Making Tax Digital for sole traders and the self-employed
If you are self-employed, Making Tax Digital for Income Tax changes how you keep records and report to HMRC — not how much tax you pay, nor when you pay it. Here is what applies to you, from when, and what to do.
When it starts for you
| Qualifying income over | In your tax return for | You use MTD from |
|---|---|---|
| £50,000 | 2024 to 2025 | 6 April 2026 |
| £30,000 | 2025 to 2026 | 6 April 2027 |
| £20,000 | 2026 to 2027 | 6 April 2028 |
Qualifying income is your turnover, not your profit. It is your total self-employment and property income before expenses. HMRC's own example: £27,000 from self-employment plus £25,000 of rent gives £52,000. A salary, dividends, pensions and your share of partnership profits do not count.
HMRC checks your tax return each year and writes to you if you are over the threshold. From September 2026, HMRC said it would start signing up people who should use MTD from April 2026 and had not signed up themselves. At £20,000 or less, you are exempt.
Not sure which year applies?
Enter your figures and get your start date and every deadline for your calendar.
What changes, in four steps
- Use HMRC-recognised software. One product that does everything, or your spreadsheet plus bridging software.
- Keep digital records of your business income and expenses: the amount, the date and the category — the same categories as Self Assessment. Keep your receipts and invoices as you do now.
- Send a quarterly update every three months. It is a summary of your totals, not a tax return. Each update covers the tax year so far, so you can correct earlier figures without resending.
- Submit your tax return through your software by 31 January, after adding any other income (salary, dividends, savings…). You pay your tax as you do now, by 31 January — MTD does not change how or when you pay.
Quarterly update deadlines
| Standard period (tax year) | Calendar period | Send by |
|---|---|---|
| 6 April to 5 July | 1 April to 30 June | 7 August |
| 6 April to 5 October | 1 April to 30 September | 7 November |
| 6 April to 5 January | 1 April to 31 December | 7 February |
| 6 April to 5 April | 1 April to 31 March | 7 May |
Three things that matter for sole traders
Your accounting year
If your accounts run from 1 April to 31 March, choose calendar update periods in your software before your first update. You cannot change it once you have sent one.
Under £90,000? Simpler records
If your turnover is below the VAT threshold, HMRC lets you simply record whether each transaction is income or an expense. Once turnover reaches £90,000, you categorise in full.
Your spreadsheet can stay
Bridging software sends your spreadsheet totals to HMRC. With more than one product, records must be digitally linked: no copying and pasting once a record has been sent.
Penalties, without the panic
For the 2026 to 2027 tax year, HMRC will not give penalty points for late quarterly updates. Late tax returns still get points. From 2027 to 2028, each late update earns a point, and at 4 points you get a £200 penalty.
Software that works for sole traders
90 HMRC-recognised products handle self-employment income and can send your final tax return; 24 of them have a free version. The most searched:
| Software | Type | Final tax return | Sole trader | UK property | Foreign property | |
|---|---|---|---|---|---|---|
| Records | Yes | Ready now | Ready now | Ready now | Website | |
| Records | Yes | Ready now | Ready now | Not included | Website | |
| Records | Yes | Ready now | Ready now | Not included | Website | |
| Records | Yes | Ready now | Ready now | Not included | Website | |
| Records | Yes | Ready now | Ready now | Not included | Website | |
| Bridging | Yes | Ready now | Ready now | Ready now | Website | |
| Records | Yes | Ready now | Ready now | Ready now | Website | |
| Records + Bridging | Yes | Ready now | Ready now | Not included | Website | |
| Records | Yes | Ready now | Ready now | Ready now | Website | |
| Records + Bridging | Yes | Ready now | Ready now | Ready now | Website | |
| Records | Yes | Ready now | Ready now | Not included | Website | |
| Records | Yes | Ready now | Not included | Not included | Website |
Filter all 158 products · Free options only
Find the product that fits your whole tax return
Salary, dividends, CIS or capital gains as well? Our check tells you which products handle all of it today.
Sources (checked 9 October 2026): GOV.UK — find out if and when you need to use MTD for Income Tax, work out your qualifying income, create digital records, send quarterly updates, submit your tax return, Making Tax Digital for Income Tax, exemptions. Software data: HMRC software finder (Open Government Licence v3.0). This is guidance, not tax advice.