know what to do now?

This means that you need to start using the MTD system for income tax as HMRC records show that your assessable self-employment and property income was over £50,000 in the 2024/25 tax year.

In this article we’ll discuss what this means for you, provide an overview of MTD for income tax and what you need to do now.

Here’s what we cover…

Table of Contents

An overview of the digital design of income tax

From 6 April 2026, an individual must generally use MTD for income tax if they are registered for self-assessment, receive income from self-employment or property, their combined assessable income in the 2024/25 tax year was more than £50,000 and no exemption applies.

Eligible income is the combined gross income from self-employment and assets, before expenses, based on the relevant self-assessment statement. Other income and profits are not counted towards this limit.

Those who meet these criteria (there are exceptions) must use MTD-compliant software to maintain digital records, send quarterly updates, and file a tax return, including any other sources of income that must be reported.

Quarterly updates are summaries of business income and expenses. These are not tax returns.

MTD for income tax will be extended in 2027 and again in 2028.

The threshold is more than £30,000 of qualifying income in 2025/26 starting on 6 April 2027 and more than £20,000 in 2026/27 starting on 6 April 2028, subject to the other eligibility conditions and exceptions.

HMRC will use tax records from sole traders and landlords to determine whether they need to use MTD for income tax but are not already doing so and will contact those who meet the criteria to let them know they are automatically enrolled.

HMRC-led registration with MTD will be phased in over the coming months.

HMRC’s current automatic registration process applies to people who need to use MTD for income tax for 2026/27, whose records show qualifying income in excess of £50,000 in 2024/25 and who have not yet registered.

Please note that if you are required to join for income tax from April 2027 or April 2028 MTD, this auto-enrollment process will not apply to you.

Why HMRC registered you for MTD

If you need to use MTD for income tax but have not registered for it, HMRC will contact you to let you know that it has done so on your behalf.

Although you have been added to the MTD service for income tax, it is important to note that this does not mean you are fully equipped for compliance.

You must follow a series of steps to ensure that you meet the necessary requirements.

What to do if HMRC has declared you for MTD for income tax?

Firstly, check that the documents HMRC hold for you are up to date. Use the data you use for self-assessment and log in to your HMRC online services account.

Open the Income Tax MTD service, check the information HMRC has for your business and check your self-employment and/or property income sources to ensure they are correct.

And if your circumstances have changed, make sure you contact HMRC to let them know.

View HMRC’s exemption guidelines. Some exceptions apply automatically, others must be requested with appropriate documentation.

If HMRC’s source of income information is incorrect or your circumstances have changed, follow HMRC’s instructions to correct the information or contact HMRC.

2. Choose your MTD compatible software

You need to use software for MTD for income tax.

You may use a product or a compatible combination of products, including spreadsheets, with appropriate bridging software, provided that the overall configuration meets the digital recording, updating and tax filing capabilities you require.

Check the provider’s supported features and HMRC’s list of compatible software.

A solution like Sage Sole Trader can help you simplify the process.

It can help you record and categorize transactions, prepare and send supported quarterly MTD updates, and display an indicative tax estimate based on the information entered.

You remain responsible for verifying the completeness and accuracy of records and meeting submission and payment deadlines.

Once you have selected your software, connect it to MTD for Income Tax.

3. Check your documents and close any gaps

Create and retain required digital records from your MTD start date.

Check what quarterly updates are due for each self-employment or investment income source and use MTD-compatible software to submit pending updates.

This may mean importing bank transactions, recording income, entering expenses, or organizing receipts.

Doing this sooner rather than later will make it easier to ensure everything is up to date.

4. Contact your accountant if you have one

If you have an accountant, they have probably contacted you about MTD for income tax and you are already set up.

But check if you are logged in.

If your accountant has not yet been informed of the new legislation, contact them now to find out how they can assist you with MTD.

While you don’t need to hire an accountant for MTD for income tax, professional advice can be helpful.

Depending on the services agreed upon, an accountant or tax advisor may be able to assist you with reviewing your records, software setup and archiving requirements.

You remain responsible for ensuring that your tax affairs are complete and filed on time.

Final thoughts

It can be a little worrying if you have received a letter or online message from HMRC informing you that you have been automatically registered with MTD for income tax.

But you’re not the only one being contacted by HMRC.

HMRC will ensure that those sole traders and landlords whose records show they need to use MTD are signed up to do so, if they are not already using the new system.

So what’s the best thing you can do now? Act early.

First, log in to your HMRC account, check your business information and then select MTD compatible software so you can keep records digitally, make your quarterly filings and submit your tax return.

And if you need assistance, contact an appropriately qualified advisor, such as an accountant or tax advisor.

It may feel like a big step to move from manual accounting to a digital process, but the sooner you start, the easier it will be for you to stay on top of your taxes and HMRC requirements, so you can focus on your business.