Making Tax Digital for Income Tax: what sole traders need to know now

Why this matters now

If you are a sole trader or landlord, Making Tax Digital for Income Tax is no longer something for the future. According to HMRC's guidance on GOV.UK, people with qualifying income above £50,000 (measured on the 2024 to 2025 tax year) should have started using it from 6 April 2026. The first quarterly update for that group was due on 7 August 2026, and the next is due on 7 November.

If you are under the £50,000 line, your turn is coming. GOV.UK sets out two further steps: a £30,000 threshold, based on your 2025 to 2026 income, with a start date of 6 April 2027, and a £20,000 threshold, based on your 2026 to 2027 income, with a start date of 6 April 2028. The sooner you understand how it works, the less of a scramble it will be.

What "qualifying income" actually means

Qualifying income is your self-employment and property income before expenses are deducted. That catches people out. Someone with £35,000 of turnover and healthy costs can still be in scope, because it is the gross figure that counts, not your profit.

HMRC checks your Self Assessment return each year to see whether you are over the relevant threshold. Some people are exempt, for example if they are digitally excluded, and exempt individuals carry on reporting through Self Assessment as before.

What changes in practice

The big shift is that you keep your records digitally and report more often. GOV.UK says your software needs to do several things:

• Create, store and correct digital records of your self-employment and property income and expenses.
• Send your quarterly updates to HMRC.
• Let you add any other income sources and submit your tax return by 31 January the following year.

Quarterly updates are summaries, not a pile of paperwork. HMRC's guidance says they contain totals for each income and expense category, and that HMRC will not receive details of individual digital records such as a receipt or invoice.

The quarterly dates

Most people use the standard update periods. These are the deadlines listed by HMRC:

• 6 April to 5 July: send by 7 August.
• 6 April to 5 October: send by 7 November.
• 6 April to 5 January: send by 7 February.
• 6 April to 5 April: send by 7 May in the following tax year.

HMRC also offers calendar update periods (for example 1 April to 30 June) that use the same deadlines, which some people find easier to line up with their own bookkeeping.

A breathing space in the first year

HMRC says it will not apply penalty points for late quarterly updates during the 2026 to 2027 tax year. That is helpful, but it is not a reason to ignore the updates. The same guidance says you must still send your quarterly updates before you can submit your tax return.

Signing up, and what HMRC is doing in September

To sign up you need to be registered for Self Assessment and to have submitted a tax return in the last two years. You will need details such as your business name, address and the nature of your trade, and you may need to prove your identity.

You do not have to wait to be told. However, GOV.UK states that from September 2026 HMRC will start to sign up anyone who needs to use Making Tax Digital for Income Tax for 2026 to 2027 and has not signed themselves up. It also warns that HMRC will use only the information it already holds, which may not reflect recent changes in your circumstances. If your business has changed, it is worth signing up yourself so the details are right.

Choosing software

GOV.UK says free products are available for people with simple tax affairs, though they may have limits such as a cap on transactions. If you would rather keep your spreadsheets, bridging software can connect to them and send your submissions to HMRC, so you do not have to abandon a system that already works for you.

When you compare options, it helps to ask a few plain questions:

• Does it appear on the GOV.UK list of compatible software?
• Can it read the records you already keep, or will you need to start again?
• Does it connect to your bank feed so income and expenses are captured without retyping?
• What happens if you grow past a free plan's limits?

Making it less of a chore

The real saving comes from making record keeping a by-product of how you already work. If invoices, card payments and expenses flow into one place automatically, a quarterly update becomes a five minute check rather than an evening of admin. Turtle helps small businesses join up their tools in this way through process automation, but the first step is simply to choose software and start using it well before your deadline.

A simple plan

• Check your 2024 to 2025, 2025 to 2026 and 2026 to 2027 gross income against the thresholds to find your start date.
• Choose compatible software, or bridging software if you prefer spreadsheets.
• Sign up yourself rather than waiting for HMRC to do it from the information it holds.
• Diarise 7 February and 7 May, or the dates that apply to you.
• Speak to your accountant if you are unsure. This article is general information, not tax advice.