MTD April 2026: What Sole Traders Need to Do Right Now

Making Tax Digital for Income Tax Self Assessment (MTD ITSA) goes live on 6 April 2026. If you are a sole trader or landlord with annual gross income over £50,000, the way you report your earnings to HMRC is about to change. Instead of filing a single Self Assessment tax return once a year, you will need to keep digital records and send quarterly updates to HMRC using compatible software.

This is not a drill and it is not optional. HMRC has confirmed the dates, published the rules, and listed the compatible software. Here is everything you need to know and do before the deadline.

What is MTD for Income Tax?

MTD for Income Tax (officially “Making Tax Digital for Income Tax Self Assessment”) requires self-employed individuals and landlords to:

1. Keep digital records of all business income and expenses
2. Submit quarterly updates to HMRC through compatible software
3. Send a final declaration (also called an End of Period Statement) after the tax year ends

That means five submissions per year instead of one: four quarterly updates plus the final declaration. The aim, according to HMRC, is to reduce errors in tax returns and give taxpayers a more up-to-date picture of their tax position throughout the year.

Who does it affect and when?

MTD ITSA is being rolled out in phases based on your gross income (that is your total income before expenses, not your profit):

• 6 April 2026: Sole traders and landlords with gross income over £50,000
• April 2027: Those with gross income over £30,000
• April 2028: Those with gross income over £20,000

If your gross income is below £50,000 right now, you are not required to join in April 2026 but the threshold will reach you within a year or two. Getting your processes sorted now means you will not be scrambling later.

The quarterly deadlines for 2026/27

For the first MTD year (the 2026/27 tax year running 6 April 2026 to 5 April 2027), the quarterly update deadlines are:

• Quarter 1 (6 Apr – 5 Jul 2026): due by 5 August 2026
• Quarter 2 (6 Jul – 5 Oct 2026): due by 5 November 2026
• Quarter 3 (6 Oct 2026 – 5 Jan 2027): due by 5 February 2027
• Quarter 4 (6 Jan – 5 Apr 2027): due by 5 May 2027

Your final declaration for the 2026/27 tax year is due by 31 January 2028 — the same date you would normally file your Self Assessment return.

What counts as “digital records”?

HMRC requires you to keep digital records of each transaction, including the date, amount, and category of income or expense. You do not need to scan every receipt (though it is good practice). The records themselves must be held in software, not on paper.

Spreadsheets are allowed, but there is a catch: if you use a spreadsheet you will also need bridging software that can connect to HMRC's systems and submit your quarterly updates electronically. You cannot email or upload a spreadsheet to HMRC directly.

The simplest route is to use software that both stores your records and submits to HMRC directly. HMRC maintains a list of compatible software on GOV.UK which is updated regularly.

What happens if you miss a deadline?

HMRC is introducing a new points-based penalty system for late submissions under MTD. Each time you miss a quarterly deadline, you receive a penalty point. Once you reach the threshold (currently set at four points for quarterly obligations), you will receive a £200 penalty. Each further late submission after that also triggers a £200 fine.

Points can be reset back to zero if you subsequently file on time for a set period. There are also separate penalties for late payment of tax, which work on a percentage basis rather than points. Full details are available on the HMRC penalties page.

What you need to do now: a checklist

With the 6 April 2026 start date only weeks away, here is a practical list of steps to get yourself ready:

1. Check whether you are in scope. Look at your gross income for the 2024/25 tax year (your most recent Self Assessment). If it was over £50,000, you are in the first wave starting April 2026.
2. Choose compatible software. Check HMRC's compatible software list and pick a tool that fits your budget and workflow. You do not need the most expensive option — many affordable tools handle everything required.
3. Set up your digital records now. Do not wait until April. Start recording your income and expenses digitally today so the transition is seamless when the new tax year begins.
4. Understand the quarterly rhythm. Mark the four quarterly deadlines (5 August, 5 November, 5 February, 5 May) in your calendar. Set reminders a week before each one.
5. Talk to your accountant. If you use an accountant or bookkeeper, confirm how you will work together under MTD. Some accountants submit on your behalf; others expect you to use the software yourself and send them access.
6. Sign up for HMRC's MTD service. You will need to register for MTD for Income Tax through your Government Gateway account. This links your software to HMRC so submissions go through correctly.
7. Review your expense categories. MTD submissions categorise expenses into HMRC's standard categories. Make sure you know which category each of your regular expenses falls into to avoid errors in your quarterly updates.

Do not overcomplicate it

MTD sounds like a big change, and in some ways it is. But the core requirement is simple: keep a digital record of what you earn and spend, and send a summary to HMRC four times a year plus once at the end. If you already track your finances in any kind of app or spreadsheet, you are most of the way there.

The biggest mistake sole traders make is assuming MTD requires expensive enterprise-grade accounting software. It does not. What it requires is compatible software that can talk to HMRC's API. Plenty of lightweight, affordable options exist.

QuarterlyUK is one of them — built specifically for sole traders who want to stay compliant without paying for features they will never use. At £2.50 per month, it covers digital record-keeping and is designed around the quarterly update workflow that MTD demands.

Key dates at a glance

Further reading

• GOV.UK: Making Tax Digital for Income Tax as an individual
• GOV.UK: Find compatible software for MTD Income Tax
• GOV.UK: Sign up for MTD for Income Tax
• GOV.UK: Penalties for late submission