For sole traders
Making Tax Digital: what you actually need to do
The short version: check your turnover before you buy anything. If Making Tax Digital applies, you need current digital records, four updates during the year and a tax return sent through compatible software. You do not automatically need expensive accounting software.
The next start date
If your combined self-employment and property income was more than £30,000 in 2025 to 2026, you need to use Making Tax Digital from 6 April 2027. The test is income before expenses, not profit.
First: work out whether this is your problem
Add up the turnover from every sole trader business you run and any property income you receive. Use the amount before expenses. Do not add salary, dividends, pensions or your share of a partnership's profit.
That total is your qualifying income. The wording matters: more than £30,000 means £30,000 exactly is not in the April 2027 band.
| Qualifying income | Based on tax year | You must use MTD from |
|---|---|---|
| More than £50,000 | 2024 to 2025 | 6 April 2026 |
| More than £30,000 | 2025 to 2026 | 6 April 2027 |
| More than £20,000 | 2026 to 2027 | 6 April 2028 |
If you are unsure, run the checker. It shows the reasoning rather than handing you a yes or no with no explanation.
What changes for a sole trader
This is not four full tax returns a year. It is still more admin than doing the books once in January.
- Keep digital records. Record the amount, date and category of business income and expenses in compatible software, or in software that is digitally linked to it.
- Send quarterly updates. Your software totals those records and sends a summary to HMRC every three months. If you run two sole trader businesses, each needs separate records and separate updates.
- Finish the year. You still submit a tax return and pay what is due by 31 January. The compatible software becomes the route into HMRC.
The five things I would do now
- Find the right Self Assessment return. The table above tells you which tax year decides your start date.
- Confirm your qualifying income. Use turnover before expenses. Guessing from profit is the easy way to get this wrong.
- Ask your accountant what they are doing. If they keep your records or submit for you, do this before buying a subscription they may not use.
- Check your current software. It may already support MTD for Income Tax. If it does not, decide whether to switch or add bridging software.
- Start keeping records as you go. The biggest change is not the button that sends an update. It is no longer leaving a year's bookkeeping until the end.
What software should you buy?
Possibly none. HMRC says free software is available for some people with straightforward tax affairs. A spreadsheet can also remain part of the process if compatible bridging software connects it digitally to HMRC.
Pay for software when it saves you work you actually have: invoicing, bank feeds, expense matching, VAT, payroll or giving your accountant access. Do not pay £20 a month merely because a software company has put "MTD ready" on a landing page.
Check three things before paying
- It appears in HMRC's compatible-software service for your type of income.
- It sends the tax return as well as quarterly updates, or you know what will.
- Your accountant is willing to work with it.
Compare the software and its real cost
The comparison currently uses ordinary vendor links. If an affiliate relationship is added, it will be disclosed before any link that can pay us.
Do you need an accountant?
Making Tax Digital does not create a rule that says you must hire one. Straightforward books can remain straightforward. An accountant becomes more useful when you have several businesses, property income, VAT, employees, foreign income or uncertainty over what belongs on the return.
Software records and sends what you give it. It does not make a complicated tax position simple by itself.
Common questions
Does Making Tax Digital apply to every sole trader?
No. It applies when you are registered for Self Assessment, receive self-employment or property income, and your qualifying income is more than the threshold for the relevant tax year. The announced thresholds are more than £50,000 for April 2026, more than £30,000 for April 2027 and more than £20,000 for April 2028.
Is the Making Tax Digital threshold based on profit or turnover?
Turnover. Qualifying income is your gross income from self-employment and property before expenses. Salary, dividends and pension income do not count towards it.
What must a sole trader do under Making Tax Digital?
Keep digital records of business income and expenses, use compatible software, send a summary update for each sole trader business every three months, and submit the tax return through compatible software after the tax year.
Can a sole trader keep using a spreadsheet?
Yes. A spreadsheet can be part of your digital records, but it must be digitally linked to compatible bridging software for submissions to HMRC. Manual copying between products does not meet the digital-link requirement.
Do I need to buy MTD software now?
Not necessarily. First check whether you are in scope, whether your current software will support MTD for Income Tax, and whether your accountant already has a plan. HMRC says free software is available for some people with straightforward tax affairs.
Where this comes from
Everything on this page traces to GOV.UK. Last checked 2026-08-11. If GOV.UK says something different, GOV.UK is right and we are wrong — please tell us.
- Find out if and when you need to use Making Tax Digital for Income Tax
- Work out your qualifying income for Making Tax Digital for Income Tax
- Use Making Tax Digital for Income Tax
- Use Making Tax Digital for Income Tax: send quarterly updates
- Choose the right software for Making Tax Digital for Income Tax
Checked against GOV.UK on 2026-08-24. See every source we used.