MTD IT - sign up guidance

HMRC relaunched testing of MTD IT in April 2024 and the scope is expanding from April 2025. Individual taxpayers with income from self-employment and/or property, and their agents, can now sign-up voluntarily from gov.uk (link for agents, link for taxpayers), in advance of mandation starting from April 2026.

Before signing up, it is important to understand the MTD IT requirements. In particular, volunteers need to: 

• Choose a suitable software product and speak to the developer to check exactly what MTD IT functionality is included in their product. Note that some developers require separate licences for each income source in MTD which may add to the cost.
• Choose a product (or products) that will allow the income tax liability to be finalised from software. The HMRC submission service that allows the reporting of other income not covered by MTD IT requirements is currently closed and will remain so throughout 2025/26. It is not clear whether it will ever reopen for those in MTD IT.
• Have reliable, regular bookkeeping using accounting software in place. The bookkeeping needs to be done by the taxpayer or their main agent (multiple agent functionality is expected to be available for testing from April 2025).
• When signing up to testing you have to sign up all self-employment and property income sources (ie, it is not possible to sign up just property or self-employment income or one of multiple trades).
• Volunteers need to complete the whole year in MTD IT including catching up on all quarterly updates. During the testing period there are no penalties or penalty points for late submission of quarterly updates.
• Meet the eligibility criteria and expect that they will continue to do so.

The first step of the sign-up process can be used to check eligibility against an HMRC list of eligible taxpayers. Note that this check will not identify cases where there is joint property, furnished holidays lettings or an accounting date other than 31 March to 5 April but such cases should not sign up. Those with High Income Child Benefit Charge and income from jointly held property can sign up for testing for 2025/26.

• Have the information needed to sign up: national insurance number, date of birth, start date for each trade and for property income, accounting method (cash or traditional), business name, address, nature of trade. HMRC is working on simplifying the sign up journey and now pre-populates the sign up process with information it holds on trades and property income.
• Have no plans to change accounting date, accounting method or to carry back losses.
• The sign up process allows volunteers a choice about whether to sign up for the current year (2024/25) or next year (2025/26). From April 2025 the choice will be between signing up for 2025/26 or 2026/27. The possibility of a bulk sign up process has been considered but it is expected that each taxpayer will need to be signed up individually to MTD IT.
• Agents must have an agent services account and be authorised to act for the client. This can be done by linking to the existing authority for self assessment in the HMRC online services for agents account. 
• Agents must have the agreement of their client and an appropriate engagement letter.

Further information on MTD IT:

• MTD income tax
• Agent Services Account
• Making Tax Digital for Income Tax - GOV.UK