HMRC is auto-enrolling the self-employed for MTD

From September 2026, HMRC began automatically signing up self-employed people and landlords to Making Tax Digital for Income Tax (MTD). Mike Parkes from Coconut explains what you should do next.

If you became eligible for MTD during the 2026-27 tax year, but didn’t already sign up yourself or through an agent, you’ll be automatically enrolled.

The process is happening in stages, so if you’re affected, you may receive confirmation from HMRC that you’ve been signed up.

For many small business owners, this raises some practical questions. What happens now? What software do you need? Is MTD software ready for the growing number of people who need to use it? And how much work will quarterly reporting actually involve?

Here’s what you need to know about choosing software and making MTD as straightforward as possible.

What happens if HMRC signs you up to Making Tax Digital?

If HMRC signs you up, you’ll need to use MTD-compatible software to:

• keep digital records of your self-employed or property income and expenses
• send quarterly updates to HMRC
• submit your tax return at the end of the tax year.

HMRC uses information it already holds to identify the people who need to use MTD. For the first group, this includes people with qualifying income of more than £50,000 reported on their 2024-25 tax return.

If HMRC has signed you up, you can check that the information it holds about you is correct on the government website.

You’ll also need to choose compatible software if you haven’t already done so.

What MTD software is ready to use?

The evidence so far suggests that MTD-compatible software is already being used at scale to keep digital records and send quarterly updates to HMRC.

HMRC says more than 570,000 people signed up to MTD by August 2026 – and more than 436,000 sole traders and landlords have successfully submitted their first quarterly update for 2026-27.

But you still have a choice to make.

While HMRC recognises software that meets its requirements, it doesn’t recommend one provider over another.

So the question isn’t just whether software is MTD-compatible. It’s whether it’s easy to use and suited to the way you run your business.

How easy should quarterly reporting be?

The amount of work involved will depend on your business.

If you have a small, straightforward business and keep your records up to date, the quarterly update itself shouldn’t be a lengthy process. HMRC describes the updates as short summaries and says they can take minutes to complete.

The key is not to leave all your bookkeeping until the quarterly deadline.

Recording income and expenses regularly means there’s less to sort out when it’s time to submit.

Think of quarterly reporting as a quick check on records you’ve already maintained, rather than four additional tax returns.

Software can also reduce some of the manual work involved. Depending on the product, features such as bank feeds, receipt capture, and automatic transaction matching can help keep your records up to date.

Read more: Quarterly tax reporting: practical steps for the next tax deadline

How do you choose the right MTD software?

There isn’t one software package that’s right for every business. When comparing options, consider:

Is it easy to record transactions?

If recording an expense takes several steps, you’re less likely to keep your records up to date. Look for software that makes everyday bookkeeping straightforward.

Can you connect your bank account?

Bank feeds can reduce manual data entry by bringing transactions into your software. You’ll still need to check and categorise them correctly.

Can you capture receipts?

Being able to photograph or upload receipts as you go can help keep your records organised and reduce the amount of paperwork you need to deal with later.

Is submitting the quarterly update straightforward?

Your software should guide you through the process and allow you to check the figures before they’re sent to HMRC.

HMRC’s guidance confirms that compatible software is used to create digital records, send quarterly updates, and submit the tax return.

Does the price match your needs?

MTD doesn’t automatically mean you need an expensive accounting package.

There are different products available, including options aimed at businesses with simpler tax affairs. HMRC recommends comparing what each product offers and choosing one that suits your circumstances.

Don’t choose software based on price alone. A cheaper product isn’t necessarily better value if it’s difficult to use and leaves you spending more time on your bookkeeping.

Equally, a small sole trader with straightforward affairs may not need a complex accounting package with features they’ll never use.

The right software is the one that fits the way you actually run your business.

Do you need an accountant under MTD?

You don’t necessarily need an accountant for MTD.

MTD means you need to keep digital records and submit information to HMRC using compatible software. It doesn’t mean every sole trader needs an accountant.

If your tax affairs are straightforward and you’re comfortable managing your own records, you may be able to manage MTD yourself using suitable software.

An accountant or tax adviser may be useful if your affairs are more complicated, you have several sources of income, you’re unsure about allowable expenses, or you’d simply prefer someone else to deal with your tax.

You can also use software alongside an accountant, allowing you to keep your records digitally while your accountant helps with your wider tax affairs.

Read more: How much should I save for taxes? An accountant’s guide for business owners

More expert tax guides from Mike Parkes

• What are three-line accounts? A simplified approach to quarterly tax reporting
• Marriage allowance – could this tax benefit boost your income?
• Making Tax Digital is live – vital next steps for the self-employed