Making Tax Digital for sole traders: what changes and when
From April 2026 HMRC wants self-employed people to keep digital records and send updates every three months. Who it applies to, the 2026, 2027 and 2028 start dates, what you have to send and what happens if you are late.
The short version
Making Tax Digital for Income Tax (MTD) changes how you tell HMRC about your self-employed income, not how much tax you pay. Once it applies to you:
- you keep your records of income and expenses digitally, in software or a spreadsheet;
- you send HMRC an update every three months, from that software;
- you still send a tax return once a year, by 31 January, also from software.
It started on 6 April 2026 for the people with the highest income, and it reaches more sole traders every April until 2028.
When it starts for you
It depends on your qualifying income in an earlier tax year:
| Your qualifying income | In the tax year | You start MTD on |
|---|---|---|
| Over £50,000 | 2024-25 | 6 April 2026 |
| Over £30,000 | 2025-26 | 6 April 2027 |
| Over £20,000 | 2026-27 | 6 April 2028 |
Qualifying income is your turnover before expenses from self-employment, plus any UK rental income, added together. A rider who took £34,000 in fares and spent £12,000 on the van still has £34,000 of qualifying income. Wages from a PAYE job, pensions and dividends do not count.
If your qualifying income is £20,000 or less, you are automatically exempt. Our guide Do I need Making Tax Digital? walks through more examples.
What you have to do
1. Keep digital records. Every sale and every business expense goes into software, or into a spreadsheet that connects to software (HMRC calls this "bridging software"). Paper notebooks and shoeboxes of receipts are not enough on their own any more.
2. Send a quarterly update every three months. Each update is a running total from 6 April to the end of the quarter, so you are never adding up a quarter on its own:
| Update covers | Send it by |
|---|---|
| 6 April to 5 July | 7 August |
| 6 April to 5 October | 7 November |
| 6 April to 5 January | 7 February |
| 6 April to 5 April | 7 May |
If your business accounts run from 1 April to 31 March, you can use calendar quarters instead; the deadlines stay the same.
3. Send your tax return and pay by 31 January after the end of the tax year, as now. The difference is that the return is sent from your MTD software.
What happens if you are late
- 2026-27 (the first year): HMRC has said there are no penalties for late quarterly updates. You still need to send them before you can send your tax return, and the usual penalty points for a late tax return still apply.
- From 2027-28: each missed deadline gives you a penalty point. At 4 points you pay a £200 penalty, and another £200 every time you miss a deadline after that. Points are removed 24 months after the deadline you missed, as long as you are below the threshold.
- Paying late still costs penalties and interest, as it does today.
Who does not have to use it
Some people are exempt automatically, for example if your qualifying income is £20,000 or less, or you did not have a National Insurance number before the tax year started. Others can apply, mainly if they are "digitally excluded": it is not reasonable to use software because of age, health, disability, religion, or no internet where you live or work. Never having used accounting software, having few records, or the cost are not reasons on their own.
How SoleLog fits in
SoleLog is a simple app for sole traders that keeps your records on your phone, tells you when MTD starts for you, shows every SA103 box for each quarter and prepares the file that My Tax Digital sends to HMRC. Read how to do Making Tax Digital without expensive software.
Sources
This article explains HMRC’s published rules in plain words; it is not tax advice. Rules change: check the GOV.UK pages linked above, and ask an accountant if your situation is unusual.