Making Tax Digital for self-employed people and sole traders (2026 to 2028)

By Jorge Ruete Veramendi · Last updated 15 November 2026

In short: Making Tax Digital (MTD) for Income Tax applies to self-employed people and sole traders whose self-employment and property income, before expenses, is over £50,000 (from 6 April 2026), £30,000 (from 6 April 2027) or £20,000 (from 6 April 2028). You keep digital records, send HMRC a quarterly update for each business and file your tax return through HMRC-recognised software. Check your start date with our free MTD checker.

Does Making Tax Digital apply to sole traders?

Yes. Making Tax Digital for Income Tax applies to sole traders and landlords registered for Self Assessment whose qualifying income is above the threshold for the tax year. Being self-employed and being a sole trader mean the same thing here: you run a business on your own and pay Income Tax through Self Assessment.

Making Tax Digital does not apply to limited companies, and partnerships don’t need to use it yet.

When does Making Tax Digital start for self-employed people?

The start date depends on your qualifying income in an earlier tax year. HMRC checks the Self Assessment return you sent for that year.

If your qualifying income is £20,000 or less, you don’t need to use Making Tax Digital. You keep sending a normal Self Assessment tax return.

👉 Not sure which row is yours? Our Making Tax Digital checker gives you your start date and deadlines in 30 seconds, with no sign-up.

What counts as qualifying income for sole traders?

Qualifying income is your total self-employment and property income before expenses, also called turnover. It is not your profit.

Example 1: a self-employed plumber has £34,000 turnover and £18,000 profit. Their qualifying income is £34,000, so they start Making Tax Digital on 6 April 2027 if that was their 2025 to 2026 income.

Example 2: a sole trader earns £27,000 from a business and £25,000 in rent. Their qualifying income is £52,000 (GOV.UK’s own example), because self-employment and property income are added together.

I have a job and a side business. Do I need Making Tax Digital?

Only if your side business turnover (plus any rental income) is over the threshold. Your salary never counts. Someone earning £60,000 from a job and £8,000 from freelance work has qualifying income of £8,000, so Making Tax Digital doesn’t apply to them.

What do sole traders have to do under Making Tax Digital?

Sole traders under Making Tax Digital do three things:

1. Keep digital records. Record every business transaction in HMRC-recognised software: the date, the amount and the category. If your turnover is below the VAT threshold, you only need to record whether each transaction is income or an expense. Keep your receipts, invoices and bank statements too.
2. Send a quarterly update for each business. Every three months, your software sends HMRC a summary. If you have two self-employed businesses, or a business and a rental property, each one gets its own update.
3. File your tax return by 31 January. It replaces the usual Self Assessment return and is sent through the same software.

Quarterly updates are reports, not payments. Making Tax Digital does not change when you pay your tax.

What are the Making Tax Digital deadlines for sole traders?

Sole traders have the same deadlines as landlords: 7 August, 7 November, 7 February and 7 May for quarterly updates, and 31 January for the tax return. See every date from 2026 to 2029 in our Making Tax Digital deadlines guide.

HMRC will not apply penalty points for late quarterly updates in the 2026 to 2027 tax year. From 2027 to 2028, each late update earns a point, and 4 points bring a £200 penalty.

Can I get an exemption from Making Tax Digital?

Some people are exempt automatically, and others can apply. You are automatically exempt if, for example:

• your qualifying income is £20,000 or less
• you had no National Insurance number before the start of the tax year
• you are a Lloyd’s member or a minister of religion filing the related pages

You can apply for an exemption if you are digitally excluded: it isn’t reasonable for you to use software because of your age, health, disability, religious beliefs or a lack of internet access where you live or work. Being unfamiliar with software, or preferring paper, is not accepted as a reason.

Exempt people still send a Self Assessment tax return every year.

What about partnerships and limited companies?

Partnerships don’t need to use Making Tax Digital for Income Tax yet. HMRC says they will in future but hasn’t given a date. Limited companies pay Corporation Tax, so Making Tax Digital for Income Tax doesn’t apply to them. Dividends you take from your own company don’t count towards your qualifying income.

What software do sole traders need?

You need software that is recognised by HMRC for Making Tax Digital for Income Tax. Look for software that:

• sends quarterly updates and the tax return (some only do the first)
• handles more than one business if you also rent out property
• connects to your bank to save time

If you’re a sole trader who is also a landlord, our MTD software comparison for landlords shows which tools cover both. A comparison for sole traders is coming soon.

The bottom line

Making Tax Digital for sole traders is based on turnover, not profit, and on self-employment plus property income, never your salary. If yours is over £30,000, you start on 6 April 2027, so choose your software and sign up before then. Check your start date now.

This is general information, not tax advice. Check the official guidance on GOV.UK or speak to a qualified accountant about your situation.