ICAEW urges taxpayers to sign up for MTD

Taxpayers with combined gross income from sole trades and property exceeding £50,000 in the 2024/25 tax year must sign up for making tax digital (MTD) for income tax, the ICAEW has urged. 

It said that individuals should register before the system begins in April 2026, and that HM Revenue and Customs (HMRC) is currently issuing mandation letters to taxpayers who filed their 2024/25 tax return by November 2025. 

These letters instruct those required to comply with MTD for income tax to sign up. A final batch of letters will be sent in March to taxpayers who filed by 31 January 2026.

While HMRC is dispatching letters throughout February and March, some taxpayers may not receive theirs until April. The ICAEW noted this is the month when they must begin keeping digital accounting records, adding that individuals who meet the income criteria are required to sign up even if they do not receive a letter.

Tax agents will not receive copies of the letters sent to their clients by HMRC. The ICAEW recommended that taxpayers share the correspondence with their agents to assist with the registration process. Agents are permitted to sign up clients for the service on their behalf.

Lindsey Wicks, senior technical manager for tax policy at ICAEW, said: “MTD for income tax represents the most significant change to income tax reporting for taxpayers and agents for almost three decades. It is important that taxpayers understand their responsibilities, beginning with signing up for MTD income tax. Once in MTD income tax, they will need to keep digital records and submit quarterly updates and an end of year return to HMRC using compatible software.

“A letter from HMRC indicates that it’s time to get serious about MTD income tax. Taxpayers should consider signing up now, and agents should consider how and when they will sign up their clients, so they can get ahead of the curve before the first quarterly updates are due for submission by 7 August.”