Making Tax Digital for Income Tax: what sole traders need to do
Making Tax Digital for Income Tax is live from April 2026 for self-employed people and landlords over £50,000 gross. Here's who's caught, what changes, and when.
Quick answer
From 6 April 2026, self-employed people and landlords with gross income over £50,000 must keep digital records and send HMRC four quarterly updates instead of one annual Self Assessment return. The first quarterly deadline is 7 August 2026. The threshold drops to £30,000 from April 2027 and £20,000 from April 2028. Crucially it's measured on gross income — turnover before any expenses.
MTD for Income Tax — phased thresholds
| From | Applies if gross income exceeds |
|---|---|
| 6 April 2026 | £50,000 |
| April 2027 | £30,000 |
| April 2028 | £20,000 |
Step-by-step
- 1
Work out whether you're caught — on gross income
This is where most people get it wrong. The threshold is measured on gross income, meaning all business and property income before any deductions or expenses. A sole trader turning over £55,000 with £20,000 of costs is inside the threshold even though profit is well below it. If you're self-employed and also let property, HMRC adds the gross figures together.
- 2
Understand what actually changes
Two things: you must keep digital records rather than a spreadsheet-and-shoebox arrangement, and you send four quarterly updates to HMRC across the year instead of one Self Assessment return. The quarterly updates are summaries, not four full tax returns — but they are deadlines, and the first is 7 August 2026.
- 3
Get compatible software before the first deadline
Quarterly updates go to HMRC through MTD-compatible software. If you're currently doing your books in a spreadsheet, this is the change that needs planning time — not the reporting itself. Sort it well ahead of August rather than in the week before.
- 4
Check the following years, because the threshold drops
£50,000 from April 2026, £30,000 from April 2027, and £20,000 from April 2028 under current plans. If you're under the threshold today, work out which year catches you and prepare in advance rather than being surprised by it. Plans can change — check HMRC's current guidance rather than relying on any single article.
- 5
Put your prices and terms in order at the same time
If you're reorganising your bookkeeping anyway, it's the natural moment to tidy the rest of the business admin: published prices, written terms, a proper invoice process, and a website that doesn't send prospective clients to a personal email address. Digital records are much easier to keep when the income is arriving through a clean process.
Tips & best practices
- ▸Gross income, not profit — this is the single most commonly misunderstood part of the rules.
- ▸Self-employment and property income are combined when testing the threshold.
- ▸The first quarterly deadline is 7 August 2026; the software needs to be working before then.
- ▸Check HMRC's own guidance for your specific situation — thresholds and timing have moved before.
Common questions
When does Making Tax Digital for Income Tax start?
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6 April 2026 for self-employed people and landlords with gross income above £50,000. The threshold falls to £30,000 from April 2027 and £20,000 from April 2028 under current plans.
Does Making Tax Digital apply to me?
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If your gross income from self-employment and/or property exceeds £50,000, then from 6 April 2026 yes. Gross means turnover before expenses, not profit, and self-employment and rental income are added together when testing the threshold.
What do I actually have to do differently?
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Keep digital records, and send HMRC four quarterly updates through MTD-compatible software instead of a single annual Self Assessment return. The quarterly updates are summaries rather than four full returns, but each is a real deadline.
When is the first quarterly deadline?
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7 August 2026 for those brought in on 6 April 2026. Have compatible software in place and working well before that date, particularly if you currently keep records in a spreadsheet.
What counts towards the £50,000 threshold?
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All business and property income before any deductions or expenses. If you're a sole trader who also rents out property, HMRC adds your gross self-employment turnover to your gross rental income when assessing whether you're caught.