HMRC don’t have the best reputation for building the most user-friendly systems, and signing up for Making Tax Digital (MTD) for Income Tax is no exception. We usually walk our clients through the process, so we’ve put this guide together to make it as painless as possible.
Not sure if MTD applies to you? Read our Beginner’s guide to Making Tax Digital for sole traders and landlords to find out how it works and who it applies to.
If you’re a sole trader or landlord and you need (or want) to sign up to MTD with HMRC, here’s exactly what to do.
Before you start
You’ll need your Government Gateway login, the same one you’ve been using for your self-assessment. If you can’t find it, dig it out before you begin, otherwise you’ll get halfway through and grind to a halt.
Step 1: Head to the sign up page
Go to the official HMRC page. Scroll right to the bottom of the page, where you’ll find the link to start the sign up process.
Step 2: Sign in
HMRC will ask how you’d like to sign in. We’d suggest Government Gateway, as that’s most likely what you’ve used in the past for your self-assessment.
Add your login details and continue.
Step 3: Pick your tax year
Next up, HMRC will ask which tax year you want to sign up for. If you want to be in MTD with immediate effect, select “I want to start in the current tax year, 2026 to 2027”.
Step 4: Read the bit about penalties
The next page goes through how penalties will apply. The rules are slightly different depending on whether you’re signing up voluntarily or whether you’re required to do so based on your sole trade or rental income (or both) during the 2024/25 tax year. Worth a proper read, so you know where you stand.
Step 5: Confirm you have compatible software
HMRC will then ask whether you have compatible software. If you’re a FreeAgent user, and our clients typically are, this is a straightforward yes.
Step 6: Add your sources of income
This is the slightly more involved step. You’ll need to add, update or edit each source of income (sole trade and/or rental property) and fill in the details for each one. Once you’ve worked through them all, hit “Save and continue”.
Step 7: You’re done
The final page will simply confirm “You’ve signed up”. That’s it, you’re now in MTD for Income Tax.
A few things to keep in mind
- Make sure your bookkeeping software is connected and ready to go before your first quarterly update is due. If you’re on FreeAgent, we can help you get set up.
- If you’re not sure whether you should be signing up voluntarily or whether you’re mandated, get in touch and we’ll help you work it out.
- Once you’ve signed up, the quarterly update clock starts ticking. Don’t rush to sign up earlier than you need to without thinking it through.
Need a hand?
If you’d like us to walk you through any of the steps, or you’d rather we just did it for you, drop us an email and we’ll get stuck in.
