HMRC checks each Self Assessment return and writes to people whose qualifying income from self employment and property is over the MTD for Income Tax threshold, telling them they must use MTD from the start of the following tax year. From September 2026 it has also been signing up people who have not done so themselves and sending a letter to confirm it. Before acting, check the income figures and sources the letter relies on, whether any of them have ceased, and whether you fall within an exemption.
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Why has HMRC written to me?
HMRC’s guidance says it reviews your Self Assessment return and checks your qualifying income each tax year. If the income is above the relevant threshold, HMRC writes to confirm that you need to start using MTD for Income Tax by the start of the following tax year. In practice there are several kinds of letter:
- A letter telling you that you need to use MTD. For the first wave this was based on the 2024 to 2025 return, for anyone with qualifying income over £50,000.
- A letter confirming HMRC has signed you up. HMRC says that from September 2026 it is signing up, in stages, anyone who needs MTD for 2026 to 2027 and has not signed up. The confirmation may arrive in HMRC online services or by post.
- A letter confirming you do not need MTD. HMRC sends this after you tell it that all your self employment and property income has ceased.
- A decision letter on an exemption application. This says whether the exemption is accepted, how long it lasts, or why it was refused and how to appeal.
The general background to HMRC correspondence is in HMRC letters explained.
Which figures is the letter based on?
Qualifying income is your total self employment and property income before expenses, taken from the return for the earlier tax year. Employment income, a share of partnership profit, dividends and pensions do not count. The timetable is:
| Return HMRC checks | Qualifying income over | You must use MTD from |
|---|---|---|
| 2024 to 2025 | £50,000 | 6 April 2026 |
| 2025 to 2026 | £30,000 | 6 April 2027 |
| 2026 to 2027 | £20,000 | 6 April 2028 |
The common errors in that figure are worked through in what counts as qualifying income for MTD.
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What should I check when the letter arrives?
When HMRC signs you up, it uses only the information it already holds, which may not reflect changes since your last return. Its guidance asks you, once you sign in to HMRC online services and select MTD for Income Tax, to:
- confirm your self employment and property income details, including UK and overseas properties (all UK properties are one UK property business and all foreign properties are one foreign property business)
- add any new self employment or property income since your last return
- tell HMRC about any income source that has ceased since your last return, even if you filed a later return after HMRC signed you up
Also check the arithmetic. A share of jointly owned property income counts, not the whole rent. Personal self employment or property income notified to you by a partnership counts, but your share of partnership profit does not. If the figure HMRC used looks wrong, that is the first point to raise.
What if my income has stopped?
HMRC’s guidance separates two cases:
- All self employment and property income ceased before 6 April 2026. If you have a letter saying HMRC signed you up, update your information in your HMRC online account. You will not need MTD, but you still submit your 2025 to 2026 return.
- All income ceased on or after 6 April 2026. You still need MTD software to send a quarterly update covering the period up to the date the income ceased, and to submit your 2026 to 2027 return. After that you no longer need MTD.
If income ceased and HMRC has not contacted you yet, contact HMRC and still file the 2025 to 2026 return by 31 January. HMRC says that if you do not tell it, it will sign you up using the information it has.
What if I think I am exempt?
Some exemptions are automatic and need no contact with HMRC. Examples include qualifying income of £20,000 or less, having no National Insurance number before the start of the tax year, and (until April 2027) having included certain supplementary pages such as the SA109 on your 2024 to 2025 return. Others must be applied for, including digital exclusion. See who is exempt from MTD for Income Tax and MTD digital exclusion.
To apply, call or write to Self Assessment general enquiries; agents use the Agent Dedicated Line. Letters should be headed “Making Tax Digital for Income Tax: digitally excluded application” or “Making Tax Digital for Income Tax: exemption application”, and a single application should explain every exemption you think applies. HMRC aims to reply within 28 calendar days. If you have already been signed up and your circumstances have changed, HMRC says you should apply and keep using MTD while you wait.
If the application is refused, the decision letter explains why. You can appeal within 30 days of the date on the letter, in writing, using the heading “exemption appeal” or “digitally excluded appeal” and sending it to the address in the decision letter.
What if I simply disagree that I need MTD?
HMRC’s guidance is to contact Self Assessment general enquiries if you have been signed up and do not think you need to use MTD; agents should contact the agent dedicated line. This is the route for a wrong income figure, a source that has ended, or a residence point, as opposed to an exemption.
What if no letter came?
The duty does not depend on the letter. HMRC says that if you did not receive one, it is still your responsibility to check whether and when you need MTD and to be signed up and ready. HMRC’s online checker covers the 2024 to 2025, 2025 to 2026 and 2026 to 2027 tax years. You can also check HMRC online services: if you have been signed up, a message on screen will confirm it. If there is no message, you have not been signed up yet and can still sign up yourself or through an agent. HMRC’s view on lost post generally is discussed in not receiving HMRC letters as an excuse.
What happens about penalties in the first year?
For 2026 to 2027 HMRC will not apply penalty points for late quarterly updates, but the updates must still be sent before the return can be submitted, and points do apply to a late return. Someone signed up part way through the year must catch up: authorise software, create digital records from the start of the tax year and send any overdue update as soon as possible.
Illustration only. Sam’s 2024 to 2025 return showed £38,000 of trading turnover and £16,000 of rent, so £54,000 of qualifying income. She ignored the first letter and in October 2026 receives confirmation that HMRC has signed her up. She sold her rental flat in March 2026, so she signs in, tells HMRC the property income ceased, sets up software, enters her trading records from 6 April 2026 and sends the overdue update. Her trading turnover alone keeps her in MTD.
What mistakes come up most often?
- Treating the letter as optional, or assuming no letter means no obligation.
- Not checking the income sources HMRC has listed, especially ceased lettings and overseas property.
- Stopping MTD work while an exemption application is pending.
- Missing the 30 day appeal window on a refused exemption.
- Agents not checking whether a client was signed up by HMRC; see the agent sign up process.
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Related Accountapedia entries
- Which clients join MTD Income Tax and when
- Do I need to tell HMRC about rental income
- Joining MTD for Income Tax voluntarily
- Telling HMRC you no longer need to file a return
- Updating engagement letters for MTD Income Tax
Sources
- GOV.UK: Find out if and when you need to use making tax digital for income tax
- GOV.UK: Work out your qualifying income for making tax digital for income tax
- GOV.UK: Sign up for making tax digital for income tax
- GOV.UK: Check what to do if hmrc has signed you up for making tax digital for
- GOV.UK: Find out if you can get an exemption from making tax digital for incom
- GOV.UK: Apply for an exemption from making tax digital for income tax
- GOV.UK: Send quarterly updates
Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 24 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.