Your Making Tax Digital signup: What happens next

Published Wednesday 23 September 2026

Table of contents

• What your MTD signup letter means
• Why HMRC has signed you up
• What you now need to do: Digital records and quarterly updates
• Key MTD deadlines to know
• How to get set up after HMRC signs you up: A summary
• Choosing MTD-compatible software
• What happens if you miss a deadline
• Simplify MTD for Income Tax with Xero
• FAQs on Making Tax Digital signup

Key takeaways

• If HMRC has signed you up for Making Tax Digital (MTD) for Income Tax, using compatible software is now a legal requirement.
• From the 2026 to 2027 tax year, you'll keep digital records, send four quarterly updates, and submit one MTD tax return.
• Your quarterly update deadlines fall on 7 August, 7 November, 7 February, and 7 May, and your tax bill is still due by 31 January.
• For 2026 to 2027, HMRC won't apply penalty points for a late quarterly update, so you have time to settle into the system.

What your MTD signup letter means

From September 2026, HMRC began automatically signing up people they believed should have signed up but who hadn't yet registered themselves. Its records show your qualifying income was over £50,000 in the 2024 to 2025 tax year which is the threshold for complying with the MTD requirements from April 2026.

Your letter or online message confirms that HMRC has signed you up for Making Tax Digital for Income Tax. From the 2026 to 2027 tax year, you'll keep digital records and use compatible software to send quarterly updates and submit your final tax return.

This is a genuine HMRC process, so the letter is real even if it feels sudden. It changes how you report your income to HMRC, while the tax you owe and your payment dates stay the same. You move from one annual Self Assessment return to digital record keeping and regular updates through software.

Because HMRC has signed you up, this is a legal requirement for the tax year named in your letter, even though you didn't choose it yourself. If you genuinely can't use digital tools, there's an exemption route covered further down.

You'll still submit your 2025 to 2026 tax return and pay that year's bill by 31 January in the usual way, as HMRC's guidance on being signed up confirms.

Why HMRC has signed you up

The signups will happen in stages over several months, and HMRC will contact you afterwards through your HMRC online account or by post depending on your pre-set preferences. Qualifying income is your total gross income, before you take off any expenses, from self-employment and property combined. It doesn’t include any other income sources including employment income taxed through Pay As You Earn (PAYE), dividends, or any partnership profit share.

Say you're a self-employed designer who turned over £40,000 in the 2024/25 tax year and also earned £15,000 in rent from a flat. Neither figure passes £50,000 on its own, but together your qualifying income is £55,000, which is why HMRC signed you up. The rules are being phased in by income level:

• From April 2026: Qualifying income over £50,000
• From April 2027: Qualifying income over £30,000
• From April 2028: Qualifying income over £20,000

How to check you've been signed up

If you're not certain, sign in to your HMRC online services account using the sign in details you use for Self Assessment. A confirmation message asks you to check your income sources once you've been signed up. No message would suggest you've not been signed up yet. If you have the message, follow the steps to check and confirm that the records HMRC hold about your self-employment and property income are correct. If you don’t have the message but you think your qualifying income means you should be using Making Tax Digital this tax year then you can still sign up yourself without HMRC doing this for you. If you have an advisor, like an accountant or bookkeeper, please reach out and speak to them about it.

What you now need to do: Digital records and quarterly updates

Once you're in Making Tax Digital for Income Tax, four tasks become part of your routine. Good software handles most of the work, so each one turns into a quick job once it's set up.

• Get MTD-compatible software. Choose software that works with Making Tax Digital for Income Tax and connect it to HMRC.
• Keep digital records. You keep your business income and expenses in compatible software, rather than on paper.
• Send quarterly updates. Every three months, you or your advisor send HMRC a cumulative summary of your income and expenses, with no tax calculations at this stage.
• Submit your MTD tax return. After your final quarterly update, you or your advisor submit a final MTD tax return that incorporates your quarterly income and expense figures. It allows you to apply any final allowances and adjustments and disclose any other income sources. This replaces your old Self Assessment return.

If you run more than one business, you send a separate update for each. A sole trader who also lets a property sends eight updates across the year: four for the trade and four for the property, plus one MTD tax return that pulls both together at the end. If you own multiple UK properties, they’re treated as one property business. With Xero, you can manage your self-employment and property income in the same subscription.

When you first get set up, you may need to catch up your digital records from the start of the tax year. After that, keeping your income and expenses up to date in your software makes each quarterly update a quick check and send rather than a fresh piece of work.

Key MTD deadlines to know

Your quarterly updates follow the tax year by default, and the deadline for each falls just over a month after the quarter closes. Because every update is cumulative, it includes the year so far, so a later update automatically picks up anything from an earlier period.

• Quarter to 5 July: Send by 7 August.
• Quarter to 5 October: Send by 7 November.
• Quarter to 5 January: Send by 7 February.
• Quarter to 5 April: Send by 7 May.

For example, if you send your first update late, the update you send by 7 November still carries the full year so far, so your record catches up automatically. Your MTD tax return and your tax payment are both due by 31 January following the end of the tax year. If you work to a 31 March year end rather than 5 April, you can choose to use calendar quarters instead. Xero supports calendar quarters, and the same deadlines apply.

How to get set up after HMRC signs you up: A summary

Once HMRC has signed you up, the process can be summed up in five steps:

1. Sign in to HMRC online services with the same details you use for Self Assessment, then select Making Tax Digital for Income Tax. If you've never used HMRC online services, set up an account first.
2. Check and confirm the income records HMRC holds for you. These come from your recent tax returns, so add any new income sources and tell HMRC about any that have stopped. If you have an advisor, they can help you with this.
3. Get compatible software that works with Making Tax Digital for Income Tax and connect it to HMRC.
4. Catch up your digital records from the start of the tax year, then send any quarterly update that's already due as soon as you can.
5. Keep your digital records up to date and send each quarterly update by its deadline.

Choosing MTD-compatible software

Compatible software is software that can connect to HMRC's systems to send your updates and return. HMRC doesn't provide it, so you choose your own. HMRC also runs a find-software tool that lists the products recognised for Making Tax Digital for Income Tax, which is a useful starting point if you're comparing options. Xero offers a range of MTD for Income Tax-compatible plans, so you can choose the option that fits your business.

A few things are worth checking before you commit:

• It covers all your income sources, including property if you're a landlord.
• It works with your chosen accounting period, whether that's the standard tax year or something different..
• It suits how you like to work, whether that's one all-in-one product or a couple of tools that link together.

Cost is a common worry, though many small business packages are affordable monthly subscriptions, and the time saved on manual admin usually outweighs the fee. Xero’s Simple plan is perfect for non-VAT registered businesses. It has features that help with basic accounting, including MTD for Income Tax for only £7 per month. If you already use accounting software, check with your provider that it's ready for Making Tax Digital for Income Tax.

What happens if you miss a deadline

Penalties tend to worry people the most, so it helps to know how the system works. For the 2026 to 2027 tax year, HMRC is applying a first-year soft landing, so you won't get penalty points for sending a quarterly update late. Penalty points still apply if you miss your tax return deadline in that first year, and from the 2027 to 2028 tax year they'll apply to late quarterly updates, too. The system is points-based: Reaching four points triggers a £200 penalty, with a further £200 for each late submission after that.

You still need to send your quarterly updates, but that first year soft landing gives you room to settle in. For a plain-English walk-through of the rules and your next steps, see this guide about MTD penalties.

If you've already missed a quarterly update, there's no need to redo each one separately. Because updates are cumulative, your next update carries the year-to-date totals and brings your record up to date. You can also resubmit a quarter if you spot a mistake, and the latest figures you send simply replace the earlier ones.

There are also new late payment penalties from 2026-27. Unlike the old fixed-rate system, these are proportionate to how long you delay paying – the longer you wait, the higher the penalty. See this guide to late-payment penalties under MTD for Income Tax for rates and thresholds. There is no soft landing on the new late payment penalties.

If you think you shouldn't have to use MTD

Some people can apply for an exemption, for example, if you're digitally excluded or can't use digital tools because of age, disability, or religious belief. You apply to HMRC, which decides case by case if an exemption applies. If you think you've been signed up in error, contact HMRC.

Simplify MTD for Income Tax with Xero

Making Tax Digital doesn't have to mean more admin. Xero keeps your records digital as you go and pulls in your bank transactions automatically, so your figures stay up to date without manual entry. When a deadline comes round, you send your quarterly updates and MTD tax return to HMRC from one place, and your first submission takes a few clicks. You can get 90% off for six months and make your Making Tax Digital signup simple from the start.

FAQs on Making Tax Digital signup

If you've just been signed up, these are the questions that tend to come up first.

Is MTD signup mandatory, or can you opt out?

Whether MTD signup is mandatory depends on your qualifying income. If your qualifying income is more than £50,000 in the 2024/25 tax year then you are mandated to comply. If HMRC has signed you up, it applies for the tax year stated in your letter. You can only stop using the service if you qualify for an exemption or your self-employment and property income has ended.

Do you still need to submit a Self Assessment tax return?

No, your MTD tax return replaces it once you're in the system. However, you'll still need to submit your 2025 to 2026 Self Assessment return by 31 January 2027.

Do your quarterly updates and tax returns need the same software?

No. You can use different compatible products for your quarterly updates and your final MTD tax return, as long as each one works with Making Tax Digital for Income Tax.

Will you be fined if you miss your first quarterly update?

Not in 2026-27 – you get a soft landing grace period. However, you must still send your quarterly updates. From 2027-28 onwards, penalty points will apply. For the full penalty system and how points work, see 'What happens if you miss a deadline'.

What if your self-employment or property income has stopped?

Tell HMRC by updating your details in your online account. Depending on when the income stopped, you may still need to send a final quarterly update and submit your tax return.