When does Making Tax Digital (MTD) start for sole traders? This has been a common question in the lead-up to April, when MTD will begin for sole traders and landlords with a qualifying income exceeding £50,000. However, despite a date being in the pipeline for a while (since 2024, to be exact), preparation is required to ensure a smooth transition to digital recording.
To learn more about when MTD starts, who it will affect, and how to prepare, continue reading.
What is Making Tax Digital?
MTD is the process of moving tax reporting to digital systems instead of using paper, to modernise and improve the UK tax system.
Taxpayers, including sole traders and landlords who are now affected by MTD, must keep their records in a digital format using HMRC-compatible software. They must send regular updates before a final declaration each year, which helps to keep their tax records up to date, accurate, and sent on time.
Who is Affected?
Since April 2019, MTD for VAT has affected VAT-registered businesses:
- Sole traders
- Limited companies
- Partnerships
As of April 2026, MTD for Income Tax will affect all individuals who file a Self Assessment return with a qualifying income above the set £50,000 threshold:
- Sole traders
- Landlords
- Those who are both employed and self-employed
- Those who are both employed and landlords
Making Tax Digital Thresholds and Dates
The MTD thresholds and dates for self-employed individuals and landlords paying Income Tax are as follows:
| Tax Return Year | Qualifying Income from Self-Employment and/or Property | MTD Start Date |
|---|---|---|
| 2024/25 | More than £50,000 | 6 April 2026 |
| 2025/26 | More than £30,000 | 6 April 2027 |
| 2026/27 | More than £20,000 | 6 April 2028 |
HMRC will assess the gross income on your Self Assessment tax return for the earlier tax year to decide whether or not you must start MTD. However, you can sign up voluntarily for MTD to become familiar with the system and practice the software early.
Example
- You are a sole trader with a £55,000 gross income on your 2024/25 tax return
- This is more than the £50,000 qualifying income from self-employment and/or property, so you must start using MTD from April 2026
- Even if your gross income is lower in later years, you must still use MTD once you have started.
- However, if you completely stop your business before April 2026 and have no self-employment or rental income by that date, you will not need to start using MTD at all.
Making Tax Digital for Sole Traders: How to Prepare
If you’re a sole trader in the UK with more than £50,000 qualifying income for 2024/25, follow our helpful steps to prepare for MTD.
Step 1 – Check Eligibility
You must check if you’re eligible for MTD based on previous Self Assessment data. If your qualifying income is over £50,000 for the 2024/25 tax year, MTD applies to you. In most cases, HMRC will send a letter to those who are eligible, but they may not send one to everyone. This is why it’s important to personally work out your qualifying income and verify your eligibility to avoid fines or penalties.
Step 2 – Choose Software
Select compatible software to manage digital records, quarterly updates, and year-end declarations to ensure you’re prepared for enrolment before signing up. At this stage, we recommend working with an accountant who can help advise on the best MTD software, ensure accurate digital records, handle submissions, and provide expert tax advice.
Step 3 – Sign Up
Sign up for MTD, or your accountant can do so on your behalf. You must sign up if the rules from April 2026 apply to your circumstances, or you can do so voluntarily if they don’t. Once the sign-up process is complete, you will receive an on-screen confirmation message about using MTD for Income Tax, which you can then agree to.
Step 4 – Maintain Tax Records
After confirmation, either you or your accountant must authorise your software and continue to maintain and manage digital records of income and expenses from the start date. Late or incorrect updates may trigger HMRC fines and penalties.
Deadlines and Penalties
The MTD deadlines for Income Tax from April 2026 are:
| Date | Action |
|---|---|
| 31 January 2026 | Submit your 2024-25 Self Assessment tax return as usual |
| 6 April 2026 | MTD starts for sole traders and landlords with a qualifying income exceeding £50,000 |
| 7 August 2026 | First quarterly update |
| 7 November 2026 | Second quarterly update |
| 31 January 2027 | Submit your 2025-26 Self Assessment tax return as usual (this is the final return to be filed as normal) |
| 7 February 2027 | Third quarterly update |
| 7 May 2027 | Fourth quarterly update |
| 6 April 2027 | MTD starts for sole traders and landlords with a qualifying income exceeding £30,000 |
Helping You Prepare for Making Tax Digital to Start
At LJS Accounting Services, we have a team of specialist MTD accountants to help you smoothly transition to digital filing as a sole trader or landlord with a qualifying income of £50,000 or more. While we continue to support VAT-registered businesses using MTD, we also assist with MTD for Income Tax, including preparation and ongoing management to ensure compliance.
Please contact us today to find out how we can help sole traders comply with MTD rules.
FAQs
Is tax going digital for a limited company?
Do all self-employed have to go digital?
Can I avoid Making Tax Digital for Income Tax?
Do I need an accountant when taxes go digital?
No, you don’t legally need an accountant under Making Tax Digital, but we highly recommend using one. Dedicated MTD accountants help save time, ensure accuracy and compliance, and avoid costly errors with HMRC. Most individuals using MTD will likely seek assistance from a reliable accountant.
Can limited companies benefit from hiring an accountant?
Yes, limited companies can significantly benefit from hiring an accountant. Working with an accountant is not essential but highly advised for limited companies to ensure Corporation Tax, VAT returns, and Companies House filings are completed correctly. Our accountants save time by managing your MTD submissions and offer reliable advice and guidance.
