From September 2026, HMRC says it will begin signing up people who must use Making Tax Digital for Income Tax but have not joined themselves. For affected sole traders and landlords, enrolment is only one step: records and compatible software still need attention.
The change is set out in HMRC guidance updated on 24 August. It is not an extension of the threshold to every small business.
Who is in scope?
For 2026–27, the requirement applies to qualifying annual self-employment and property income above £50,000, subject to exemptions. Qualifying income means the relevant income before expenses, not profit. HMRC uses tax-return information to establish when a person needs to enter the system.
Turnover and profit are different. Check eligibility and exemptions with HMRC or a tax adviser.
Why might automatically added details need checking?
HMRC says it uses information it already holds when signing someone up. That may not capture changes since the last return. Its guidance advises checking income sources and updating the service or contacting HMRC where necessary. Automatic enrolment should not be mistaken for a guarantee that every detail is current.
Are quarterly updates four extra tax returns?
No. In its 12 August progress report, HMRC distinguishes the software-submitted summaries from the annual tax return. The annual Self Assessment process remains, including its 31 January deadline. The department reported more than 436,000 first quarterly updates and over 570,000 sign-ups at that point.
Participation figures do not establish readiness. Businesses still need digital records and recognised software.
Does first-year penalty relief cover everything?
No. HMRC says it will not issue penalty points for late quarterly updates in 2026–27. Late annual returns and late tax payments can still attract penalties. The first-year concession should not be read as a general suspension of tax obligations.
HMRC also says the qualifying-income threshold will fall to more than £30,000 from April 2027. Businesses preparing for that later stage should distinguish voluntary early participation from their mandatory start date.
Reporting basis: Official HMRC guidance and its August update, checked on 31 August 2026. This is general news information, not personalised tax advice; use the linked official guidance for decisions about your circumstances.
Illustrative bookkeeping photograph; not HMRC software or a taxpayer’s records. Photo by Aaron Lefler on Unsplash