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Opening an envelope from HMRC is rarely comfortable. If you’ve recently received an HMRC MTD letter, it’s important to understand what it means. This is not a penalty notice or a tax demand. Instead, it is a compliance notice informing you that the way you report your income to HMRC will change from 6 April 2026 under Making Tax Digital.
You received it because your income from property and/or self-employment means you fall within the scope of Making Tax Digital for Income Tax. This article walks you through what the letter says, why it landed on your doormat, and exactly what you need to do next.
KEY TAKEAWAYS
The letter is a compliance notice, not a penalty or tax demand.
You received it because your gross qualifying income exceeded £50,000 in the 2024/25 tax year.
Qualifying income is gross income before expenses, not your profit.
From 6 April 2026 you must use HMRC-recognised software and submit quarterly updates.
Your 2025/26 Self Assessment return is still required as normal by 31 January 2027.
The soft landing for 2026/27 covers late quarterly updates only, not the Final Declaration or late payments.
What Is the HMRC MTD Letter?
The letter is a formal compliance notice from HMRC informing you that your tax reporting obligations are changing. It is sent to landlords and self-employed people whose qualifying income exceeded £50,000 in the 2024/25 tax year. The letter typically contains your Unique Taxpayer Reference, a summary of your new obligations, and a link to GOV.UK for further guidance.
Exact wording from the HMRC letter
"You will need to change the way you report your income and expenses to HMRC. You'll need to use Making Tax Digital for Income Tax from 6 April 2026 as your total income was over £50,000 from self-employment and property in your 2024 to 2025 tax return. This is your qualifying income which is worked out before expenses or taxes are deducted."
This is not a penalty. It is not an investigation. It is not a request for money. It is HMRC giving you advance notice that the reporting system is changing and that you need to act before April 2026.
Making Tax Digital for Income Tax replaces the traditional annual Self Assessment return for those above the qualifying income thresholds. Instead of filing once a year, you will submit four quarterly digital updates and a Final Declaration using HMRC-compatible software. The rollout is phased: above £50,000 from April 2026, above £30,000 from April 2027, and above £20,000 from April 2028.
Is This Letter Genuine? How to Check
A genuine HMRC letter will include your full name, Unique Taxpayer Reference and National Insurance number.
It will not ask you to click a link, call a premium rate number, or provide bank details, a PIN or passwords.
It will direct you to GOV.UK only, not any other website.
If in doubt, do not use the contact details printed on the letter. Go directly to GOV.UK.
Self Assessment helpline: 0300 200 3310
Report scams: phishing@hmrc.gov.uk
Why Has HMRC Written to Me?
HMRC already holds your income figures from your previous Self Assessment returns. You received the HMRC letter because your gross income from self-employment and/or property exceeded £50,000 in the 2024/25 tax year. This figure is calculated before expenses, so your profit figure is not what triggered it.
A landlord with £55,000 in gross rental income and £30,000 in allowable expenses still has a qualifying income of £55,000 for MTD purposes.
What To Do Next: Your Step-by-Step Action Plan
Step 1: Verify Your Qualifying Income
Before doing anything else, confirm that the letter genuinely applies to you. Pull up your 2024/25 Self Assessment return and add together y-our gross self-employment turnover and your gross property income. If the combined total exceeds £50,000, you are in scope for April 2026. If your income has since dropped below £50,000, you may fall into a later phase of the rollout rather than the April 2026 wave.
Our MTD calculator lets you quickly determine your qualifying income in under a minute.
Step 2: Choose MTD-Compatible Software
From 6 April 2026 you can no longer file your tax return through the HMRC online portal or on paper. You must use software that HMRC recognises as MTD-compatible. Spreadsheets on their own are not sufficient unless they are linked to compatible bridging software. The software you choose will be responsible for storing your digital records, preparing your quarterly updates and submitting your Final Declaration directly to HMRC.
Use our MTD software finder tool to compare available options and choose the best solution for your business.
Step 3: Sign Up for MTD for Income Tax
Choosing software is not the same as signing up for MTD. Both steps are required. You must formally register through your Government Gateway account. If you do not already have one, you will need to create it first. Once registered, you will need to authorise your software to connect to your HMRC account and submit updates on your behalf.
Our step-by-step registration guide walks you through the entire process.
If you have an accountant, they can manage the sign-up process on your behalf.
Exact wording from the HMRC letter
"Act now to get ready for 6 April 2026. You will need to get commercial software that works with Making Tax Digital for Income Tax and sign up for Making Tax Digital for Income Tax, so you're ready to use the service from 6 April 2026."
Step 4: Start Keeping Digital Records and Know Your Deadlines
Do not wait until April 2026 to start organising your records. The earlier you begin keeping digital records of your income and expenses, the smoother your first quarterly submission will be. Keep digital copies of receipts, invoices and bank statements within your chosen software from now.
Once MTD begins, your quarterly updates follow this schedule:
Quarter | Period | Deadline |
|---|---|---|
Q1 | 6 April to 5 July | 7 August |
Q2 | 6 July to 5 October | 7 November |
Q3 | 6 October to 5 January | 7 February |
Q4 | 6 January to 5 April | 7 May |
Final Declaration | End of tax year | 31 January |
Step 5: Submit Your 2025/26 Self Assessment as Normal
Receiving this letter does not change anything about your 2025/26 Self Assessment return. You must still submit it as normal by 31 January 2027 under the existing system. MTD only governs reporting from the 2026/27 tax year onwards. Missing the 31 January 2027 deadline still attracts penalties under the current Self Assessment rules.
What Happens If You Ignore the Letter?
Ignoring the HMRC MTD letter does not remove the legal obligation. If your qualifying income exceeded £50,000 in the 2024/25 tax year, you are required to comply with Making Tax Digital from 6 April 2026 regardless of whether you read or act on the letter.
In practice, ignoring the letter does not trigger an immediate penalty. However, it increases the risk that you miss key obligations, such as setting up MTD-compatible software, keeping digital records, and understanding your new reporting requirements.
For those joining in April 2026, HMRC has introduced a soft-landing period. During the 2026/27 tax year, no penalty points will be issued for late quarterly updates. This gives taxpayers time to adjust to the new system.
However, this does not remove all consequences. The Final Declaration must still be submitted on time, and late payment penalties apply as normal. If you are unprepared because you ignored the letter, the risk shifts to missing these later obligations.
What If You Think the HMRC MTD Letter Does Not Apply to You?
There are three legitimate reasons why the letter may not apply to your situation.
Your Income Has Dropped Since 2024/25
HMRC bases its letters on the figures from your previous Self Assessment return. If your qualifying income has since fallen below £50,000, you may not need to join MTD in April 2026. You would instead fall into Phase 2 if your income is above £30,000, which begins in April 2027, or Phase 3 if your income is above £20,000, which begins in April 2028.
You May Qualify for an Exemption or Deferral
Not everyone is required to comply with MTD immediately. Exemptions include digital exclusion, which applies if you cannot reasonably use digital tools due to age, disability, remote location or religious belief. If HMRC has already confirmed you are digitally excluded, the letter can be disregarded.
Other grounds for deferral or exemption include having no National Insurance number before the relevant tax year starts, being in the final year of your self-employment or property letting business, and certain trustees and personal representatives. Foster carers and kinship carers eligible for qualifying care relief are not permanently exempt but are deferred, meaning they do not need to comply until April 2027 at the earliest.
The Income Figure May Be Incorrect
If you believe HMRC has used an inaccurate income figure, you can contact them to dispute it. Call the HMRC Self Assessment helpline on 0300 200 3310 or write to the address printed on the letter. Have your Unique Taxpayer Reference and National Insurance number ready before you call.
Conclusion
The HMRC MTD letter is not something to fear. It is advance notice of a change in how you report your income, not a change in how much tax you pay. The two things HMRC is asking you to do are straightforward: get MTD-compatible software and sign up through your Government Gateway account.
The sooner you act, the more time you have to get comfortable with the new system before the first quarterly deadline arrives.
Frequently Asked Questions
