Haven’t signed up for Making Tax Digital for Income Tax yet? Well, you might be in for a surprise. HMRC has confirmed it will start automatically signing up taxpayers from September 2026. Yes, you read that right. September, as in less than three weeks away.

What have HMRC announced?

HMRC has confirmed that it will start signing up taxpayers who should already be complying with MTD for Income Tax regulations, but haven’t registered themselves. This process will happen in stages over the following months.

This means that if you’re in the first batch of people and have been putting off signing up for MTD-compatible software, you might not have much longer to get sorted. 

Around one in three taxpayers haven’t signed up

More than 570,000 Sole Traders and landlords have now signed up for MTD IT according to HMRC stats. With more than 70,000 people reportedly signing up in a single week. However, there’s still a sizable group who haven’t.

HMRC estimates that around 864,000 taxpayers fall into the first threshold (earning over £50,000 of qualifying income in the 2024/25 tax year), which means around 294,000 taxpayers have yet to register. In other words, around one in three people who should be following MTD in 2026/27 haven't even signed up yet. HMRC has now made it clear that it won’t simply wait for them to get around to it. 

{{st-expense-guide}}

How is the MTD for Income Tax automatic sign-up happening?

From September, HMRC will begin identifying customers who should be using MTD for the 2026/27 tax year but haven't signed up. The automatic sign-up process will happen in stages over the coming months. However, HMRC hasn't confirmed which groups will be prioritised or when individual taxpayers can expect to be automatically enrolled.

HMRC has also confirmed that this is the first time it will automatically sign up taxpayers to Making Tax Digital. So, if you know you should be following MTD for Income Tax but haven't registered yet, the safest option is to get registered rather than wait for an automatic sign-up.

The first Making Tax Digital deadline has passed - what now?

The first quarterly update deadline for the 2026/27 tax year was 7th of August 2026. HMRC says more than 436,000 Sole Traders and landlords have successfully filed their first update. That means around 134,000 of signed-up people missed the deadline for their first quarterly update. Yikes!

Missed the first deadline? Don’t panic!

Thanks to the penalty easement for the first year, missing the first deadline doesn’t earn you a penalty point. This was done to give taxpayers time to get used to the reporting requirements. So if you’ve signed up and missed the deadline or haven’t signed up yet, you can breathe a sigh of relief.

However, that said, it’s still a mandatory reporting requirement, so you need to get your records up to date rather than letting things build up. The next quarterly update deadline is due 7th of November 2026, covering the period up to the 5th of October.

What happens from April 2027?

The penalty rules become more important from the 6th of April 2027, when the points-based system will apply to missed quarterly updates. You'll receive one penalty point for each missed quarterly deadline. Once you reach four points, you'll receive a £200 penalty.

Points can expire after a period of compliance, so missing one deadline won't automatically mean you face a £200 fine. For this year though, taxpayers have a little breathing room. It's a good opportunity to get into the habit of keeping your records up to date and submitting your quarterly updates before the deadline.

Under the £50,000 threshold?

If you're sitting there feeling smug because your qualifying income was under £50,000 in 2024/25, don't get too comfortable. The threshold is due to drop again to £30,000 from the 6th of April 2027, meaning more Sole Traders and landlords will be brought into MTD IT for the new tax year. So even if you're not affected by MTD yet, it could be on the horizon for you.

What should you do if you haven't signed up?

If you think you're part of the first MTD group and haven't registered yet, don't wait for HMRC to automatically sign you up.

Here's what to do:

• Check whether MTD applies to you. For the 2026/27 tax year, the first group includes people with qualifying income from self-employment and/or property of more than £50,000.
• Sign up for MTD if you're required to use it.
• Choose compatible software, like Crunch, that lets you keep digital records and submit your quarterly updates.
• Get your records up to date so you're ready for the next deadline.
• Already signed up? Check whether you've submitted your first update and deal with anything you've still got outstanding.

Not sure whether you're in the first MTD group? It's worth checking now, particularly with HMRC's automatic sign-up process starting in September.

{{instantquote}}

Our take on the automatic enrolment process

While the thought of being automatically signed up for Making Tax Digital for Income Tax might seem daunting, we actually think it's a good thing. For taxpayers who should already be using MTD, automatic sign-up means getting up and running now, while the penalty easements are still in place. There's also a common misconception that MTD doesn't apply to you simply because you're self-employed or a landlord and your income isn't particularly high. What matters is your qualifying income, not your total income or how much you take home.

If you're in the first group affected by MTD, getting set up now gives you time to get comfortable with digital record-keeping and quarterly updates before penalty points come into play from April 2027. So, rather than seeing automatic enrolment as something to worry about, we'd see it as a nudge to get sorted. Especially while there's still some breathing room to get used to the new system.

Want someone in your corner to unpick Making Tax Digital rules? Get an instant online quote now to see how cost-effective accounting can be.

‍