If you’re self-employed and need to use Making Tax Digital (MTD) for Income Tax, buying compatible software isn’t the only thing you need to do.
You also need to sign up for Making Tax Digital for Income Tax with HMRC.
For the first group of sole traders, MTD became mandatory from 6 April 2026. If your qualifying income means you’re caught by the rules and you haven’t signed up yet, it’s worth sorting it out as soon as possible.
The actual HMRC sign-up process isn’t particularly difficult. The confusing part is knowing whether you need to sign up, what information you’ll need and what you’re supposed to do once registration is complete.
Here’s the whole process, step by step.
Do I Need to Sign Up for Making Tax Digital?
Before doing anything else, check whether MTD actually applies to you.
Making Tax Digital for Income Tax is being introduced gradually.
The current timetable is:
| When MTD starts | Qualifying income |
|---|---|
| 6 April 2026 | More than £50,000 |
| 6 April 2027 | More than £30,000 |
| 6 April 2028 | More than £20,000 |
If your 2024/25 Self Assessment tax return showed qualifying income of more than £50,000, you generally need to use MTD for Income Tax from 6 April 2026.
But be careful with the word income.
HMRC isn’t looking at your taxable profit when deciding whether you cross the MTD threshold.
It’s based on qualifying income before expenses
Qualifying income is broadly your gross income from self-employment and property before deducting expenses.
For example, imagine you’re a self-employed plumber with:
Turnover: £58,000
Business expenses: £20,000
Profit: £38,000
You might look at your £38,000 profit and assume you’re below the £50,000 MTD threshold.
That would be the wrong figure to use.
Your gross self-employment income is £58,000, so subject to the other MTD rules and any exemptions, you could fall within MTD from April 2026.
What If I Have More Than One Business?
Your qualifying income can come from more than one source.
For example, suppose you have:
Self-employed income: £32,000
Property income: £21,000
Your total qualifying income would be:
£53,000
You don’t look at each source separately when testing the threshold.
HMRC looks at your total qualifying income from self-employment and property.
Does My PAYE Salary Count?
No.
This is another useful distinction.
Income from employment doesn’t form part of your MTD qualifying income.
Other sources that don’t count towards the qualifying-income threshold include dividends, pensions and your share of partnership profits as an individual partner.
You may still need to report these sources when completing your tax return. They simply aren’t included when working out whether you’ve crossed the MTD qualifying-income threshold.
Will HMRC Tell Me If I Need to Sign Up?
HMRC may write to you if its records show your qualifying income is above the relevant threshold.
But don’t rely entirely on receiving a letter.
HMRC’s guidance says you should also check your qualifying income yourself.
If you’re required to use MTD, the responsibility ultimately sits with you.
What Do I Need Before Signing Up?
Before starting the HMRC registration process, get a few things sorted.
1. You must already be registered for Self Assessment
MTD for Income Tax sits alongside the Self Assessment system.
You must be registered for Self Assessment before you can sign up for MTD for Income Tax.
HMRC also currently requires you to have submitted a tax return within the last two years before signing up.
If you’ve only just become self-employed, this can affect when you’re able to join MTD.
2. Choose your MTD-compatible software
You need software that works with Making Tax Digital for Income Tax.
Don’t assume that software labelled “MTD compatible” automatically supports MTD for Income Tax.
Some older MTD products were designed around VAT.
Your chosen software needs to support the Income Tax version of Making Tax Digital and the tasks you need it to perform.
Your software will need to help you keep or connect to digital records and send the required information to HMRC.
3. Find your Government Gateway details
You’ll normally need the same Government Gateway user ID and password that you use for Self Assessment.
Don’t create a completely new account simply because you’re joining MTD if you already have the correct Self Assessment credentials.
4. Be prepared to prove your identity
HMRC may ask you to confirm your identity during the sign-up process.
Depending on the options HMRC gives you, this may involve using an app on your phone to match your face against your passport or driving licence.
Alternatively, HMRC may ask questions based on information it already holds about you.
That could include information relating to your:
- passport
- driving licence
- Self Assessment records
- latest P60
- recent payslip
- credit reference information
Having these details available before you begin can make the process much easier.
How to Sign Up for Making Tax Digital for Income Tax
Once you’ve checked that MTD applies to you and chosen your software, you’re ready to sign up.
Step 1: Go to HMRC’s official MTD sign-up service
Use the official GOV.UK service for Making Tax Digital for Income Tax.
Avoid searching for random registration services online. You shouldn’t need to pay a third party simply to access HMRC’s sign-up service.
Step 2: Sign in using your Self Assessment details
Use the Government Gateway user ID and password you received when you registered for Self Assessment.
HMRC will use these details to identify your existing tax record.
Step 3: Complete any identity checks
If HMRC asks you to prove your identity, follow the instructions on screen.
The exact questions or verification method can vary from person to person.
Step 4: Provide the information HMRC requests
Follow the online process and provide the information requested about your self-employment or property income sources.
HMRC will check whether you’re eligible to sign up based on the information you provide.
You won’t be asked to enter all your other income and gains during the sign-up process.
Things such as savings interest, dividends and other relevant income are dealt with through your compatible software when completing your tax return.
Step 5: Complete the sign-up
Once you’ve worked through HMRC’s questions, complete the registration process.
But don’t stop there.
Signing up with HMRC and getting your software ready are two separate jobs.
After Signing Up: Connect Your Software to HMRC
Once you’re signed up, you need to authorise your compatible software to communicate with HMRC.
You’ll normally find an option within the software along the lines of:
Connect to HMRC
or:
Authorise HMRC
The wording varies between software providers.
Follow the instructions and sign into HMRC when prompted.
This authorisation allows the software to exchange the information needed for Making Tax Digital with HMRC.
You should also check the accounting period shown in your software before you start creating your MTD digital records.
Can My Accountant Sign Me Up?
Yes.
If you already have an accountant or tax agent, they can sign you up for Making Tax Digital for Income Tax.
HMRC provides a separate sign-up process for agents.
It’s worth speaking to your accountant before registering yourself if they’re going to manage MTD on your behalf.
You also need to make sure that your accountant is properly authorised and that the software arrangements between you will work.
For example, you might keep your records yourself while your accountant handles the final tax return.
Alternatively, your accountant might manage the whole process.
MTD doesn’t require you to use an accountant, though. A sole trader can sign up and manage MTD themselves.
Can I Still Use Excel After Signing Up?
Potentially, yes.
Signing up for MTD doesn’t automatically mean abandoning your spreadsheets.
If you’re happy keeping your business records in Excel or another spreadsheet, you may be able to continue doing so using compatible bridging software.
Bridging software connects your spreadsheet records with HMRC.
The key issue isn’t whether you use Excel.
It’s whether the combination of software you’re using meets HMRC’s MTD requirements, including the requirements for digital records and submissions.
This can be an attractive option for sole traders who already have a simple bookkeeping spreadsheet and don’t want to move everything into a large accounting package.
Do I Have to Use Xero, QuickBooks or Sage?
No.
HMRC doesn’t require you to use one particular accounting software company.
You need compatible software that works with Making Tax Digital for Income Tax.
That could be a full bookkeeping system, or it could involve spreadsheets and bridging software.
The right choice depends on how you run your business.
If you send lots of invoices, want automatic bank feeds and need detailed financial reports, a full accounting package may make sense.
If you have a straightforward business and already keep organised spreadsheet records, a simpler MTD solution may be enough.
Don’t pay for dozens of accounting features you’ll never use simply because you think HMRC requires them.
What Happens After You’ve Signed Up?
Signing up isn’t the end of your MTD responsibilities.
Once you’re using Making Tax Digital for Income Tax, you’ll need to use compatible software to manage the relevant parts of the process.
For affected sole traders, this includes:
Keeping digital records
You’ll need to create and maintain the required digital records of your self-employment income and expenses.
Sending quarterly updates
You’ll send summaries based on your digital records to HMRC during the tax year.
For sole traders using the standard quarterly periods, the normal deadlines are:
| Update | Deadline |
|---|---|
| First quarterly update | 7 August |
| Second quarterly update | 7 November |
| Third quarterly update | 7 February |
| Fourth quarterly update | 7 May |
These quarterly updates aren’t four full tax returns.
Completing your tax return
After the tax year has finished, you’ll need to check and adjust your records where required, add other income and gains, check your tax calculation and submit your tax return using your compatible MTD software.
The normal 31 January deadline following the end of the tax year still applies.
For example, the MTD tax return for 2026/27 is due by 31 January 2028.
Don’t Forget Your Previous Self Assessment Return
This is particularly relevant for people entering MTD in 2026.
If you started using MTD from 6 April 2026, you may still need to complete your normal Self Assessment return for 2025/26.
That return is due online by:
31 January 2027
You don’t replace that return with your MTD quarterly updates.
Think of 2026/27 as the transition year.
You could be keeping MTD records and sending quarterly updates for the current tax year while still having to complete your traditional Self Assessment return for the previous year.
What If I Should Have Signed Up Already?
If you were required to use MTD from 6 April 2026 and haven’t signed up yet, don’t ignore it.
HMRC’s current guidance says people who need to use MTD for the 2026/27 tax year should sign up now.
Get your position checked, choose compatible software and complete the HMRC registration process as soon as possible.
If you’re unsure whether the rules apply to you, start by checking your qualifying income from the relevant Self Assessment return.
Can I Sign Up Voluntarily?
Yes.
You don’t necessarily have to wait until MTD becomes compulsory for you.
HMRC currently allows eligible taxpayers to sign up voluntarily before they’re legally required to use MTD.
You can sign up for the current tax year or the next tax year.
For example, if you expect to become mandatory from 6 April 2027, you may be able to join voluntarily before then.
There is an important catch.
If you volunteer part-way through a tax year, you’ll need compatible software to send any quarterly updates you’ve already missed for that year.
So don’t click the button simply to “have a look”.
Understand what voluntarily joining means before signing up.
What If I’m Exempt From Making Tax Digital?
Some people can be exempt from MTD.
For example, an exemption may be available where it isn’t reasonable or practical for you to use compatible software because you’re digitally excluded.
There are also other circumstances where the MTD rules may not apply or may apply differently.
If you believe you’re exempt, check HMRC’s exemption rules rather than simply deciding not to sign up.
Common MTD Sign-Up Mistakes
There are a few easy mistakes worth avoiding:
Assuming HMRC will automatically sort everything out
Don’t rely solely on receiving a letter from HMRC. Check whether you meet the qualifying-income rules yourself.
Looking at profit instead of turnover
The threshold is based on qualifying gross income before expenses, not your taxable profit.
Buying the wrong software
Check that the product supports Making Tax Digital for Income Tax, not simply Making Tax Digital for VAT.
Thinking software automatically signs you up
Choosing software is one part of the process. You still need to complete the required HMRC sign-up and authorise your software.
Creating unnecessary Government Gateway accounts
Use the same user ID and password associated with your Self Assessment registration.
Forgetting your previous tax return
Starting MTD doesn’t wipe out the Self Assessment return you still owe for the previous tax year.
Making Tax Digital Sign-Up Checklist
Before you start, make sure you can answer yes to these questions:
- Are you registered for Self Assessment?
- Have you submitted a Self Assessment return within the last two years?
- Have you checked whether your qualifying income puts you within MTD?
- Have you checked whether an exemption applies?
- Have you chosen MTD for Income Tax-compatible software?
- Do you have your Self Assessment Government Gateway details?
- Are you ready to complete an HMRC identity check if requested?
- Have you decided whether you or your accountant will manage MTD?
Once you’re signed up:
- Authorise your software to connect with HMRC.
- Check your accounting period in the software.
- Start or continue keeping the required digital records.
- Make a note of your quarterly update deadlines.
- Keep your previous Self Assessment obligations in mind.
Frequently Asked Questions
Where do I sign up for Making Tax Digital for Income Tax?
Sole traders can sign up using HMRC’s official online service on GOV.UK.
Is MTD registration automatic?
You shouldn’t assume it is. If you’re required to use MTD for Income Tax, HMRC’s current guidance tells you to prepare and sign up for the service.
Do I need a Government Gateway account?
You’ll need the same Government Gateway user ID and password you received when registering for Self Assessment.
Do I need an accountant to register for MTD?
No. You can sign yourself up and manage MTD using compatible software. An authorised tax agent can also sign you up.
Do I need accounting software before registering?
HMRC says you should choose compatible software before signing up.
Can I use Excel for MTD?
Yes, spreadsheets can form part of an MTD-compliant system when used correctly with suitable compatible software.
Is the MTD threshold based on profit?
No. Qualifying income is based on gross income from self-employment and property before expenses.
What is the MTD threshold for 2026/27?
If your qualifying income shown by your 2024/25 tax return was more than £50,000, you generally need to use MTD from 6 April 2026, subject to the detailed rules and exemptions.
What happens after I register?
You’ll need to authorise your compatible software, keep the required digital records, send quarterly updates and eventually complete your tax return through compatible software.
The Bottom Line
Signing up for Making Tax Digital for Income Tax is only one part of getting ready for MTD.
For most sole traders, the process looks like this:
Check whether MTD applies → choose compatible software → sign up with HMRC → connect your software to HMRC → keep digital records → send quarterly updates → complete your tax return.
The biggest mistake is waiting until a quarterly deadline arrives before thinking about any of this.
If you’re required to use MTD for 2026/27 and haven’t registered yet, HMRC’s current advice is to sign up now.
Once the registration and software connection are sorted, the focus shifts to something much more familiar: keeping good records of what your business earns and spends.
This guide is based on HMRC guidance available in August 2026. Making Tax Digital rules and software requirements can change, so check the latest HMRC guidance if you’re reading this at a later date.