HMRC has started automatically enrolling some landlords and sole traders into Making Tax Digital for Income Tax. The action is aimed at people who should have joined from 6 April 2026 but did not complete the sign up themselves.
If HMRC signs you up, this does not mean everything is ready. You still need to check your income sources, choose compatible software, connect it to HMRC, bring your digital records up to date and submit any quarterly updates that are due. HMRC uses information from earlier Self Assessment returns, so its records may not reflect a property sale, a new letting, a ceased trade or another recent change.
Why HMRC Is Signing People Up
Making Tax Digital for Income Tax became compulsory from 6 April 2026 for qualifying sole traders and landlords. HMRC estimated that more than 864,000 people would enter the first phase and confirmed that recognised software would be needed to keep digital records and send quarterly updates.
HMRC is now enrolling some people who appear to meet the rules but have not signed up. It will normally contact affected taxpayers through their online account or by post. Signing up yourself remains preferable because it gives you an opportunity to check the details before reporting begins.
Who Is Affected
You are generally within the first phase if your combined gross income from self employment and property was more than £50,000 in the 2024 to 2025 tax year. The threshold applies to qualifying income before expenses, not taxable profit.
For example, a landlord receiving £42,000 in gross rent and earning £12,000 from a sole trader business has qualifying income of £54,000. The combined figure brings that person within MTD even though neither source exceeds £50,000 by itself.
The next phases apply from 6 April 2027 where qualifying income for 2025 to 2026 exceeds £30,000, and from 6 April 2028 where qualifying income for 2026 to 2027 exceeds £20,000.
What Counts as Qualifying Income
Qualifying income normally includes gross turnover from self employment together with gross UK and foreign property income reported through Self Assessment. Employment income, dividends, pensions and partnership profit received as an individual partner do not normally form part of this test.
For landlords, the key word is gross. Mortgage interest, repairs, letting agent fees, insurance and other expenses do not reduce the income used to test the threshold. This means a landlord with modest taxable profit can still be required to use MTD if gross rent is high enough.
Where a property is jointly owned, each owner generally considers their own share of the property income. The ownership, beneficial entitlement and way the income was reported should be checked rather than assuming the full rent belongs to one person.
Automatic Sign Up Is Not Full Compliance
Automatic enrolment only places you within the MTD service. It does not select software, create missing records or send updates on your behalf.
After receiving an HMRC notification, you should:
- Sign in using the Government Gateway account connected to your Self Assessment record.
- Check every self employment, UK property and foreign property source shown by HMRC.
- Tell HMRC if an activity stopped before MTD began or if its records are otherwise incorrect.
- Choose compatible software that can create digital records, send quarterly updates and submit the annual tax return.
- Authorise the software to communicate with HMRC.
- Enter or import records from 6 April 2026 and submit outstanding updates.
Do not assume that an accountant’s existing Self Assessment authority automatically completes every MTD setup step. The adviser should confirm that the correct agent access, software authority and income sources are in place.
Quarterly Reporting Deadlines
Most people using standard tax year periods have four update deadlines each year. For 2026 to 2027, these are 7 August 2026, 7 November 2026, 7 February 2027 and 7 May 2027.
The updates provide summaries of income and expenses from digital records. They are not four additional tax returns and they do not change when the tax is normally paid. An annual Self Assessment return is still required. The return for the first MTD year, 2026 to 2027, is due by 31 January 2028.
Landlords and sole traders must also submit their return for 2025 to 2026 under the previous process by 31 January 2027 because that year ended before mandatory MTD began.
What If You Missed an Update
The first standard quarterly deadline was 7 August 2026. If HMRC enrolls you after that date and the update is outstanding, it should still be submitted as soon as the records are ready.
HMRC has confirmed that taxpayers joining mandatorily in April 2026 will not receive penalty points for late quarterly updates during the first 12 months. This easement does not remove the duty to keep digital records or send the updates, and normal consequences can still apply to a late annual return or late tax payment.
From 2027 to 2028, late quarterly updates can attract points under the new penalty system. Reaching the relevant threshold can result in a £200 penalty, followed by further penalties for additional missed obligations while the taxpayer remains at that threshold.
When HMRC May Be Wrong
Automatic enrolment is based mainly on information HMRC already holds. It may therefore be incorrect if you stopped letting property, ceased self employment, amended the relevant return, transferred the activity to a company or fall within an exemption.
Do not ignore the notice or simply start filing against incorrect sources. Compare the notice with your tax return and current circumstances, then contact HMRC or ask your accountant to correct the position. If an activity ended after 6 April 2026, reporting may still be needed up to the cessation date.
Can You Claim an Exemption
Some people are automatically outside MTD, while others may apply for exemption where it is not reasonable or practical to use digital tools. Relevant factors can include age, disability, health, religious beliefs, poor internet access or another circumstance that makes digital compliance unreasonable.
An MTD exemption does not remove the responsibility to declare taxable income, submit Self Assessment returns or pay tax. Anyone relying on an exemption should confirm the position with HMRC before ignoring an enrolment notice.
Common Problems for Landlords
Gross Rent Is Confused With Profit
A mortgage or large repair bill can reduce taxable profit but does not normally reduce gross qualifying income. This is one of the main reasons landlords unexpectedly fall within MTD.
Joint Ownership Is Recorded Incorrectly
HMRC may hold an outdated or incorrect share of rental income. Ownership documents, Form 17 elections where relevant and previous returns should be reviewed.
Several Income Sources Are Kept Separately
A landlord may use one spreadsheet for rent and another system for a sole trader business. MTD looks at combined qualifying income, while quarterly updates are required for the relevant sources. The software arrangement must support the complete position.
Records Start Too Late
Waiting for an automatic enrolment letter can leave months of rent, repairs, agent statements and business transactions to reconstruct. Digital records should cover the period from the mandatory start date.
How UK Property Tax Accountants Can Help
Automatic sign up can be confusing, particularly where HMRC holds old information or several income sources are involved. UK Property Tax Accountants can review the full position and put the correct reporting process in place.
Confirm Whether MTD Applies
Review gross property and self employment income, ownership shares, overseas rent and the relevant threshold.
Check HMRC’s Records
Compare the automatic enrolment details with current property and business activities and help correct inaccurate sources.
Set Up Suitable Software
Recommend compatible software, connect it to HMRC and create a practical process for rent, expenses and supporting documents.
Bring Records Up to Date
Reconcile letting agent statements, mortgage information, repair invoices and business transactions from the start of the MTD year.
Submit Updates and Returns
Prepare quarterly updates, complete the annual Self Assessment return and monitor the relevant deadlines.
Review Property Tax Claims
Check allowable expenses, finance costs, ownership details and other property tax matters so that digital reporting is supported by accurate tax treatment.
FAQs
Will HMRC automatically sign up everyone for MTD?
No. HMRC is enrolling some people its records show should already be within mandatory MTD. Taxpayers should not wait for HMRC if they know the rules apply to them.bishopfleming+1
Is the £50,000 threshold based on profit?
No. It is based on combined gross qualifying income from self employment and property before expenses.
Do quarterly updates replace Self Assessment?
No. You must still submit an annual tax return and pay the tax due by the normal deadline.
What should I do if HMRC lists an old rental property?
Check when the property activity ceased and contact HMRC or your accountant to correct the income source. Reporting may still be required if it ceased after MTD began.
Can my accountant manage MTD for me?
Yes. An authorised agent can help with enrolment, software, digital records, quarterly updates and the annual return, but the correct MTD authority and software connection must be established
