UK guide · 2026

Making Tax Digital for Income Tax: sole trader checklist

Making Tax Digital for Income Tax (MTD IT) began in April 2026 for UK sole traders and landlords with qualifying income over £50,000. It replaces the single annual Self Assessment return with digital record-keeping and quarterly updates. If that includes you — or will when thresholds drop — this page explains what actually changes and what to sort out first, without assuming you need to buy anything today.

Who is affected, and when

• From April 2026: sole traders and landlords with qualifying income over £50,000 must keep digital records and send quarterly updates.
• From April 2027: the threshold is planned to drop to £30,000 of qualifying income.
• From April 2028: a further drop to £20,000 is planned.
• Qualifying income is your combined gross income from self-employment and property — before expenses, not profit. Check your own position on GOV.UK.

What actually changes

The tax you owe is calculated the same way. What changes is how records are kept and how often HMRC hears from you.

• Digital records replace paper books and ad-hoc notes — records must be kept in MTD-compatible software (or spreadsheets connected through bridging software).
• Four quarterly updates per year go to HMRC showing income and expenses, instead of one annual Self Assessment return.
• A final declaration is still due by 31 January to confirm the year and add other income like savings or dividends.
• HMRC's own online filing route and paper forms stop being an option for those inside MTD — compatible software is required.
• Registration is not automatic. HMRC may write to you, but you (or your accountant) must sign up and set up software yourself.

Can you keep your spreadsheet?

Sometimes, yes. MTD requires digital records and digital filing — it does not force one specific tool. Bridging software can connect a well-kept spreadsheet to HMRC. But if your spreadsheet is already straining (many income streams, manual bank copy-paste, error-prone formulas), quarterly deadlines multiply that pain by four. Our comparison guide covers when each route makes sense.

→ Spreadsheet vs accounting software for UK small businesses

Get-ready checklist

1. Step 1

   Check whether your qualifying income crosses the threshold — use HMRC's eligibility checker on GOV.UK rather than guessing.

2. Step 2

   Decide your record-keeping route: MTD-compatible accounting software, or keep your spreadsheet and add bridging software that files from it.

3. Step 3

   If you are choosing software, confirm it appears on HMRC's list of MTD for Income Tax compatible software before paying for anything.

4. Step 4

   Separate business and personal transactions now — a dedicated business bank account makes quarterly categorisation far quicker.

5. Step 5

   Note the quarterly deadlines in your calendar for the whole year, so the first one does not arrive as a surprise.

6. Step 6

   Talk to your accountant (if you have one) about who submits the quarterly updates — you, them, or shared access in the software.

Source for rules and deadlines: GOV.UK — search "Making Tax Digital for Income Tax" for HMRC's eligibility checker and compatible software list.