HMRC has updated its sign-up guidance for Making Tax Digital for Income Tax, telling sole traders and landlords who are required to join from 6 April 2026 that they should sign up now. For small businesses, the useful point is simple: this is no longer just a future compliance change to keep on a spreadsheet. It is moving into the practical set-up phase.
The first mandatory group is people with total annual income from self-employment and property above £50,000. HMRC says those required to use Making Tax Digital for Income Tax for the 2026 to 2027 tax year should sign up now, either directly or through an agent. The service checks eligibility using the details provided during sign-up.
The change matters most to sole traders, owner-managed businesses and accountancy firms serving small clients. It affects how records are kept, how quarterly updates are sent, and how the final tax position is submitted through compatible software. It also means business owners need to check software, agent authorisations and records before the deadline starts to feel urgent.
Who should pay attention now
The immediate group is sole traders and landlords whose combined self-employment and property income is over £50,000. HMRC says users must be registered for Self Assessment and must have submitted a tax return in the last two years. Those below the first threshold may still want to prepare, because HMRC’s guidance says some people can sign up voluntarily before they are required to use the service.
For many micro-businesses, the phrase “income” can cause confusion. Owners should not guess from memory. They should look at their most recent Self Assessment position and speak to their accountant or bookkeeper if they are unsure whether the threshold applies. A weekend trader, consultant, tradesperson or creative freelancer with property income may be closer to the line than expected once income sources are combined.
BritishSME has previously covered what small businesses should do now on Making Tax Digital for Income Tax. The latest HMRC update adds a practical next step: eligible businesses should move from awareness to sign-up, software checks and workflow testing.
What has changed in the guidance
HMRC’s updated page says people required to use Making Tax Digital for Income Tax from 6 April 2026 should sign up now. It also flags planned maintenance from 5pm on Friday 10 July 2026 to 9am on Monday 13 July 2026, when the sign-up service will not be available. That maintenance window is not a deadline, but it is a reminder that leaving set-up to the last minute creates avoidable friction.
The guidance also says users need compatible software before submitting through Making Tax Digital. That is an operational issue, not just a tax issue. A business that currently keeps records in a spreadsheet, paper folder or banking app will need to confirm how those records flow into software that can meet the rules.
HMRC also states that taxpayers still need to submit a Self Assessment tax return for the tax year before they start using Making Tax Digital for Income Tax. In practice, owners should avoid treating sign-up as a replacement for existing responsibilities during the transition period.
Agents have a separate route
Accountants and tax agents have separate HMRC guidance for signing up clients. HMRC says agents need client permission and, where relevant, an agent services account. Existing Self Assessment authorisations are recognised for Making Tax Digital for Income Tax, but firms should still check that authorisation and client records are ready before trying to complete sign-up at scale.
For accountancy practices, the workload risk is client bunching. If every affected client waits until close to the start date, software checks, authorisations, missing income details and client questions will arrive together. Practices may want to segment clients now: clearly in scope, likely to be in scope later, exempt or unsure.
For small businesses that use an adviser, the practical move is to ask who is handling sign-up and what information is needed. Do not assume the accountant can do everything without current details about business activity, start dates, software and income sources.
Penalties and the first year
HMRC says it will not apply penalty points for late quarterly updates in the first tax year, 2026 to 2027, for people required to use Making Tax Digital for Income Tax from 6 April 2026. That should reduce some pressure during the first year, but it is not a reason to ignore the change. HMRC says penalties can still apply for late tax returns or late tax payments.
The sensible reading for small firms is that the first year should be used to build a reliable routine. Quarterly updates require current records. If bookkeeping is still done in bursts once or twice a year, the business will need a different rhythm. Owners should decide who updates records, how often bank feeds are checked, how receipts are captured, and how software errors are resolved.
Businesses signing up voluntarily should also read HMRC’s penalty information before opting in. Volunteering may help with readiness, but it should be a deliberate decision made with a clear view of what the business will have to submit.
What small businesses should do next
Start with a threshold check. Confirm whether total annual income from self-employment and property is over £50,000, and whether the business is registered for Self Assessment with a recent return submitted. If the answer is yes, decide whether the owner or agent will complete sign-up.
Next, test the software position. Ask whether the current bookkeeping system is compatible with Making Tax Digital for Income Tax, whether it can handle all relevant income, and whether the owner understands the quarterly update process. If a software change is needed, it is better to make it while there is time to clean up opening balances, categories and bank feeds.
Finally, put a simple timetable in place. Schedule sign-up, gather the information HMRC asks for, confirm agent authorisation if needed, and set a monthly record-keeping routine. The businesses that handle this calmly will treat it as an admin transition. The ones that wait may find themselves trying to fix software, records and authorisations at the same time.
Sources
Sources: HMRC, Sign up for Making Tax Digital for Income Tax; HMRC, Sign up your client for Making Tax Digital for Income Tax.
