Who can't yet sign up for MTD IT?
Making Tax Digital for Income Tax (MTD IT) becomes mandatory from April 2026 for sole traders and landlords with qualifying income over £50,000. However, HMRC’s current guidance makes clear that not everyone can sign up yet. If you are preparing early, are you actually eligible?
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Pay self-assessment tax
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MONTHLY FOCUS - PROFIT EXTRACTION PLANNING AHEAD OF 5 APRIL 2026
The end of the 2025/26 tax year is fast approaching. In this Monthly Focus we look at ways to get money out of your company tax efficiently, and consider whether limited is still the way to go for your business.
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Cut your losses to get a tax refund
You invested in a company that’s now in dire straits and your shares are worth next to nothing. Selling them isn’t an option so how do you go about getting some tax back on your bad investment?
According to HMRC’s sign-up guidance, certain taxpayers are currently excluded from joining MTD IT. These include individuals who:
- are members of a partnership
- are subject to bankruptcy or an individual voluntary arrangement
- have certain complex tax affairs that the system does not yet support
- do not meet the digital and identity verification requirements.
In addition, some taxpayers with particular reporting needs may find that the service cannot yet accommodate their circumstances. HMRC has indicated that functionality is being expanded in stages. If you attempt to sign up and are not eligible, your application will be rejected and you will remain within self-assessment. This does not remove the obligation to join when mandation applies and your circumstances fall within scope. As 6 April 2026 approaches, you should review both your income level and your eligibility under HMRC’s current criteria before attempting to enrol. Checking the guidance in advance can prevent delays and confusion during the transition to digital reporting.
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