The first quarterly deadline for Making Tax Digital for Income Tax has passed. More than 436,000 sole traders and landlords filed their first update on time, which sounds like progress until you consider how many were required to join and simply haven’t. If you’re one of them, HMRC is about to make the decision for you.
From September 2026, HMRC will begin auto-enrolling anyone who should have joined MTD for Income Tax from April but hasn’t registered. You’ll receive a letter or digital notification explaining the next steps. The enrolment will happen whether you’re ready or not, which is why acting now, before that letter arrives, puts you in a much stronger position.
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What does HMRC auto-enrolment actually mean?
Auto-enrolment means HMRC registers you for MTD for Income Tax on your behalf. You’ll receive a letter or digital message confirming this and explaining what you need to do next. At that point, the clock starts ticking on your obligations, including submitting quarterly updates through compatible software and eventually filing your End of Period Statement and final declaration.
The problem with waiting to be auto-enrolled is that it compresses your preparation time. Signing up yourself, right now, gives you the space to get your records in order, choose and connect the right software, and understand the quarterly submission calendar before deadlines start stacking up. Reactive compliance is harder and more stressful than planned compliance.
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What if you’ve already missed a quarterly deadline?
There is some breathing room here, though it comes with important conditions attached.
The 2026/27 tax year operates under a soft landing period. That means HMRC won’t issue penalty points for late quarterly updates during this year. If you missed the first quarterly submission, you won’t face an immediate fine. What you will face, however, is the requirement to submit every outstanding quarterly update before you can file your tax return. Skip one, and the whole process stalls.
Late tax returns and late payments are a different matter entirely. Those can still attract penalties regardless of the soft landing. The soft landing covers the quarterly updates themselves, not the tax return filing deadline or any tax due.
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Who needs to be using MTD for Income Tax right now?
MTD for Income Tax currently applies to sole traders and landlords with qualifying income above the threshold who were required to join from April 2026. If you’re unsure whether that includes you, the qualifying income threshold and the type of income that counts both matter, and getting this wrong is a genuine risk.
From April 2027, the scope widens. More individuals will be brought in as the thresholds drop further. So even if you’ve concluded it doesn’t apply to you yet, that position may change within the next year. Understanding where you sit now means you’re not scrambling when the next wave of mandation arrives.
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Why this matters more in the next few weeks than it did in April
September is when HMRC begins auto-enrolling those who missed the April start. That makes the next few weeks a genuine decision point. Signing up before auto-enrolment lands gives you control over the timing and the process. Waiting means HMRC sets the pace.
The quarterly submission schedule runs throughout the year, so there is no quiet period to catch up in. Each quarter that passes without a submission is one more update that needs filing before your tax return can go in. The soft landing removes the penalty points, but it doesn’t remove the administrative backlog that builds if quarterly updates keep slipping.
Getting registered now, even after a missed deadline, resets the situation and gives you a clear path forward.
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What should you do next?
Start by confirming whether MTD for Income Tax applies to your income type and level. If it does and you haven’t signed up, register with HMRC before the auto-enrolment letters go out in September.
Connect compatible software. Xero is fully MTD-compatible and straightforward to set up, so if you’re not already using it, this is a practical moment to make the switch. Get your income and expense records into the software and check that your figures are current.
If you’ve missed a quarterly update, don’t wait. Submit the outstanding update as soon as possible so that your tax return filing isn’t blocked further down the line. The soft landing means no penalty points for late quarterly updates this year, but the submission still has to happen.
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