Making Tax Digital Starts April 2026 — What Sole Traders Need to Do Right Now
- Billy Giles
- 6 days ago
- 3 min read
Making Tax Digital for Income Tax isn't coming — it's here. From 6 April 2026 HMRC started requiring sole traders and landlords earning above £50,000 to ditch the annual Self Assessment routine and switch to quarterly digital reporting. If you're running a side hustle, a wax melt business, an eBay operation, or earning from a rental property, this could already apply to you.
I've built a free MTD checker that tells you in three questions whether you're in scope, what your start date is, and exactly what you need to do. But first, let me explain what's actually changing and why it matters.
What Is Making Tax Digital for Income Tax?
Making Tax Digital for Income Tax Self Assessment — usually shortened to MTD for ITSA — is HMRC's plan to move the entire self-employment tax system onto digital record keeping and quarterly reporting.
Instead of doing one Self Assessment tax return every January, you'll need to:
Keep digital records of your income and expenses throughout the year using approved software
Submit four quarterly updates to HMRC each tax year
Submit a final end-of-period statement at the end of the year
File your annual tax return as normal
It's more touchpoints with HMRC, but the idea is that by keeping records in real time you'll have fewer nasty surprises at year end.
Who Does MTD Apply To Right Now?
The rollout is happening in phases based on gross income:
From 6 April 2026 — sole traders and landlords with gross income over £50,000
From 6 April 2027 — gross income over £30,000
From 6 April 2028 — gross income over £20,000
Gross income means your total before expenses. If you have both self-employment income and rental income HMRC adds them together. So if you earn £30,000 from your business and £25,000 from a rental property, your combined gross is £55,000 and you're already in scope from this year.
What Are the Quarterly Deadlines?
This is where people get caught out. Under MTD you have four submission deadlines every year:
Quarter 1 (6 April to 5 July) — due 5 August
Quarter 2 (6 July to 5 October) — due 5 November
Quarter 3 (6 October to 5 January) — due 5 February
Quarter 4 (6 January to 5 April) — due 5 May
Miss a deadline and you get a penalty point. Rack up enough points and you get a £200 fine. The points system resets after 24 months of full compliance.
What Software Do You Need?
You cannot use a spreadsheet alone. You must use HMRC-recognised MTD-compatible software. The main options are:
QuickBooks — good all-rounder, works well for product-based businesses
FreeAgent — popular with freelancers and service businesses
Xero — strong if you have more complex accounts
Sage — solid option, especially if you're already using other Sage products
HMRC has a full approved list on GOV.UK. Most of these have a monthly subscription cost so factor that into your business expenses — and remember you can use our free Sole Trader Profit Calculator to work out how software costs affect your bottom line.
What Should You Do Right Now?
If you think MTD might apply to you, here's the order of play:
Check your gross income for the last tax year — add self-employment and property income together before expenses
Use the free Making Tax Digital Checker to confirm whether you're in scope and get your exact start date
Choose your MTD-compatible software and set it up before your first quarterly deadline
Start keeping digital records from the beginning of your first MTD period
Submit your first quarterly update by the relevant deadline above
If you're not in scope yet for 2026 but you're growing, keep an eye on your income. The £30,000 threshold kicks in next April and the £20,000 threshold the year after. Better to understand the system now than scramble when the deadline arrives.
The Bottom Line
MTD for Income Tax is the biggest change to self-employment tax since Self Assessment itself. It affects hundreds of thousands of sole traders and landlords and the thresholds are dropping every year. If you're running any kind of home business — craft, reselling, printing, property — this is something you need to understand now.
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