HM Revenue & Customs (HMRC) is moving into the next stage of its Making Tax Digital (MTD) for Income Tax rollout. Starting this September, tax officers will directly sign up qualifying sole traders and landlords who have not yet registered themselves.
The first phase of the new system went live on 6 April 2026. The law applies to anyone whose total gross earnings from self-employment, property rentals, or both topped £50,000 on their 2024/25 tax return.
HMRC estimates that around 864,000 people fall into this first category. By mid-August, over 570,000 taxpayers had registered, and roughly 436,000 had already sent in their first quarterly update.
What HMRC’s September Auto-Enrollment Means for You
Having HMRC complete your registration does not automatically make your business compliant.
When HMRC signs you up, they simply activate your account in their system. They do not pick your accounting software, digitize your paper receipts, or upload your quarterly numbers. Keeping valid digital records remains your personal legal responsibility.
HMRC plans to register un-enrolled taxpayers in waves over the coming months and send confirmation letters by post or directly to online tax accounts.
If you have delayed setting up, do not wait for a letter to arrive. You still need to pick compatible software, grant authorization to HMRC, and bring all your accounting records up to date.
Important Warning: Auto-enrollment relies on your 2024/25 tax return figures. If your business closed or your earnings fell below £50,000 in 2025/26, let HMRC know right away so they can fix their records.
Filing Deadlines and First-Year Penalty Rules
The deadline for the first quarterly update of the 2026/27 tax year passed on 7 August 2026.
If you report using standard tax dates, your remaining filing dates for the year are:
- Quarter 2 (ends 5 October): File by 7 November 2026
- Quarter 3 (ends 5 January): File by 7 February 2027
- Quarter 4 (ends 5 April): File by 7 May 2027
HMRC will not charge late-filing penalty points for overdue quarterly updates during the first 2026/27 tax year. However, you must still submit every missing update before you can file your final annual tax declaration. Standard interest charges on late tax payments also remain in place.
Who Needs to take Action?
Self-employed workers and property owners making over £50,000 must follow MTD rules today. Qualifying income is your total combined gross revenue before you deduct any business expenses or landlord costs.
MTD Threshold Expansion Timeline
- 6 April 2026: Income over £50,000 (Current Requirement)
- 6 April 2027: Income over £30,000 (Next Phase)
- 6 April 2028: Income over £20,000 (Final Phase)
Steps to Take Right Now
If your gross earnings put you above the threshold, here is how to take control of your MTD setup:
- Check Your Gross Income: Review your 2024/25 tax return to confirm whether your total revenue passed £50,000.
- Choose Compatible Software: Pick an HMRC-approved cloud accounting platform such as Xero or QuickBooks.
- Submit Overdue Updates: File any missing quarterly reports as soon as your software is set up.
- Look Into Exemptions: Apply for an official digital exclusion if severe illness, physical disability, age, or lack of internet access prevents you from using digital tools.
How Lanop Can Help
Making Tax Digital is no longer a future proposal, it is current tax law.
At Lanop Business & Tax Advisors, we can help you check whether MTD applies to you, set up compatible accounting software, organise digital bookkeeping, and manage quarterly reporting. Our team can also support your wider Self-Assessment and tax planning.
If you have not signed up yet, now is the time to get your records and software ready before HMRC’s automatic sign-up programme begins in September. Book a free consultation with a Lanop tax advisor today
