MTD for ITSA: Who Needs to Register in 2026

MTD for ITSA: Who Needs to Register in 2026 and What to Do if HMRC Sends You a Letter

Throughout the 2025–2026 tax year, a lot of self-employed individuals have been receiving letters from HM Revenue & Customs regarding the upcoming switch to Making Tax Digital (MTD) for Income Tax.

Naturally, this sparks quite a few questions: do you really have to rush to register? What if your earnings are under the £50,000 mark? And is there any legal way to opt out?

Let’s break down the answers to your most common questions, based entirely on official HMRC guidance.

 

Do I have to register for MTD just because I got a letter?

No. Don’t panic just yet. That letter is simply a notification, not a legally binding demand to sign up immediately. You only have to register if you actually meet the set criteria. According to HMRC, using MTD is only mandatory if your gross income goes over the specific threshold.

How do I know if I actually fall under MTD rules?

You need to look at your total income (before deducting expenses) for the 2025–2026 tax year, which runs from April 6, 2025, to April 5, 2026. If that figure is over £50,000, you are legally required to use MTD starting April 6, 2026.Source: HMRC

My income is £49,800. Do I need to do anything?

No. If your income is below £50,000, you don’t need to register, and you don’t even need to contact HMRC to tell them. You simply continue filing your taxes using the standard Self Assessment system you’re used to.

When exactly does the obligation to switch to MTD start?

The requirement kicks in after the end of the tax year in which your income broke the threshold. So, if your total income at the end of the 2025–2026 tax year sits above £50,000, your mandatory switch to MTD starts in April 2026.Source: HMRC

Should I register early if I expect my income to grow soon?

No. HMRC doesn’t require you to register based on projections or business plans. Your obligation to join MTD is determined strictly by your actual income for a completed tax year.

I made over £50,000 this year, but I know my income will drop next year. What now?

If your income for 2025–2026 goes over £50,000, you are still obligated to use MTD from April 2026—even if you are certain you will earn less the following year. The system looks strictly at the qualifying previous tax year.

Is it possible to opt out of MTD entirely?

Yes, but only if applying MTD is considered “not reasonably practicable” for you. This exemption is usually granted for objective reasons, such as a severe health condition, disability, age, religious beliefs, or a complete lack of digital access (like living in a remote area without broadband). Source: HMRC

How do I apply for an exemption?

You’ll need to contact HMRC, either through your online Personal Tax Account or by writing them a letter. In your application, confirm that your income level meets the MTD threshold, but clearly explain your circumstances and detail exactly why keeping digital records isn’t reasonably practicable for you.

When should I apply for this exemption?

If you already know you have grounds for an exemption, it’s best to submit your application before April 2026. If your circumstances change later on, you can apply as soon as those new issues arise.

I already registered for MTD, but my income has dropped. Can I leave?

A drop in income doesn’t trigger an automatic exit from MTD, unfortunately.

• If you’ve closed your business entirely, you must notify HMRC that you have ceased self-employment.

• If you’re still trading but now have valid grounds for an exemption (as mentioned above), you need to apply for it directly.

Will I be fined if I don’t register in advance?

No. There are no penalties for not registering “early.” You can only be fined if you are legally required to use MTD and you fail to comply with the rules after your mandatory start date.

The Bottom Line

• Your MTD status depends entirely on your income during the 2025–2026 tax year.

• Income under £50,000 = no changes required. Keep doing what you’re doing.

• Income over £50,000 = you must switch to MTD by April 2026.

• Exemptions are available, but only for valid, objective reasons, and you have to apply for them directly through HMRC.

 

Author: Jelena Vitkovskaja