By WatkinsonBlack
Making Tax Digital for Income Tax has been on the horizon for years, but this month marks a genuine shift in how it’s being rolled out.
Rather than waiting for sole traders and landlords to register voluntarily, HMRC has begun automatically enrolling those who meet the criteria but haven’t signed up themselves. If that applies to you, you’ll receive a letter or a digital notification confirming you’re being brought into the system, whether or not you were expecting it. For many business owners who assumed MTD was still something to think about “eventually,” this is the point where it stops being a future consideration and becomes a present one.
Who’s being caught by this
The threshold for this round of automatic enrolment is qualifying income over £50,000 in the 2024-25 tax year, covering self-employment and property income combined. If you’ve been above that figure and haven’t already registered for MTD yourself, you should assume you’re in scope. HMRC is working through the affected population in stages from September onwards, so not everyone will receive their letter on the same day, but the direction of travel is the same for all of them: sign-up is happening regardless of whether you’ve opted in.
What being signed up actually means
Being auto-enrolled isn’t a formality and it doesn’t mean the requirement is optional. From the point HMRC signs you up, you’re expected to keep digital records of your income and expenses and report to them quarterly, rather than just once a year through a traditional Self Assessment return. In practice, that starts with signing into HMRC’s online services using your existing Self Assessment credentials, and checking that the income details HMRC holds for you are accurate. If a source of income has genuinely stopped, that needs to be reported rather than left as it stands.
Getting your records in order
The next step is choosing software that’s compatible with MTD. There are both free and paid options available, and you can use a single all-in-one package or separate tools for record-keeping and submissions, so it’s worth taking a little time to find something that suits how your business actually operates rather than picking the first option that comes up. Digital records need to run from the start of the tax year, which means anyone only finding out about this now will likely need to catch up on the quarter that’s already gone, rather than starting with a clean slate from today. That catch-up is more manageable than it sounds if you’ve kept reasonable paper or spreadsheet records up to now, since the software mainly needs the same information in a different format.
The deadlines to have in mind
For the 2026-27 tax year, the quarterly update deadlines fall on 7 August and 7 November 2026, then 7 February and 7 May 2027, with the familiar 31 January deadline still applying to the final tax payment. There is a degree of breathing room built into this first year, since HMRC isn’t applying penalty points for missed quarterly updates while the system beds in. That’s a genuine concession, but it isn’t an invitation to let things slide. The quarterly updates still need to be filed eventually, and the habit of getting them right from the outset will save considerably more stress than trying to reconstruct several quarters of records in one go next spring.
If you don’t think you should be included
It’s also worth pausing to check whether you should be in MTD at all. If your qualifying income has dropped below the threshold, if your self-employment or property income actually ceased before April, or if you have grounds to be treated as digitally excluded, that needs to be raised with HMRC directly rather than assumed to sort itself out. Once you’re already in the system, correcting a mistake tends to take considerably longer than flagging the issue before enrolment goes through, so it’s worth acting as soon as you receive any notification rather than putting it to one side.
Get in touch
If you’ve had a letter or notification about this, or you’re simply not sure whether it applies to you, which software to use, or how to get your records in order before the next quarterly deadline, get in touch and we’ll talk it through. Better to have that conversation now than to be untangling several quarters of catch-up work under pressure later in the year.
WatkinsonBlack have considerable experience in all areas of taxation and business services. This includes providing a very cost-effective payroll bureau service, as well as assisting to ensure compliance with the latest Making Tax Digital legislation. If you are employed or self-employed either as a sole trader, partnership or limited company and want to arrange a no-obligation initial meeting on any taxation or accounting matter then please contact us by telephone on 01925 413210 or by e-mail to info@watkinsonblack.com. Please note that these ideas are intended to inform rather than advise and you should always obtain professional advice before taking any action.
