Tax and HMRC

Making Tax Digital,
What It Means For You.

Which date applies to you, what actually changes, and the bit almost everyone misses about how HMRC decides you're in scope.

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This is general guidance for UK sole traders. MTD for Income Tax is still being rolled out in phases, and the detail can shift, so treat this as an overview to check your own position against, not a final answer.

What's actually changing

Right now, most sole traders do one tax return a year. Under Making Tax Digital for Income Tax, that gets replaced with digital record keeping through compatible software, four quarterly updates sent to HMRC through the year, and a final declaration at year end that replaces the old Self Assessment return.

It's not optional once you're in scope, and it's not a trial, HMRC has confirmed the dates and there's no indication of further delay this time.

The dates that matter

£50k

From 6 April 2026

If your qualifying income was over £50,000 on your 2024/25 tax return, you're in from this date.

£30k

From 6 April 2027

The threshold drops, based on your 2025/26 return.

£20k

From 6 April 2028

The threshold drops again, based on your 2026/27 return.

What "qualifying income" actually means

This trips people up. It's not just your trade profit, it's your gross income from self-employment and property combined, before expenses. If you're a tradesman with a rental property on the side, both get added together to check against the threshold.

  • Gross, not profitIt's turnover before you deduct expenses, so it's a bigger number than the one you're used to thinking in.
  • Self-employment and property, combinedA buy-to-let alongside your trade counts toward the same threshold.
  • Based on your last filed returnHMRC checks the most recent tax return you've actually submitted, not your current year's income.

What you'll actually have to do

  • Keep digital recordsA spreadsheet on its own generally isn't enough, records need to be kept and submitted through MTD-compatible software.
  • Send four quarterly updatesA running summary of income and expenses sent to HMRC roughly every three months, not a full return each time.
  • Submit a Final DeclarationAt year end, replacing the old Self Assessment return, confirming the full picture and any adjustments.
Often missed Because the threshold check looks backward at your last filed return, you can be mandated into MTD for 2026 based on income you earned back in the 2024/25 tax year, even if your income has since dropped. People assume it's based on what they're earning right now, and get caught out.
Also worth knowing MTD for Corporation Tax has been scrapped entirely, it isn't proceeding. If you're operating through a limited company, this rollout doesn't currently affect you at all, it's purely an Income Tax Self Assessment change for sole traders and landlords.

Not sure which date applies to you?

Send over your last tax return and we'll tell you exactly where you stand and what needs to change.

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This guide is general information about Making Tax Digital for Income Tax for UK sole traders and landlords, correct at the time of writing, and isn't personalised tax advice. Thresholds and rules can change as the rollout continues, always check anything you're unsure about before relying on it.

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