Making Tax Digital update for sole traders and landlords

HMRC is beginning to enrol sole traders and landlords who have not yet joined MTD, while opening exemptions for those due to join from April 2027.

HMRC will start signing up sole traders and landlords who should have joined Making Tax Digital (MTD) in April 2026 but haven’t yet done so. Looking ahead, HMRC has opened the MTD exemption window for taxpayers who would otherwise have to join from next April.

Unless qualifying for an MTD exemption, sole traders and landlords with qualifying income over £50,000 should have already submitted their first quarterly update for 2026/27. However, of the 864,000 taxpayers required to register for MTD, only 570,000 have done so, with just 436,000 successfully filing so far:

• HMRC has decided to start signing up the remaining taxpayers it believes are within the scope of MTD for 2026/27, rather than wait for those taxpayers to sign up themselves.
• Although no penalty points will be charged for late quarterly updates in 2026/27, HMRC is obviously keen for taxpayers to be aware that MTD is not optional.

Taxpayers signed into MTD by HMRC will receive a letter or digital message depending on contact preferences. They will be advised about the next steps, such as obtaining and using MTD-compatible software.

Exemption window

Sole traders and landlords with income between £30,000 and £50,000 for 2025/26 will join MTD from 6 April 2027, unless they qualify as digitally excluded, with HMRC recently opening up applications for an exemption. Taxpayers might qualify for an exemption if the following applies:

• Internet access: This means no internet access at home or business because of the location, and where access is not available at a suitable alternative location.
• Age, health or disability: Taxpayers will need to show that their age, health condition or disability stops them from using a computer, tablet or smartphone to keep digital records or submit them to HMRC.
• Religious reasons: This will apply to practising members of a religious society or order whose beliefs mean they do not use a computer, tablet or smartphone for business or personal use.

The fact that additional costs will be incurred, or that extra time will be required for MTD, is not a valid reason for HMRC to grant an MTD exemption.

HMRC guidance on applying for an exemption from MTD can be found here.

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