HMRC Will Start Signing Up Making Tax Digital No-Shows: What to Do Now.

More than 570,000 taxpayers had signed up for Making Tax Digital for Income Tax by 12 August 2026, with more than 436,000 successfully sending their first quarterly update.

The first quarterly deadline of 7 August 2026 has now passed, and HMRC is turning its attention to people it believes should already be using the system.

The important point is that an HMRC Making Tax Digital sign-up does not complete the work needed to comply. It puts you into the MTD system. You still need appropriate software, accurate digital records, quarterly updates and an MTD-compatible process for submitting your tax return.

What has HMRC announced?

HMRC confirmed on 12 August 2026 that it will begin signing up taxpayers who should be using Making Tax Digital for Income Tax for the 2026/27 tax year but have not yet registered.

The process will begin in September 2026 and take place in stages over the following months.

HMRC is encouraging affected sole traders and landlords to sign up themselves now, or ask their accountant to do so on their behalf.

Signing up before HMRC does gives you more opportunity to check your details, prepare your records and choose software that suits the way you work.

The key facts at a glance.

Who could HMRC sign up?

HMRC’s September action is aimed at taxpayers it believes should already be using Making Tax Digital for Income Tax for 2026/27 but have not signed up.

Broadly, the first mandatory group includes individual sole traders and landlords whose total qualifying income from self-employment and property was more than £50,000 in 2024/25.

Importantly, qualifying income is based on relevant income before expenses, rather than taxable profit.

Other income sources do not necessarily count towards qualifying income. For example, HMRC says employment income, dividends, pensions and an individual’s share of partnership profits are not included in the calculation.

You can read HMRC’s current guidance on working out qualifying income.

For a wider introduction to the rules, see our guide to Making Tax Digital for landlords and the self-employed .

What if your circumstances have changed?

HMRC uses information from your Self Assessment tax return when deciding when you should enter Making Tax Digital.

Your circumstances may have changed since that return was submitted. For example, a business may have stopped trading or a property income source may have ended.

The rules around ceased income sources are more detailed than simply removing the income from the MTD calculation, so do not assume a later change automatically takes you outside MTD.

If you believe HMRC’s information or decision is incorrect, check your position and contact HMRC where necessary.

What if an exemption may apply?

There are circumstances where someone can be exempt from Making Tax Digital for Income Tax.

This includes certain cases of digital exclusion, where it would not be reasonable for someone to use compatible software because of their circumstances.

Some exemptions apply automatically while others require action or an application, so it is important not to assume you are exempt without checking.

See the official HMRC Making Tax Digital exemption guidance.

What HMRC sign-up will not do for you.

Automatic sign-up deals with registration. It does not remove the practical work involved in Making Tax Digital.

In particular, HMRC signing you up will not:

• confirm that every self-employment or property income source on HMRC’s records is correct;
• choose the accounting software that best suits your business;
• turn existing paper, spreadsheet or other records into complete digital accounting records;
• configure or authorise your MTD-compatible software;
• send your quarterly updates for you; or
• prepare and submit your 2026/27 tax return.

What software do you need for Making Tax Digital?

Taxpayers within Making Tax Digital for Income Tax need to use compatible software.

HMRC says the software needs to support the digital process used to create and maintain records, send quarterly updates and submit the year-end tax return.

You should choose software based on what your business actually needs rather than simply picking the first MTD-labelled product you find.

What if you missed the first Making Tax Digital quarterly deadline?

The first quarterly update deadline for the 2026/27 MTD cohort was 7 August 2026.

If you missed it, HMRC has confirmed that there will be no penalty points for late quarterly updates during 2026/27.

However, that does not make quarterly updates optional.

Making Tax Digital quarterly updates are cumulative. Each update covers the period from the beginning of the tax year to the end of the relevant update period.

However, if you have already missed an update, do not assume you can simply ignore it and file something later. The correct steps can depend on your software and circumstances, so check what remains outstanding with your accountant or software provider.

The next standard quarterly deadline is 7 November 2026. If your digital records are not yet ready, leaving the work until November will only increase the amount that needs sorting out.

Do limited companies need Making Tax Digital for Income Tax?

No. Making Tax Digital for Income Tax currently applies to qualifying individuals receiving self-employment and/or property income.

Trading through a limited company is different from operating as a sole trader for these purposes. A limited company is not brought into MTD for Income Tax simply because its turnover exceeds the £50,000, £30,000 or £20,000 thresholds.

Making Tax Digital for VAT is a separate regime.

What happens to the MTD income threshold next?

The £50,000 threshold is only the first stage of Making Tax Digital for Income Tax.

This means many sole traders and landlords who are outside the first mandatory group are only one or two tax years away from entering MTD.

Getting digital records and bookkeeping processes into shape before your mandatory start date is likely to be considerably easier than trying to rebuild them after your first deadline arrives.

What to do now: a seven-step checklist.

1. Check whether you are in scope. Review the qualifying self-employment and property income reported for 2024/25 and remember that the calculation is based on income before expenses rather than taxable profit.
2. Check your income sources. Make sure you understand which self-employment and property income counts and whether HMRC’s information reflects your current circumstances.
3. Review any possible exemption. Do not assume one applies. Check whether it is automatic or requires action and get advice where necessary.
4. Consider signing up before HMRC does. If you are required to use MTD, acting now gives you more control over the process and more time to get everything ready.
5. Choose compatible software. Make sure your software is suitable for your records, quarterly updates and year-end tax return rather than choosing purely on the basis that it carries an MTD label.
6. Bring your digital records up to date. Make sure the relevant income and expenses from the beginning of your MTD period are properly recorded.
7. Plan the remaining deadlines. Decide who will maintain the records, review them and send the updates. A regular process is much easier than a quarterly catch-up exercise.

Why acting now is better than waiting for HMRC.

Waiting may feel easier because HMRC has said it will eventually sign up remaining taxpayers in the first cohort.

In practice, waiting gives you less time to resolve incorrect information, choose suitable software and organise your records before another deadline arrives.

Acting now gives you the opportunity to:

• confirm whether you genuinely fall within the MTD rules;
• identify incorrect or outdated information;
• choose software that suits the way your business operates;
• bring your records up to date at a manageable pace; and
• understand what still needs to be submitted before HMRC contacts you.

The first-year relief from quarterly penalty points gives affected taxpayers some breathing space. It is better used to get the process right than as a reason to postpone the work.

Frequently asked questions.

This article provides general information only and does not constitute tax advice. Your obligations and any exemption will depend on your individual circumstances.