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Tax and admin7 October 2026·5 min read

Making Tax Digital for sole traders, explained

Making Tax Digital for sole traders is here. Who has to join, when the £30,000 and £20,000 limits start, and the four quarterly dates you need to know.

A cartoon tortoise carrying a stack of ledger books on its shell, walking from an old filing cabinet toward a glowing smartphone.

From 6 April 2026, some UK sole traders stopped doing one tax return a year. They now send HMRC an update every three months. If you earn less than £50,000 you're probably thinking this isn't about you. For about 970,000 more people, that changes in the next two years.

This is Making Tax Digital for Income Tax. Here's what it means for sole traders, in plain terms.

What is Making Tax Digital for sole traders?

Making Tax Digital for Income Tax is HMRC's new way to do Self Assessment. You keep your records digitally, in software that works with HMRC. You send a short update four times a year. Then you finish with a final declaration, which replaces the old tax return.

It applies to sole traders and landlords. If you're a limited company, it's a different system.

Who has to use it, and when?

It's being phased in by income. GOV.UK says you must use it from 6 April 2026 if your total annual income from self-employment and property is over £50,000. You also need to be registered for Self Assessment and have sent a tax return in the last two years. HMRC checks this against your 2024 to 2025 return.

The limit then drops in two steps. According to a GOV.UK policy paper published on 24 March 2026:

  • £50,000 from April 2026
  • £30,000 from April 2027
  • £20,000 from April 2028

The same paper says the move to £20,000 will bring in approximately 970,000 additional people, those with income between £20,000 and £30,000.

The figure that counts is your income from self-employment and property, not your profit. Say you're a personal trainer who takes £32,000 over a year and spends £9,000 on rent and kit. Your profit is £23,000, but the income figure is £32,000. That puts you in from April 2027, not 2028. This is an example, and your own case may differ, so check with HMRC or an accountant.

If you're in scope, HMRC will tell you through your online account or by post. You can also ask for an exemption if it isn't reasonable for you to use software, for example because of digital exclusion.

What do you actually send?

Each quarterly update contains totals for each income and expense category. GOV.UK is clear that HMRC does not receive individual records, such as a receipt or an invoice. Each update covers the period from the start of the tax year to the end of that quarter. So if you got something wrong in the last one, the next update fixes it.

You have two choices for your quarters. The standard ones follow the tax year. Calendar quarters follow the calendar month ends.

The quarterly deadlines

These are the dates from GOV.UK's guidance, last updated on 7 September 2026.

| Standard quarter | Calendar quarter | 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 |

You can send an update any time after the quarter ends. If you expect no more transactions, you can send it up to 10 days before the period ends.

Then comes the final declaration. GOV.UK says you must submit it by 31 January after the end of the tax year. That's the same deadline you know from Self Assessment. It's where you add anything else, such as other income, and confirm your tax position for the year.

What about penalties?

Not many for now. GOV.UK says you'll not get penalty points for missing a quarterly update deadline in the 2026 to 2027 tax year. Penalty points still apply if you miss the tax return deadline, and you still have to pay your tax on time.

What should you do now?

If your income is over £30,000, you've got until April 2027. That's roughly six months. It's enough time to pick software, but not enough to leave it.

Here's what I'd do:

  1. Work out your income figure for this year. Add up what you invoiced, not what's left after costs.
  2. Stop keeping records in a shoebox, a notebook or a single messy spreadsheet. HMRC-compatible software needs digital records.
  3. Put the four dates in your calendar. Quarter deadlines are short, and 7 August is easy to miss in the summer.
  4. Set money aside for tax each time you get paid, so a quarterly update never comes with a surprise.

That last point is where most small businesses struggle. Being paid late makes it worse, because you can't plan tax on money you don't have yet. We wrote about what late payments cost self-employed people, and the numbers are worth a look. If your customers pay slowly, our guide to chasing an unpaid invoice can help.

My take

Four updates a year is more admin, and I won't pretend otherwise. But the totals are simple. If your records are tidy, each update takes minutes. If they aren't, quarterly deadlines will force you to tidy them, which isn't the worst thing.

At Vcents, we make sure the payment side is clean. You ask for money in WhatsApp, the customer pays from their bank app, and there's a record of who paid what and when. That won't file your return for you. It just means one less thing to piece together on 7 November.

Sources

Vcents turns the thread into a payment.

Ask for money in plain English. Your customer taps once, authorises in their own bank, and the receipt lands back in the chat.

How receiving payments works