MTD for Income Tax is coming. This guide explains the timeline, what changes, which software qualifies, and how to get ready without stress.
April 2026 · 8 min read · By Self Employed Tools
Making Tax Digital (MTD) is HMRC's programme to move the UK tax system online. The goal: eliminate paper tax returns, reduce errors, and give both taxpayers and HMRC a more accurate, real-time picture of tax liabilities.
MTD for VAT launched in 2019 and is now mandatory for all VAT-registered businesses. MTD for Income Tax Self Assessment (MTD ITSA) is the next phase, and it affects sole traders and landlords.
| Date | Who it applies to | Action required |
|---|---|---|
| April 2026 | Sole traders & landlords earning over £50,000 | Quarterly digital submissions to HMRC |
| April 2027 | Sole traders & landlords earning over £30,000 | Quarterly digital submissions to HMRC |
| TBC | Lower thresholds (under £30,000) | Date not yet confirmed by HMRC |
Instead of filing a single annual Self Assessment return, you'll need to:
The quarterly updates are summaries — not detailed receipts. But they must be submitted via HMRC-approved MTD software, not manually through HMRC's website.
HMRC maintains a list of approved software. These are the most relevant tools for UK Sole Traders and sole traders:
Built specifically for UK Sole Traders. Free if you bank with NatWest, RBS, or Ulster Bank. From £19/mo otherwise. Handles Self Assessment and MTD VAT in one place.
Try FreeAgent free for 30 days →Market leader with excellent MTD support. From £16/mo (ex-VAT). Best for sole traders who want bank feeds, automated reconciliation, and accountant compatibility.
Try Xero free for 30 days →Simple mileage tracking, expense categorisation, and direct HMRC submission. From £10/mo. Best for sole traders who want the simplest possible setup.
Try QuickBooks free for 30 days →Pay-per-year (£29.99/year) rather than a monthly subscription. Best for sole traders with straightforward income who only need Self Assessment — not year-round bookkeeping.
Try GoSimpleTax free →Spreadsheets (including Excel and Google Sheets) are not MTD-compatible unless you use a special bridging software add-on. If you currently track income and expenses in a spreadsheet, you have a few options:
For most sole traders, switching to dedicated software is the cleaner, cheaper, and more future-proof solution.
If your sole trader income is under £30,000, you have time — HMRC hasn't confirmed a mandatory date for lower earners yet. But there are good reasons to get set up early:
No. MTD changes how you report to HMRC, not what you owe. Your tax liability is calculated the same way — you're just submitting updates more frequently.
Yes. If you have an accountant, they can submit MTD updates on your behalf using their own software. Check with them about their process and whether it's included in your fees.
HMRC will introduce a points-based penalty system for MTD ITSA. You accumulate points for late submissions, and penalties are only triggered after multiple missed deadlines — so an occasional miss won't immediately result in a fine.
No. Payment deadlines remain the same. MTD changes the reporting process, not the payment schedule. You'll still pay your tax bill by 31 January and potentially make a payment on account by 31 July.
Compare the best HMRC-recognised accounting tools for UK sole traders, with verified GBP pricing.
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