Making Tax Digital for Income Tax: what sole traders actually need to do
Making Tax Digital sounds like a new tax. It isn’t. It’s a change to how certain sole traders and landlords keep records and report income.
If it applies to you, the practical job is to keep digital records, send updates through compatible software and complete your end-of-year tax return. Quarterly updates don’t replace that final return.
When do I need to start Making Tax Digital for Income Tax?
HMRC’s timetable is:
Qualifying income in this tax year | Required start date, unless exempt |
|---|---|
More than £50,000 in 2024/25 | 6 April 2026 |
More than £30,000 in 2025/26 | 6 April 2027 |
More than £20,000 in 2026/27 | 6 April 2028 |
Qualifying income broadly means your gross income from self-employment and property, added together where you have multiple qualifying sources. Gross means it’s measured before expenses. Your PAYE salary doesn’t count towards this test. HMRC: who must use MTD and when.
So someone with £55,000 qualifying turnover and £20,000 expenses can be in scope (meaning the rules apply to them), even though their profit is £35,000. The threshold is “more than”, not “at least”.
What changes during the year?
You’ll need compatible software (software that can connect to HMRC) to keep the required digital records and send quarterly summaries. You normally send a separate update for each sole-trader business. Property income is reported under the relevant property-business rules. Can a spreadsheet do the job? It can be part of your setup, but it needs a suitable compatible connection to HMRC. A spreadsheet on its own can’t send anything to HMRC. See HMRC’s software guidance and quarterly update requirements.
The quarterly deadlines are 7 August, 7 November, 7 February and 7 May. For 2026/27, that means 7 August 2026 through to 7 May 2027. The tax return and any balancing tax payment (the rest of the tax you owe for the year) are due by 31 January after the tax year ends: 31 January 2028 for 2026/27. HMRC: deadlines and penalties.
Sending quarterly updates doesn’t, on its own, mean four new quarterly tax payments. Keep budgeting for the usual Self Assessment payment dates, including payments on account where they apply. HMRC: payments on account. Our Autumn Budget 2026 guide for the self-employed looks at whether the way you pay could change.
What if you’ve missed the first update?
At the time of this article’s September 2026 review, the first 2026/27 update deadline had passed. HMRC won’t charge penalties for missed quarterly update deadlines for 2026/27. You still need digital records and the quarterly updates before you complete the tax return.
That concession only applies to 2026/27. It isn’t a blanket promise that everyone gets a penalty-free first year. It also doesn’t remove late payment interest or all other penalties. HMRC: 2026/27 concession.
A manageable way to get ready
Check your qualifying income for the relevant tax year.
Use HMRC’s eligibility checker, including the questions about exemptions.
Choose compatible software that covers your income sources, or agree with your accountant who does what.
Sign up and authorise the software as required.
Set a regular time to check and match up (reconcile) your income and costs, rather than leaving the whole quarter until the deadline.
Some people qualify for an exemption, including certain people who are digitally excluded. Don’t assume you qualify just because software feels unfamiliar. Use the official process. And if you haven’t had a letter from HMRC, it’s still your responsibility to check where you stand. HMRC: eligibility, exemptions and next steps.
