A letter saying HMRC has signed you up for Making Tax Digital might leave you wondering whether everything is now sorted, or whether there is something you should have done already.
Being signed up does not mean HMRC is taking care of the work for you. You still need to keep digital records of your business or rental income and expenses, and use software to send HMRC updates during the year.
But you do not necessarily need to replace the way you currently keep your records, and you do not have to manage everything yourself. The first step is to understand why HMRC has contacted you and what you need to do next.
Why has HMRC signed you up?
From September 2026, HMRC is signing up sole traders and landlords who should already be using Making Tax Digital for Income Tax but have not registered. This is happening in stages, where HMRC’s records show qualifying income above £50,000 in 2024/25. Unless exempt, those affected were required to start using MTD from 6 April 2026.
“Qualifying income” means the income that counts towards this limit. It generally includes your combined self-employment and rental income before you deduct expenses, not the profit you are left with. Your salary, dividends and pension income do not count towards it.
For example, if you received £36,000 from self-employment and £18,000 from renting out a property in 2024/25, the combined figure is £54,000. Neither amount exceeds £50,000 on its own, but together they do. Deducting your business expenses does not bring you below the limit for this test.
First, check that HMRC has the right information
Sign in to your HMRC online account through GOV.UK and open the Making Tax Digital for Income Tax section. You will be asked to check the details HMRC holds about your self-employment and rental income.
Make sure everything is listed correctly, including any business you have started or stopped, or property you have begun or stopped letting since your last return. If you have an accountant, send them the letter and discuss it with them.
For example, if you stopped all your self-employment and rental activity before 6 April 2026, HMRC says you do not need to use MTD for 2026/27. You still need to update your HMRC account and submit your 2025/26 tax return.
Earning less this year does not, by itself, mean you can stop using MTD. There are rules about when you can leave, and some people qualify for an exemption. If you think the letter is wrong, ask HMRC or your accountant to check before assuming it does not apply to you.
Can you keep using your spreadsheet or current software?
Possibly. MTD does not automatically mean starting again with a new accounting package.
If you already record your income and expenses in a spreadsheet, you may be able to keep using it. You would need an extra tool, often called bridging software, to take the figures from your spreadsheet and send them to HMRC electronically.
Another option is accounting software that lets you keep your records and send your updates from the same place.
Before paying for anything, check what it actually does. Can it handle rental income, self-employment income or both? Can it send the annual tax return as well as the quarterly updates? You or your accountant need software that covers those jobs, even if you use different programs for different tasks.
Software can help bring in transactions from your bank, but it will not necessarily give you the full picture. For example, a letting agent might deduct their fee before paying rent into your account. You might also pay for a business purchase using your personal card. Looking only at the money going through one bank account can leave things missing.
You will still need to keep receipts, invoices and bank statements to support the figures you report.
If you already have an accountant, speak to them before buying software. Start with what you use now and work out what, if anything, needs to change.
Do you need to catch up from April?
Yes, if you were required to use MTD from April 2026. Receiving the letter in September does not move your start date to September. You need to bring your digital records up to date from the start of the tax year and send any overdue updates.
For businesses using the standard tax-year dates, the records start on 6 April 2026. The first quarterly update was due on 7 August 2026, and the next is due on 7 November 2026.
Each update covers the year so far. The November update therefore includes income and expenses from 6 April to 5 October, rather than just the latest three months.
Check your HMRC account to see what is overdue. If you have not started, gather the records you already have and identify what is missing rather than waiting until November to begin.
There is some reassurance for the first year: HMRC is not giving penalty points for late quarterly updates in 2026/27. You still need to keep the records and send the updates. Penalties can still apply to late annual tax returns and late tax payments.
Do the quarterly updates replace your tax return?
No. Quarterly updates are summaries of your business or rental income and expenses, not four full tax returns.
After the tax year ends, you or your accountant still need to check that nothing is missing, correct any mistakes and work out which expenses can be claimed. Other income and tax reliefs must also be included where needed before the annual return is sent.
There are two separate years to keep in mind:
- Your 2025/26 tax return still needs to be completed in the usual way. The standard online deadline is 31 January 2027.
- Your 2026/27 tax return, covering your first mandatory MTD year, must be sent using software that works with MTD by 31 January 2028.
MTD does not mean paying tax every three months. Your usual payment dates remain, including January and July payments on account if you already need to make them.
What can your accountant take care of?
You do not have to do all of this yourself. Your accountant can help with the digital records, quarterly updates and annual return. The important thing is to agree who is doing what.
If your accountant currently prepares your tax return once a year, ask whether they will also handle the MTD updates and what extra help you might need with bookkeeping.
At Thames Williams, we start by looking at how you currently keep track of your income and expenses. You might have a spreadsheet that works well, accounting software you are comfortable using, or records that need bringing up to date.
From there, we can agree the help you need. That could mean choosing and setting up software, catching up on records and overdue updates, or taking care of the bookkeeping and tax reporting throughout the year.
You may prefer to keep entering your own income and expenses and have us check them and send the updates. Or you may want us to handle the bookkeeping too. We will make clear what we will do, what you will still need to provide and how much it will cost.
If there is work to catch up on, we will explain that separately from the ongoing service.
Need help getting started with MTD?
Tell us whether you are self-employed, a landlord or both, whether HMRC has already signed you up, and how you currently keep your records.
We will talk through what you need help with and agree the work and fees before starting.
Talk to Thames Williams about Making Tax Digital
This article provides general guidance; the rules that apply to you will depend on your circumstances.
