How HMRC's automatic MTD sign-up affects your practice

General information for practice owners, current to September 2026. Figures and dates are HMRC's own, published in its guidance and reporting since August 2026; the rollout is staged and details can change — take your own advice before relying on any of this for a specific client.

For most of 2026, getting a client into Making Tax Digital for Income Tax has been something your practice controlled: you checked the threshold, chose the moment, and signed them up through your agent services account. From September 2026, HMRC has started signing up anyone it thinks should already be in and is not. HMRC sends the confirmation letter to the client and does not copy the agent, so practices need to act on this now.

What's changing from September 2026

Making Tax Digital for Income Tax has been mandatory since 6 April 2026 for anyone registered for Self Assessment whose combined self-employment and property income, before expenses, came to more than £50,000 on their 2024-25 tax return. Bringing someone into MTD has, until now, meant the client or their agent actively signing up through HMRC's online service, choosing compatible software, and starting quarterly updates. From September 2026, HMRC is running a parallel process: using the income data it already holds from the 2024-25 return, it is identifying everyone who appears to meet the £50,000 threshold for 2026-27 but hasn't signed up voluntarily, and registering them without being asked. The taxpayer then gets a letter or a digital message, depending on their stated preference, telling them they've been enrolled and what to do next — get compatible software, keep digital records, and start filing quarterly updates.

The numbers behind the rollout

HMRC has published figures for the rollout. More than 570,000 sole traders and landlords had already signed up for MTD for Income Tax for 2026-27 by the time the auto-enrolment run began, and over 436,000 of those had successfully filed their first quarterly update. Against that voluntary base, HMRC has said roughly 294,000 people who should be in the scheme have not yet joined it — and that is the population the auto sign-up is working through, in stages, over the following months, pausing around the Self Assessment filing peak in January so it doesn't collide with HMRC's own busiest period. HMRC's MTD sign-up service was offline for scheduled maintenance from 11 to 15 September 2026, as the programme began.

The £50,000 threshold is the first of three. It falls twice more over the following two years, bringing more of a general practice's client bank into scope. If HMRC keeps the same approach, clients who have not signed up by then will be enrolled automatically too.

HMRC does not copy the letter to agents

HMRC has said that when it auto-enrols a taxpayer, it writes to that individual and asks them to share the communication with their agent. It does not send a separate copy to the accountant. A client who reads the letter and calls you causes no problem. A client who does not recognise the term, or puts the letter aside, can leave your firm with a client inside MTD, quarterly obligations already running, and no knowledge that it has happened.

There is a second problem. HMRC's auto sign-up works from the income figure on the 2024-25 return, with no visibility of what's happened since. A landlord who has sold a property, or a sole trader who has scaled back or incorporated, can still be enrolled on a threshold they no longer meet. When the client does not forward a letter that was based on out-of-date figures, the firm may first hear of the client's MTD status from a missed-deadline notice.

Correcting a wrong automatic sign-up

HMRC's guidance says that correcting an incorrect or premature auto sign-up is described as less flexible, and can take longer, than checking the position and signing a client up proactively. In practice that means a phone call to HMRC's agent line, evidence of the change in circumstances, and a wait for the record to be updated, all spent undoing a decision HMRC made from old figures. Signing a client up yourself through the agent services account lets you check their position against current figures before they are committed.

The first-year penalty easement and its limits

HMRC has confirmed that for a taxpayer's first year in MTD for Income Tax, 2026-27, it will not apply penalty points for late quarterly updates — the reason Grace's missed updates above don't cost her anything directly. The easement covers the quarterly update obligation only. The penalty regime for a late Self Assessment return or for tax paid late continues exactly as before. The easement is useful reassurance for a worried client, and clients still need to act on the letters promptly.

What to do this week

1. Pull a list of every client, including those not yet in MTD, whose 2024-25 self-employment and property income, before expenses, exceeded £50,000, and check who still isn't signed up.
2. Sign eligible clients up yourself through your agent services account before HMRC's letter arrives. You choose the timing and can verify the numbers first.
3. Flag the letter specifically to anyone near the threshold, including clients who have sold property or scaled back trading since 2024-25, and ask them to send it to you the same day it arrives.
4. Where a client is already auto-enrolled, check the income data HMRC used is still accurate and get any change corrected promptly. The longer it is left, the harder it is to correct.
5. Add a standing instruction to new-client set-up and review calls: "if HMRC writes to you about tax, send it to us the same day."
6. Start planning capacity for 2027/28. The £30,000 threshold pulls a much larger group into scope, and the same blind spot applies to all of them.

Firms already stretched by MTD's rollout have the least time for this work. We cover that pressure in how firms are freeing up capacity in 2026. For the wider changes MTD brings, see how MTD for Income Tax affects accountancy practices.