HMRC has confirmed an important change for sole traders and landlords who should already be using Making Tax Digital for Income Tax but have not yet registered. From September 2026, HMRC's automatic MTD sign-up will begin ...
HMRC's automatic MTD sign-up will begin in September, streamlining tax reporting for businesses and individuals
I think this is a significant development because it changes the position from HMRC reminding people to take action to HMRC actually taking that first step for them. It will be introduced gradually starting in September for people who should be using MTD in the 2026/27 tax year.
However, HMRC is still encouraging taxpayers to register themselves rather than wait!
I can see the sense in that. Signing up yourself gives you an opportunity to check that your details are correct, ensure suitable accounting software is in place and understand what will be expected before HMRC contacts you.
The numbers suggest there is still plenty of work to do. HMRC estimates that around 864,000 taxpayers are included in the first mandatory MTD cohort.
More than 570,000 sole traders and landlords have now registered, leaving approximately 294,000 still to do so. HMRC's automatic MTD sign-up could therefore affect a substantial number of people over the coming months.
Registration is only part of the story. More than 436,000 taxpayers have successfully submitted their first quarterly update, which suggests around 134,000 of those already registered had not done so when the latest figures were published. That means roughly three-quarters of registered taxpayers have completed their first reporting requirement.
There is some breathing space during this first year!
HMRC has confirmed that taxpayers will not receive penalty points for late quarterly updates during 2026/27. From the 6th of April 2027, however, the points-based penalty regime will apply. Missing quarterly deadlines will incur penalty points, and once four points have accumulated, a fixed £200 penalty can be charged.
For me, that makes HMRC's automatic MTD sign-up something taxpayers should not simply ignore, as penalties are temporarily relaxed.
I think the sensible approach is to treat this first year as an opportunity to get comfortable with digital record-keeping and quarterly reporting. Leaving everything until HMRC intervenes may remove the need to register yourself, but it does not remove your MTD responsibilities.
If you believe you should already be using Making Tax Digital, I would recommend getting in touch and putting everything in order now.
HMRC's automatic MTD sign-up may ensure taxpayers enter the new system, but taking control yourself gives you more time to check your records, software and reporting arrangements before the penalty regime begins in April 2027.
If anything I've written in my blog post resonates with you and you'd like to discover more of my thoughts about HMRC's automatic MTD sign-up, then do call me on 01908 774320 and let's see how I can help you.
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Roger trained at Edward Thomas Peirson & Sons in Market Harborough before working at Hartwell & Co, followed by Chancery, as a partner. He started Essendon Accounts and Tax with Helen Beaumont in 2014 as a general practitioner with a hands-on approach.
Roger loves getting his hands dirty, working with emerging, small-to-medium and family businesses to ensure they receive the best possible accountancy advice. Roger utilises an extensive network of business contacts to leverage the best guidance and practical solutions.
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