Making Tax Digital starts in April. Here's what sole traders actually need to do

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MTD for Income Tax is coming for sole traders earning over £50k from April 2026. If you're reading this in March, you've got weeks.

Here's what it actually means — no fluff.

What's changing

Instead of filing one Self Assessment return per year, you'll submit quarterly updates to HMRC through MTD-compatible software. Plus a final declaration at year end.

Four submissions a year instead of one. That's the core of it.

Who's affected first

April 2026: Sole traders + landlords earning over £50k
April 2027: Those earning over £30k
April 2028: Everyone else (threshold TBC)

If you're below £50k this year, you're not legally required yet. But the software habit is worth building now.

What you need

You need MTD-compatible accounting software. HMRC has a list. QuickBooks, Xero, FreeAgent, and a handful of free options qualify.

You also need to keep digital records of income and expenses. No more shoebox. Receipts need to be logged in the software.

The bit HMRC buries

Quarterly updates aren't tax payments — they're just summaries of your income and expenses. Your actual tax calculation still happens at year end.

But if you miss a quarterly update, you get penalty points. Four points = £200 fine. It's a new points system, same logic as driving penalties.

Practical steps right now

Check if you're above the £50k threshold
Pick your software (free options exist)
Start logging expenses digitally today — don't wait
Check HMRC's MTD sign-up is open for your UTR

I built a free MTD readiness checker that walks you through whether you're actually ready — takes 2 minutes.

Also a penalty calculator if you want to see what ignoring this costs you.

One more thing

The April deadline is April 6th — start of the new tax year. That's not much runway if you're still on spreadsheets.

If you need the full setup guide (software comparisons, what records to keep, how quarterly updates work in practice), I've put together an MTD Readiness Kit that covers it properly.

But the free tools above will get most people sorted.

What software are you using for MTD? Curious what people are actually adopting.