In just three weeks’ time, Making Tax Digital (MTD) for Income Tax kicks off. As a result, HMRC has sent an email rounding up the latest news which we have set out below, in addition to some other updates. Together with the other Professional Bodies, the Institute is participating in a new Professional Body led forum which is escalating issues on MTD for Income Tax directly to HMRC. Members are encouraged to share queries with the Institute which can then be raised with HMRC directly via this forum. You can also visit our MTD for Income Tax hub for guidance and assistance. And finally, later this week the MTD for Income Tax service, which allows agents to sign up clients, will be closed for maintenance from 5pm on Friday 20 March 2026 until 1pm next Tuesday 24 March 2026.
Penalties
Updated guidance on late submission and payment penalties has now been published by HMRC. Late submission penalties use a points system so that a financial penalty is only charged where deadlines are repeatedly missed and the late payment penalties are based on the time taken to pay the tax due.
According to HMRC, these changes support the introduction of MTD for Income Tax for voluntary and mandated taxpayers ahead of the extension of these new penalty rules to all individual Income Tax Self-Assessment taxpayers from April 2027.
Exemptions
HMRC continues to receive applications for exemption from MTD for Income Tax. The following updated guidance pages explain more about this process:
HMRC has also advised that if a taxpayer or agent writes to HMRC to request an exemption, you should use one of the following subject titles on your letter to avoid delays:
- ‘Making Tax Digital for Income Tax — digitally excluded application’ if applying for a digitally excluded exemption, or
- ‘Making Tax Digital for Income Tax — exemption application’ if applying for any other exemption.
In recent months HMRC has also iterated the exemptions guidance to provide clarity on the other exemptions and deferrals that are in place for 2026/27.
Based on some of the applications received to date, HMRC has asked us to highlight the following:
- The guidance states ‘if you have an agent, friend or family member applying for exemption on your behalf, the exemption will still be based on your personal circumstances’. Whilst agents can make the application based on their client’s circumstances, the exemption will only be available for that one client, the agent cannot then apply this exemption to themselves or other clients each of whom must apply for an exemption separately, and
- The guidance states that HMRC will not accept an application for an exemption if the only reason for applying is one of the following:
- you previously filed a paper return, or
- you are unfamiliar with accountancy software, or
- you have a small number of digital records to create each tax year, or
- it will take extra time or cost for you to sign up to and use MTD for Income Tax.
The guidance is designed to offer clear and comprehensive detail on exemptions and will continue to be iterated and updated where necessary.
The Agent Dedicated Line
HMRC’s advisers on the Agent Dedicated Line are available to assist agents with queries on MTD for Income Tax. Agents will now hear the following recorded message:
‘Making Tax Digital for Income Tax is a new way for sole traders and landlords to report their income and expenses to HMRC. From April 2026, sole traders and landlords must use it if their income from self-employment and property combined is over £50,000. To get started, go to GOV.UK and search MTD for Income Tax Agent Step by Step.’ There will then be an option to press 3 to access HMRC’s dedicated MTD team. Agents can also contact HMRC via agent webchat to discuss an MTD query. If the query is considered too complex to discuss over webchat, the agent will be offered a callback.
On Wednesday 4 March, HMRC also activated a new text message service for agents contacting HMRC by mobile phone. If an agent contacts HMRC via mobile, the system now recognises their number and then provides them with an option to receive a single SMS with a link directing them to the MTD for Income Tax agent toolkit and outreach support service.
Software choices design page
HMRC will also be launching an updated software choices page in the coming weeks. The page will reflect HMRC’s latest thinking on how to enhance the agent and client journey, whilst improving clarity for users, and ensuring the information presented is consistent and easy to navigate. This will include:
a list of all available software to be viewed,
- the ability for users to search for a specific software product and check if it is compatible,
- an agent journey, and
- a randomised list of software.
Mandation letters to taxpayers
Readers may recall that in November 2025 HMRC began sending MTD for Income Tax taxpayer mandation letters to those who had filed their 2024/25 tax return by 1 August 2025. HMRC is now sending letters based on 2024/25 returns filed after 1 August 2025 to those that it believes will be mandated to use MTD for Income Tax from 6 April 2026.
The letters have been sent in batches as follows:
- Batch 1 contained letters for those who filed their 2024/25 tax return between 1 September 2025 and 30 November 2025; these letters were issued last month, and
- Batch 2 is expected to begin dispatching from the middle of this month for those who filed their 2024/25 tax return between 1 December 2025 and 31 January 2026.
Each batch of letters is being sent over a 2-week period. Like the letters sent in November 2025, each letter will advise the taxpayer that based upon the latest data held by HMRC, they will be required to use MTD for Income Tax from April 2026.
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