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MTD for Sole Traders

Whether you need to join Making Tax Digital for Income Tax, when, and exactly what changes for your record-keeping and filing.

Short answer: if your gross self-employment income (before expenses) is over £50,000, you must use Making Tax Digital for Income Tax from 6 April 2026. That threshold drops to £30,000 from April 2027 and £20,000 from April 2028, pulling in more sole traders each year.

What MTD actually changes for you

Instead of filing one Self Assessment return a year, MTD for Income Tax requires you to:

Keep digital records of your business income and expenses using compatible software (a spreadsheet with the right bridging software can count)
Send HMRC a quarterly update every three months, summarising income and expenses so far
Submit a Final Declaration at the end of the tax year (replacing the old Self Assessment return), confirming the figures and any other income

The quarterly updates are a running total, not a full tax return — you don't calculate tax owed each quarter, just report income and expenses. Tax is still worked out and paid via the Final Declaration and Payments on Account, the same as now.

Who's affected and when

Your qualifying income (from the tax year two years prior)	MTD becomes mandatory from
Over £50,000	6 April 2026
Over £30,000	6 April 2027
Over £20,000	6 April 2028

Qualifying income is gross turnover from self-employment plus gross rental income combined — not profit after expenses. Check exactly where you stand with the MTD Income Threshold Checker.

Worked example

Priya is a self-employed graphic designer. Her 2024/25 tax return (filed by 31 January 2026) showed gross turnover of £58,000. Because that's over £50,000, she must join MTD for Income Tax from 6 April 2026 — her first quarterly update covers 6 April–5 July 2026, due by 7 August 2026.

2026/27 “soft landing”

HMRC has confirmed no penalty points will be issued for missed quarterly update deadlines during the first year for taxpayers newly required to join in April 2026 — but this doesn't cover the Final Declaration, which is still due by the usual 31 January deadline. Use it to get comfortable with the new rhythm without penalty risk, but don't treat quarterly updates as optional.

Getting ready

Start tracking income and expenses digitally now, even before you're mandated — our free Expense Tracker keeps a running total you can export
Check your quarterly update deadlines against your own calendar with the MTD Quarterly Deadlines page
Decide between a spreadsheet-plus-bridging-software setup or dedicated accounting software — see Spreadsheet vs Software for MTD

MTD Income Threshold CheckerSee if and when you're affected MTD Quarterly DeadlinesThe exact dates for every quarter Sole Trader Tax CalculatorWork out your Income Tax and NICs Expense TrackerStart digital record-keeping today, free

Sources: GOV.UK — Making Tax Digital for Income Tax. This page is general guidance, not personalised tax advice.

Frequently asked questions

Do I need accounting software for MTD?▾

You need software that's HMRC-recognised as MTD-compatible — this can be dedicated accounting software or a spreadsheet combined with bridging software that submits the figures to HMRC.

What counts towards the £50,000 threshold?▾

Gross turnover from self-employment plus gross rental income, combined across all your businesses — before deducting any expenses or allowances.

Will I still file a Self Assessment return?▾

No — MTD replaces the annual Self Assessment return with quarterly updates plus a Final Declaration at year end, though the underlying obligation to report and pay tax remains the same.

What if my income drops below the threshold after I've joined?▾

You generally stay in MTD once mandated, though HMRC has confirmed some circumstances allow you to be taken out if income falls and stays low — check current GOV.UK guidance for your specific situation.