HM Revenue and Customs (HMRC) has confirmed that from September it will begin automatically signing up taxpayers who should be using its Making Tax Digital (MTD) system for the 2026 to 2027 tax year but have not yet done so.
The MTD system, rolled out in April this year, requires some taxpayers to keep digital tax records throughout the year and submit quarterly updates, along with an annual 'MTD tax return'. The aim is to spread the workload more evenly across the year, replacing the single January tax return with quarterly submissions.
Who is affected and the first deadline
Taxpayers earning more than £50,000 from self-employment and property are required to send a summary of business income and expenses to HMRC every three months, plus a financial declaration at the end of the year. The first deadline was August 7, covering income and expenses between April 6 and July 5, 2026, with more than 436,000 sole traders and landlords successfully meeting it.
HMRC has warned that the automatic sign-up process will be done in stages over the coming months, and new guidance will be published in late August explaining what customers need to do if they receive a letter from HMRC about being signed up.
How to avoid automatic sign-up
To avoid being signed up automatically, customers can sign up themselves now at GOV.UK to ensure their details are correct and to prepare in their own time. The quarterly updates are not tax returns; they are summaries sent through compatible software and 'take minutes to complete', according to HMRC.
Craig Ogilvie, HMRC's Director of Making Tax Digital, said: "It's fantastic to see so many sole traders and landlords successfully sending their first quarterly updates. This marks an important milestone in the move to a more modern tax system, with many customers telling us that the process is straightforward and works well through their chosen software.
"If you haven't yet signed up, now is the time to do so. Taking action now means you stay in control, can make sure your Making Tax Digital for Income Tax details are correct from the start, and have time to choose the software that works best for you, rather than waiting for HMRC to sign you up from September."
Penalties and next steps
HMRC has confirmed that fines won't be issued if quarterly updates are missed in 2026/27, but taxpayers will still be subject to a penalty for late tax returns at the end of the tax year. HMRC added: "Customers who have not yet sent their update can do so now in a few simple steps through their recognised software. In 2026 to 2027, there are no penalty points for late quarterly updates.
"From September 2026, HMRC will begin signing up customers who should be using MTD for the 2026 to 2027 tax year but have not yet done so, helping them meet their requirements. This will happen in stages over the coming months."
