Making Tax Digital for Income Tax is now live. Since 6 April 2026, sole traders and landlords with qualifying income over £50,000 have had to keep digital records and send HMRC quarterly updates. From 6 April 2027, the threshold falls to £30,000, bringing in hundreds of thousands more people.

Signing up isn’t automatic in the way most people expect, and the order of steps matters. This guide explains who needs to sign up, what you need before you start, the sign-up steps, and what happens next.

You need to use MTD for Income Tax if you’re a sole trader or landlord and your qualifying income is over the threshold:

From 6 April 2026: qualifying income over £50,000
From 6 April 2027: qualifying income over £30,000
From 6 April 2028: qualifying income over £20,000

Qualifying income is your gross self-employed turnover plus your gross property income — before expenses. HMRC uses the figures on your Self Assessment return from two tax years earlier. For the April 2027 start, that’s your 2025/26 return, which is due by 31 January 2027.

Some people are exempt, including those HMRC accepts are digitally excluded. Our guide to MTD exemptions covers who qualifies.

Your HMRC sign-in details — Government Gateway user ID or GOV.UK One Login
Your National Insurance number
Details of each income source — your sole trade business name and start date, and whether you have UK or overseas property income
Your latest Self Assessment return filed — you still need to file a normal return for the tax year before you start MTD
MTD-compatible software, or a plan to choose some before your first quarterly update is due

Step 1: Check your qualifying income

Add up your gross self-employment turnover and gross rental income from the relevant return. If it’s over the threshold, you’re in. If you’re close, check with your accountant before assuming you’re out.

Step 2: Choose your software

You need software that works with MTD for Income Tax. There are free and paid options, and some only do part of the job. Our guide to the best MTD software for sole traders compares them. Spreadsheet users can use bridging software instead.

Step 3: Use HMRC’s online sign-up service

Step 4: Add each income source

Sign up every income source that’s in scope — each sole trade and your property business. If you’re both a sole trader and a landlord, you’ll add both. Each source gets its own quarterly updates.

Step 5: Confirm your start tax year

Choose the tax year you’ll start using MTD. If you’re in the April 2027 group, that’s 2027/28. You can sign up earlier voluntarily to get used to the system.

Step 6: Connect your software

Authorise your software to talk to HMRC. Once it’s linked, you’ll see your quarterly deadlines and can start recording digitally.

Signing up through an accountant

If an accountant manages your tax, they can sign you up through HMRC’s agent service. You’ll first need to authorise them for MTD for Income Tax — an existing Self Assessment authorisation isn’t enough on its own. They then sign up each of your income sources.

From September 2026, HMRC began signing up people who needed to use MTD for the 2026/27 tax year but hadn’t done it themselves. Being signed up automatically doesn’t remove your obligations. You still need software, digital records and quarterly updates on time, so it’s better to sign up yourself and be ready.

Keep digital records of every income and expense item
Send quarterly updates by 7 August, 7 November, 7 February and 7 May
Submit a final declaration by 31 January after the tax year ends
Pay tax on the usual dates: 31 January and 31 July

Quarterly updates are summaries, not extra tax returns. Our guide to MTD quarterly updates explains what they contain.

Penalties

MTD uses a points-based system for late submissions, with a financial penalty once you reach the points threshold. For people who had to start in April 2026, HMRC isn’t applying penalty points for late quarterly updates in the first tax year, 2026/27. Don’t rely on similar leniency for later groups until HMRC confirms it.

Let us handle MTD for you

SmartFiling’s ICAEW chartered accountants sign you up, set up your software and file all four quarterly updates plus your year-end return for one fixed fee. See our MTD for Income Tax service or get a free quote — we’ll reply within one working day.

Frequently asked questions

Is there a deadline to sign up?

I have income from a job as well. Does that count?

No. Employment income and pensions don’t count toward qualifying income. Only self-employment and property income do.

Can I leave MTD once I’ve signed up?

If you signed up voluntarily, you can usually leave. If you’re required to use it, you can only stop if your qualifying income falls below the threshold for three years in a row, or you stop trading.

How to Sign Up for MTD for Income Tax: Step-by-Step

Do you need to sign up?

What you need before you sign up