What you should know - Making Tax Digital (MTD)
If you're a sole trader with a qualifying income of more than £50,000 a year, you'll need to sign up for Making Tax Digital (MTD) from 6 April 2026. Under the new rules, instead of sending one tax return each year, you'll need to submit quarterly tax updates to HMRC and a year-end final declaration. You'll also be required to use MTD-compatible software to keep digital records and make your submissions. Certain business account providers, like Tide and others, offer free Making Tax Digital software.
The government has introduced MTD in an effort to streamline the tax process, reduce the risk of errors and give businesses a clearer idea of how much tax they will need to pay, giving them longer to prepare and save.
MTD is being rolled out in phases, meaning sole traders with a qualifying income of more than £30,000 will be affected from April 2027 and those with an income of more than £20,000 must sign up from April 2028. We have written a detailed guide if you want to have more information on the topic.
