For the self-employed and trades
Making Tax Digital for sole traders: do you need it? Find out in 3 taps.
170 days until it starts for sole traders over £30,000
Do you need Making Tax Digital? Three taps.
1. Are you a sole trader (or landlord) registered for Self Assessment?
2. Does money come in from your trade (self-employment) or property?
3. What came in last tax year (6 April 2025 to 5 April 2026), before expenses?
Turnover, not profit. Wages from a PAYE job don't count.
Checked against GOV.UK, 14 October 2026. Sole traders and landlords; a limited company is different.
The MTD threshold: £30,000 of turnover, not profit
Yes, if you're self-employed as a sole trader and your income from self-employment and property is over the threshold, counted before expenses. That's over £50,000 since 6 April 2026, over £30,000 from 6 April 2027 and over £20,000 from 6 April 2028. You keep digital records, send quarterly updates through compatible software, then do your tax return.
Making Tax Digital for Income Tax changes how you report, not what you pay. You keep your income and expenses as digital records. Every three months, compatible software adds them up and you send a quarterly update to HMRC from it. Your tax return goes through your MTD software too.
You need it if all three are true. You're a sole trader or a landlord registered for Self Assessment and sending tax returns. You get income from self-employment or property, or both. And your qualifying income is over the threshold for that tax year.
Qualifying income is your total income from self-employment and property, before expenses. HMRC calls that turnover. Wages from a PAYE job don't count towards it.
So a plasterer who took £34,000 in the 2025 to 2026 tax year is over £30,000, even with £12,000 of materials and van costs. They need to use it from 6 April 2027. That tax year has ended, so the figure HMRC checks is the one on the 2025 to 2026 return. Only an amended return that changes that figure, or all your trade and property income stopping before your start date, changes it. A short first year gets scaled up to 12 months (GOV.UK, qualifying income, 11 September 2026).
- A sparky who took £28,000 in 2025 to 2026 is under £30,000, so not April 2027. If 2026 to 2027 comes in over £20,000, the date is 6 April 2028.
- A builder with £60,000 through the books in 2024 to 2025 should already be using it, from 6 April 2026. GOV.UK says you can still sign up if you haven't.
Making Tax Digital dates for the April 2027 group
Started
6 April 2026
Over £50,000 in 2024 to 2025
Next
6 April 2027
Over £30,000 in 2025 to 2026
Then
6 April 2028
Over £20,000 in 2026 to 2027
If you're in the April 2027 group, be signed up and using compatible software before 6 April 2027. Your first four quarterly updates are then due on:
Each update covers the tax year so far, from 6 April (or 1 April if you choose calendar quarters), not just the last three months, so a mistake in one is corrected in the next. Your tax return for 2027 to 2028 then goes through the same software by 31 January 2029 (GOV.UK: send quarterly updates, 7 September 2026; find compatible software, 13 July 2026).
Making Tax Digital quarterly deadlines 2026/27 and 2027/28
| Update covers | April 2026 group, due | April 2027 group, due |
|---|---|---|
| 6 April to 5 July | 7 August 2026 | 7 August 2027 |
| 6 April to 5 October | 7 November 2026 | 7 November 2027 |
| 6 April to 5 January | 7 February 2027 | 7 February 2028 |
| 6 April to 5 April | 7 May 2027 | 7 May 2028 |
| Tax return through the software | 31 January 2028 | 31 January 2029 |
MTD penalties: the quarterly-update free year is 2026 to 2027 only
GOV.UK's penalties page (updated 30 March 2026) says there are no penalties for missing a quarterly update deadline in the 2026 to 2027 tax year. That is the year the £50,000 group started. If your date is 6 April 2027, you join in 2027 to 2028, and from that year a missed quarterly update or tax return deadline gets a penalty point.
- One point per missed deadline. At 4 points you get a £200 penalty, and another £200 for each miss after that.
- Below 4, a point drops off 24 months after the missed deadline. At 4, they only clear once you've filed everything on time for 12 months and sent anything still outstanding from the last 24 months.
- Late payment in 2027 to 2028: in your first year under the new penalties you have 30 days to pay or set up a plan before any penalty. After that: 4% of what's owed at day 15 and 4% at day 30, plus 10% a year charged daily from day 31. From your second year the 30 days drops to 15.
That is what GOV.UK says today. The way round all of it is dull: records that build up as you work, and a reminder before each deadline.
How to sign up for Making Tax Digital, step by step
Before you start you need to be registered for Self Assessment with a tax return sent in the last 2 years, compatible software, and your business details: the business name on your invoices, address, your trade, and the start date if you started in the last 2 tax years. Then, on GOV.UK (sign-up page, updated 13 October 2026):
- 1.Open the sign-up service and sign in with the user ID and password from your Self Assessment registration.
- 2.You may be asked to prove who you are with an app on your phone and your passport or driving licence.
- 3.Tell HMRC about your self-employment and property income, including any that has stopped.
- 4.Confirm the tax year you'll start using Making Tax Digital for Income Tax.
- 5.Check each income source is there, and add any that are missing.
- 6.HMRC checks you're eligible from what you've given. If you use an accountant, they can sign you up instead.
- 7.Since September 2026 HMRC may sign you up itself, using only what it already holds. Sign yourself up so the details are right.
The shortcut on this page: sign up to InstaQuote, ANNA opens from inside it, and ANNA's own page calls its software HMRC-recognised (anna.money, 14 October 2026). You still do the GOV.UK sign-up above once; the software then does the sending.
How to sign up, step by stepThe digital records you need, and where they come from
For every bit of money in or out, GOV.UK wants three things recorded digitally: the amount, the date, and the category, using the same categories as your Self Assessment return (create digital records, 7 September 2026). One set of records per business. You still keep the originals, invoices and bank statements, or copies.
- Income: every invoice and every payment against it, with amount, date and category. InstaQuote keeps those ready for your MTD software; the digital record HMRC counts is the one in that software, so the figures go across by import or link, never retyped.
- Expenses: materials, fuel, tools, insurance. A photo of the receipt against the job, categorised once.
- Bank: ANNA's business account sees what came in and went out, so the filing matches the money.
MTD software: what you need and what's free
GOV.UK says compatible software must create, store and correct your digital records, send the quarterly updates, and submit your tax return by 31 January the following year. It says free products exist for people with simple tax affairs, and that they may cap things like the number of transactions (find compatible software, 13 July 2026).
- ANNA: a free business account, £0 monthly fee to start, and MTD for Self Assessment free for sole traders for the first year (anna.money, 14 October 2026). It's the software your updates and return go to HMRC through.
- InstaQuote: the quotes, the invoices, the chasing and the records they leave behind. 7 days free, then from £47 a month only if you carry on. It isn't HMRC filing software itself.
- You: check the figures each quarter and send the update from ANNA. The rest of the time, you do the job.
AdInstaQuote may be paid by ANNA if you open an account through us. ANNA's terms apply.
Three ways to do it
An accountant
You still keep the records all year and get them to your accountant every quarter, and the quarterly updates mean you're sending figures four times a year, not once.
A bookkeeping app plus filing software
Two apps to set up and keep in step. Three of the six trade apps we compare most closely send your books to Xero or QuickBooks for this (Tradify, Jobber and YourTradebase, their own sites, September 2026).
ANNA plus InstaQuote
The records build up as you quote, invoice and get paid, and you check them, then send them to HMRC through ANNA's MTD software, free for sole traders for the first year.
Limited companies, partnerships, landlords and exemptions
- Limited companies: Making Tax Digital for Income Tax is for sole traders and landlords, not companies. HMRC's Transformation Roadmap (GOV.UK, 21 July 2025) says it does not intend to introduce Making Tax Digital for Corporation Tax. Your company tax return carries on as now.
- Partnerships: GOV.UK says partnerships will need to use it in the future and the timeline will be set out later. No date yet.
- Landlords: the same thresholds, with rent counted alongside any trade income. All your UK properties count as one property business.
- Exemptions: if you're digitally excluded you can apply by phone or letter to HMRC's Self Assessment general enquiries line, saying why and how you file today (GOV.UK, 17 August 2026). If you're exempt you still do a Self Assessment return.
Questions trades ask
What is the Making Tax Digital threshold for sole traders?
Qualifying income over £50,000 meant 6 April 2026. Over £30,000 in the 2025 to 2026 tax year means 6 April 2027. Over £20,000 in 2026 to 2027 means 6 April 2028. It's your turnover from self-employment and property, before expenses.
When does Making Tax Digital start for sole traders?
From 6 April 2026 if your qualifying income was over £50,000 in the 2024 to 2025 tax year. From 6 April 2027 if it was over £30,000 in 2025 to 2026. From 6 April 2028 if it's over £20,000 in 2026 to 2027.
Is the £30,000 threshold turnover or profit?
Turnover. Qualifying income is your total income from self-employment and property before expenses. A trade with £34,000 coming in and £12,000 of costs is over £30,000.
Does my PAYE job count towards the £30,000?
No. Employment (PAYE) income doesn't count towards qualifying income. Only self-employment and property income do.
How do I sign up for Making Tax Digital?
On GOV.UK's sign-up service, with your Self Assessment user ID and password. You confirm your income sources, the tax year you'll start, and your business details. You need compatible software first, and a tax return sent in the last 2 years. An accountant can sign you up instead.
What are the Making Tax Digital deadlines?
Quarterly updates by 7 August, 7 November, 7 February and 7 May, each covering the tax year so far. Then your tax return through the same software by 31 January the following year.
When is my first quarterly update if I start in April 2027?
The first period runs from 6 April to 5 July 2027, and the update is due by 7 August 2027. Then 7 November 2027, 7 February 2028 and 7 May 2028.
What are the penalties for Making Tax Digital?
From the 2027 to 2028 tax year, a missed quarterly update or tax return deadline gets a penalty point. At 4 points it's £200, and £200 for each miss after that. Points drop off after 24 months if you stay below 4. There were no quarterly update penalties in 2026 to 2027, so joining in 2027 means no soft year.
Is there free Making Tax Digital software?
GOV.UK says free products exist for simple tax affairs and may cap things like transactions. Through our link, ANNA's business account is free to open, £0 monthly fee to start, with MTD for Self Assessment free for sole traders for the first year.
Do I need an accountant for Making Tax Digital?
No. You can do it yourself with compatible software. If you prefer your accountant, they can still do it, and clean records make their job quicker.
What if I earn under £20,000?
On the dates HMRC has set so far, you don't need to use it. You still do a Self Assessment tax return as now.
Does Making Tax Digital apply to limited companies?
Not this one. Making Tax Digital for Income Tax is for sole traders and landlords. HMRC's Transformation Roadmap (GOV.UK, 21 July 2025) says it does not intend to introduce Making Tax Digital for Corporation Tax, so a company tax return carries on as now.
Can I be exempt from Making Tax Digital?
Some people are, for example if you're digitally excluded. You apply to HMRC by phone or letter, saying why and how you file today. If you're exempt you still do a Self Assessment tax return.
Does Making Tax Digital apply to CIS subcontractors?
Yes, if you're a sole trader registered for Self Assessment and your qualifying income is over the threshold. CIS doesn't change that. The figure HMRC checks is what you invoiced before expenses, and the 20% a contractor takes off counts as an advance payment towards your tax and National Insurance, not a cost. So a labour-only subbie who banked £30,400 after deductions invoiced £38,000 and is over the £30,000 line for April 2027. The trade pages say how it lands for plasterers, bricklayers, dryliners, roofers and the rest.
How it lands for bricklayers and other CIS tradesDoes InstaQuote file my MTD updates?
No. InstaQuote keeps your income and expenses as clean digital records as you quote, invoice and get paid, and has the figures ready. The filing goes through MTD software such as ANNA, or your accountant.
Checked against GOV.UK
- GOV.UK: Check if you're eligible for Making Tax Digital for Income Tax (updated 26 March 2026)
- GOV.UK: Work out your qualifying income (updated 11 September 2026)
- GOV.UK: Use Making Tax Digital for Income Tax (updated 7 September 2026)
- GOV.UK: Send quarterly updates (updated 7 September 2026)
- GOV.UK: Penalties for Income Tax Self Assessment volunteers (updated 12 March 2026)
- GOV.UK: Penalties for Making Tax Digital for Income Tax (updated 30 March 2026)
- GOV.UK: Sign up for Making Tax Digital for Income Tax (updated 13 October 2026)
- GOV.UK: Create digital records (updated 7 September 2026)
- GOV.UK: Find software that's compatible (updated 13 July 2026)
- GOV.UK: Apply for an exemption (updated 17 August 2026)
- GOV.UK: CIS deductions from your payments (updated read 14 October 2026)
- GOV.UK: HMRC's Transformation Roadmap (no MTD for Corporation Tax) (updated 21 July 2025)
