HMRC automatically registers taxpayers for Making Tax Digital

Being in scope of Making Tax Digital is a question of fact determined by your qualifying income and the statutory start date, not by whether you have completed an online registration.

Since 7th September HMRC has been writing directly to taxpayers it believes are affected but have not yet registered for Making Tax Digital. HMRC has been progressively taking on more of the sign-up process itself rather than waiting for individuals and agents to act.

If you have received a letter from HMRC about Making Tax Digital, the sensible assumption is that HMRC considers you to be within the regime and that your obligations begin regardless of what you do next. If you believe the letter is wrong – because your income is below the threshold, because a business has ceased, or because an exemption applies – that needs challenging on its merits rather than ignoring.

We would encourage anyone who has had correspondence on this matter from HMRC, to not ignore the letter.

So, if you are a sole trader or landlord and you have not yet established whether you are in scope of Making Tax Digital or have received a letter from HMRC, please contact us so that we can confirm the position and assist you with quarterly reporting where required.

Who does this affect?

MTD for Income Tax became mandatory from 6th April 2026 for sole traders and landlords with qualifying income of more than £50,000 in the 2024/25 tax year, unless they are exempt.

The threshold will reduce to £30,000 from April 2027 and £20,000 from April 2028, bringing more sole traders and landlords into the system over the next two years.

MTD requirements

For those who are new to Making Tax Digital, the main change is moving from managing your tax information primarily around an annual tax return to keeping digital records and providing HMRC with quarterly updates.

You will need to:

• Keep digital records of your business or property income and expenses
• Use compatible software to send your quarterly updates to HMRC
• Keep your records up to date throughout the year
• Continue to complete an end-of-year tax return

The quarterly updates provide HMRC with information about your income and expenses. They are not a replacement for your annual tax return.

Making Tax Digital support from Verallo

Verallo’s Tax Support team can help you understand how MTD applies to you, review your current position and make sure you have the right processes in place. We can also advise on suitable software and provide ongoing support with your tax and reporting requirements.

If you have received a letter from HMRC or want to understand what Making Tax Digital means for your business, our tax team can help you work through the changes.

Find out more about Verallo’s Tax Support services here.