Making Tax Digital Voluntary Sign Up: Why Joining Early Makes Sense for Some Landlords

What is the Making Tax Digital voluntary sign-up?

The MTD voluntary sign-up is HMRC's pilot programme for Making Tax Digital for Income Tax Self Assessment. It has been open since 2022. Participants use MTD-compatible software, keep digital records, and submit quarterly updates — exactly as those mandated from April 2026 will do.

The pilot was originally more restricted — HMRC invited specific taxpayers to join. It has since opened to any individual who wants to participate, regardless of their income level or the complexity of their affairs.

Joining voluntarily means:

• You use HMRC-recognised MTD software for all your record keeping
• You submit four quarterly updates per year to HMRC
• You submit a Final Declaration by 31 January each year (replacing Self Assessment)
• The same MTD rules and processes apply to you as they will for everyone from April 2026

The key difference between voluntary and mandatory participation is simply when you start. The experience once enrolled is identical.

As of February 2026, several thousand landlords and self-employed people have already joined voluntarily. The number has grown significantly as April 2026 approaches and HMRC has pushed awareness of the programme.

Who should consider voluntary Making Tax Digital sign-up?

Voluntary sign-up makes most sense for landlords approaching the £50,000 threshold, those who want to spread their tax admin rather than face an annual January rush, and anyone who wants to trial MTD software before it becomes compulsory.

There is no single right answer — whether early adoption makes sense depends on your circumstances, your relationship with admin, and how close you are to the mandatory threshold. Here are the profiles where it tends to make most sense:

Landlords with income between £40,000 and £50,000

If your gross rental income is in this band, you are not yet mandated — but you could become so with a rent increase, a new property, or if the threshold drops further in future policy. Joining voluntarily now means you are already set up and running when (or if) you cross the threshold. The learning curve is behind you.

Landlords who find the January Self Assessment deadline stressful

The traditional Self Assessment model means gathering all your records from the past year and filing everything in a compressed January window. Under MTD, the same records are captured and submitted quarterly throughout the year. By the time the Final Declaration is due on 31 January, most of the work is already done. For many people, this is a significant quality-of-life improvement.

Tech-comfortable landlords who want better financial visibility

MTD software typically shows you running estimates of your tax liability throughout the year. If you are used to discovering your tax bill in October or November when your accountant completes your return, quarterly updates give you a much clearer picture much earlier. This helps with cash flow management — you know in April what you roughly owe in January.

Landlords whose accountants are encouraging early adoption

Many accountants are actively recommending that clients join MTD early, particularly those with income near the threshold. From an accountant's perspective, clients on digital records are easier and faster to work with — reducing fees in the process. If your accountant is pushing this direction, joining now aligns your system with theirs.

Anyone planning to grow their portfolio

If you have one or two properties now with income below £50,000 but expect to acquire more, setting up MTD-compliant digital records now establishes the habit and infrastructure. Adding properties to a system that is already running is far simpler than migrating records from a spreadsheet mid-portfolio.

Below-threshold landlords who will eventually be caught

The £50,000 threshold falls to £30,000 from April 2028, and there has been discussion (though no confirmed date) of a further reduction. If your income is between £20,000 and £30,000, you have limited time before MTD becomes mandatory. Joining voluntarily in 2026 gives you two years of practice before the official obligation kicks in.

The soft landing — the main reason to consider signing up in 2026

HMRC has confirmed that no penalty points will be issued for late quarterly updates in the first 12 months of MTD — the so-called soft landing period covering the 2026/27 tax year. This applies to all MTD participants, whether mandatory or voluntary.

The soft landing is significant. Under the normal MTD penalty system, each late quarterly update earns one penalty point. Accumulate four points and you face a £200 fine, with further £200 fines for each subsequent late submission while at the threshold.

During the soft landing:

• Quarterly updates submitted late in 2026/27 will not attract penalty points
• You can submit late without financial consequence in your first year
• The system effectively gives you a year to get into the rhythm without punishing early mistakes

What the soft landing does NOT cover:

• The Final Declaration — the 31 January deadline still carries penalties if missed
• Late payment of tax — interest and penalties still apply if you pay late
• From 2027/28 onwards — the standard penalty system applies in full

For landlords joining voluntarily in early 2026 (or for those mandated from April 2026), this means your entire first year of quarterly submissions is penalty-free in terms of late filing. It is the ideal time to learn the system, understand your software, and establish habits — without the risk of a penalty landing on you while you are still figuring things out.

This soft landing does not last forever. From April 2027, the full penalty regime is in effect. Make the most of 2026/27 as your learning year.

Benefits of voluntary Making Tax Digital sign-up

The genuine benefits of joining early are: familiarity with the process before it becomes compulsory, better visibility of your tax position throughout the year, smoother cash flow planning, reduced admin pressure in January, and potentially lower accountancy fees.

1. Familiarity without pressure

Learning new software and new processes takes time. When MTD becomes mandatory, landlords who have never used the system before will be learning it under the pressure of actual deadlines. Those who joined voluntarily will already know their software, understand how quarterly submissions work, and have resolved any teething problems. The first year of any new system has bugs and confusion — voluntary adopters experience these in a low-stakes environment.

2. Real-time tax position visibility

One of the genuine improvements MTD brings over annual Self Assessment is continuous visibility. Your software maintains a running total of your income and expenses, and most systems provide estimated tax liability calculations that update as you add transactions. Instead of discovering your tax bill in January, you know roughly what it will be in May, August, and November. This allows for better financial planning.

For landlords who regularly find themselves scrambling to gather cash for a January tax bill they did not see coming, quarterly visibility is transformative.

3. Better cash flow management

Knowing your estimated tax liability three or four months before it falls due means you can set aside the right amount of money throughout the year. Rather than a single large transfer in January, you accumulate funds gradually. Some landlords use a separate savings account into which they transfer the estimated quarterly tax liability each time they submit an update — by January, the money is already there.

4. Reduced January admin pressure

Under traditional Self Assessment, January is the most stressful month of the tax calendar. MTD does not eliminate the Final Declaration deadline, but it significantly reduces the workload involved. By the time 31 January arrives, your income and expenses for the year are already in the system — the Final Declaration is largely a review and confirmation exercise, not a data entry marathon.

5. Potentially lower accountancy fees

Accountants typically charge more for clients whose records arrive in disorganised states. If your records come through as a box of receipts in January, the accountant charges for the time spent organising them. If your records are already in structured digital format — which MTD requires — the accountant's work is reduced. Many accountants charge less for MTD clients because the preparatory work is done by the software rather than by their team.

6. Early identification of errors

Quarterly submissions mean quarterly reviews. Any anomalies in your records — a miscategorised expense, a missed rent payment, a duplicate entry — surface much sooner than under the annual model. Correcting an error in May is much simpler than correcting it two years later during an HMRC enquiry.

Potential downsides of signing up voluntarily

The main downsides are additional administration (four submissions per year instead of one), a learning curve with new software, and a change in rhythm that takes adjustment for landlords used to the annual Self Assessment cycle.

1. More frequent admin deadlines

Under annual Self Assessment, you have one substantive deadline per year (31 January). Under MTD, you have four quarterly deadlines plus the Final Declaration. If you are not in the habit of reviewing your records regularly, this represents a genuine increase in the frequency of admin tasks.

The counterpoint: if you are keeping digital records as MTD requires, the quarterly submission itself is typically 15-30 minutes of work. The records are already there — you just confirm and submit. The bulk of the work is in maintaining the records throughout the quarter, not in the submission itself.

2. Software learning curve

Any new software takes time to master. Choosing the right tool, setting up your properties and categories correctly, connecting bank feeds, understanding how the submission process works — this is all time and effort. For busy landlords managing a portfolio while working full-time, finding this time can be challenging.

Again, the counterpoint: this learning is inevitable. The question is whether you do it in 2026 at your own pace, or in April 2027 under mandatory deadline pressure.

3. Variable income can be harder to manage

If your rental income varies significantly — perhaps you have a property between tenants for three months, or you use a property seasonally — the quarterly update rhythm can feel awkward. You may have quarters with zero income and quarters with higher income, which does not map neatly to fixed quarterly assessments. MTD accommodates this (you simply report what actually happened), but it requires more attention to the quarterly record than a flat monthly rent situation.

4. Not reversible once mandated

If you join voluntarily but later decide you prefer annual Self Assessment, you can exit the pilot — but only as long as your income stays below the mandatory threshold. Once your income reaches the mandatory level, you are locked in regardless of your preference. This is not really a downside of voluntary sign-up specifically, but it is worth knowing.

How to sign up for Making Tax Digital voluntarily

To sign up voluntarily, you choose HMRC-recognised MTD software, create an account, then register through your HMRC Government Gateway account at gov.uk. You authorise your software to communicate with HMRC and begin keeping digital records.

Here is the full step-by-step process:

1. Choose MTD-recognised software first.

   Before signing up with HMRC, you need to have chosen software. HMRC maintains a list of recognised MTD software on gov.uk. For landlords specifically, options include LandlordOS, Xero, QuickBooks, Sage, FreeAgent, Hammock, and Landlord Vision. Review what each offers for landlord-specific needs (property-level tracking, mortgage interest handling, etc.) before deciding.

2. Create an account in your chosen software.

   Sign up, add your property details, set up income and expense categories, and configure any integrations (bank feeds, etc.). This may take a few hours to do properly — do not rush this step. Correct setup at the start saves significant time later.

3. Sign up at gov.uk.

   Log in to your HMRC Government Gateway account. Navigate to the Making Tax Digital for Income Tax section and follow the sign-up process. You will need your Unique Taxpayer Reference (UTR) and National Insurance number. HMRC will confirm your eligibility and set your start date.

4. Authorise your software.

   Once signed up with HMRC, you need to grant your software permission to submit on your behalf. This is done via the MTD API — typically a straightforward OAuth-style authorisation step within your software. You log in to HMRC through your software and grant the necessary access.

5. Start your digital records.

   Begin entering transactions from the agreed start date. If you are joining mid-tax-year, you may need to backfill records from 6 April of the current tax year — your software will guide you on this. Going forward, enter transactions as they occur or use bank feeds to import them automatically.

6. Submit your first quarterly update.

   On the next quarterly deadline after your start date, submit your first update through your software. The software assembles the figures from your records and submits to HMRC. You receive a submission reference. In your first year (2026/27), the soft landing means no penalty points if this is late — but aim to submit on time to establish the habit.

The whole process from software sign-up to first submission authorised should take no more than a few hours spread across two or three sessions. Most software providers have onboarding documentation and customer support to help.

What HMRC changed to make voluntary sign-up easier

HMRC simplified the voluntary sign-up process ahead of the April 2026 mandatory start date, removing requirements that previously made joining more complicated for some landlords.

Earlier versions of the pilot required landlords to have already selected and set up their software before being able to register. HMRC recognised this created a chicken-and-egg problem — people wanted to register first to understand what was required before choosing software. The process has since been updated to decouple the two steps.

HMRC has also published substantially more guidance, including:

• A recognised software list with filtering by product type and landlord-specific features
• Free webinars explaining the MTD process for landlords
• Case studies from landlords who have already joined voluntarily
• A step-by-step sign-up guide on gov.uk
• An agent authorisation process for landlords who want their accountant to manage the sign-up on their behalf

The improvements reflect HMRC's recognition that April 2026 was approaching fast and that a large cohort of landlords needed to make the transition simultaneously. Making voluntary sign-up smoother was intended to spread that transition across 2024 and 2025 rather than concentrating it in Q1 2026.

What happens if you voluntarily sign up and then want to leave?

You can exit the voluntary MTD pilot as long as your income remains below the mandatory threshold. Contact HMRC to withdraw, and you revert to standard annual Self Assessment. Once your income reaches the mandatory level, you cannot exit.

Withdrawal from the voluntary pilot is relatively straightforward. You contact HMRC's MTD helpline or use your HMRC online account to request withdrawal. HMRC will confirm your exit and revert your filing obligations to standard Self Assessment.

There is no penalty for withdrawing from the voluntary pilot. HMRC recognises that circumstances change — you may have joined and discovered it is not for you, or your income may have dropped significantly, making MTD unnecessary for the foreseeable future.

However, there are practical considerations:

• If you withdraw mid-tax-year, you will need to reconcile your MTD records with your Self Assessment return for that year
• Any quarterly updates already submitted do not disappear — HMRC holds them, and they inform your Self Assessment
• Your software subscription may have an ongoing cost even if you stop using MTD features

In practice, very few landlords who join voluntarily withdraw. The process of keeping digital records and submitting quarterly updates, once established as a habit, is not significantly more burdensome than the old annual approach. The main reasons landlords have withdrawn tend to be software dissatisfaction (solved by switching to a different tool) or a significant drop in income that removes the MTD incentive entirely.

Voluntary sign-up and the below-threshold landlord

Landlords with income below £50,000 are not obligated to join MTD until April 2028 (at £30,000) or later. Voluntary sign-up is an option worth considering if your income is approaching the threshold, if you prefer quarterly admin, or if you want time to get comfortable with the system before it is compulsory.

The mandatory timeline for context:

If your income is £35,000, you have until April 2028 before MTD is mandatory. Voluntary sign-up gives you two full years to learn the system before the mandatory date — learning it in 2026 at a relaxed pace versus in April 2028 under deadline pressure.

If your income is £22,000, there is less immediate pressure. However, if you expect your portfolio to grow, or if HMRC eventually extends MTD to all taxpayers, voluntary adoption establishes good habits early. The question is whether the additional admin of quarterly updates is worth the preparedness benefit at your current income level.

Factors suggesting voluntary sign-up makes sense below the threshold:

• Income between £40,000 and £50,000 — close enough that a rent increase could cross the line
• You are planning to acquire more properties
• Your accountant is encouraging it
• You already use accounting software and the marginal effort is low
• You find the January Self Assessment process particularly stressful

Factors suggesting waiting might make sense:

• Income well below £30,000 with no growth plans
• You are not tech-comfortable and would need significant support
• Your current record-keeping is straightforward and the annual process works well for you
• You have a good accountant who manages your Self Assessment efficiently

Using LandlordOS for voluntary Making Tax Digital sign-up

LandlordOS is an HMRC-recognised MTD platform built specifically for UK landlords. It handles digital record keeping, quarterly update submission, and compliance management in one place. A free tier is available for landlords with one or two properties.

What LandlordOS offers for voluntary MTD participants:

• Property-level income and expense tracking with HMRC's standard categories
• Bank statement import (CSV upload) to populate records quickly
• Quarterly update generation and submission to HMRC
• Running tax liability estimates updated as you add transactions
• Compliance reminders for Gas Safety certificates, EICR, EPC, and other regulatory obligations
• Document storage for tenancy agreements, certificates, and receipts

The free tier covers one to two properties — sufficient for most landlords joining voluntarily who have a small portfolio. Upgraded plans are available for larger portfolios.

To get started with voluntary MTD via LandlordOS: create a free account, set up your properties, and follow the HMRC connection process in the accounts section. The onboarding takes approximately 30-60 minutes for a typical one or two property landlord.

Quarterly update calendar for voluntary MTD participants starting in 2026

If you sign up voluntarily and your start date is 6 April 2026 (the beginning of the 2026/27 tax year), your quarterly deadlines are as follows:

From the 2027/28 tax year onwards, the full penalty regime applies. This means the window to learn the system without penalty risk is 6 April 2026 to 5 May 2027 — just over 13 months. Use it well.