MTD for sole traders: the no-jargon guide
Freelancer, contractor, tradesperson, consultant — if you file a Self Assessment for self-employment, MTD is now your problem too. Here's the size of it.
Are you in scope?
The test is turnover — gross takings before expenses — from all your sole-trade businesses plus any rental property, added together:
| Gross income (turnover) | MTD mandatory from | First quarterly update due | Checked against |
|---|---|---|---|
| £50,000+ | 6 April 2026 — already in force | 7 August 2026 | 2024/25 tax return |
| £30,000 – £50,000 | 6 April 2027 | 7 August 2027 | 2025/26 tax return |
| £20,000 – £30,000 | 6 April 2028 | 7 August 2028 | 2026/27 tax return |
| Under £20,000 | No start date announced yet | ||
What changes for you
Instead of one January scramble, the year looks like this: digital records as you go, a short quarterly update every three months (7 August, 7 November, 7 February, 7 May), then a final declaration by 31 January that replaces the tax return. Tax payment dates don't move, and quarterly updates never come with a bill attached.
The quarterly update itself is small — category totals, no receipts, cumulative so errors self-correct next quarter. The real change is behavioural: records have to be digital and current, not reconstructed from bank statements eleven months later.
Getting ready without the drama
- Check your date with the checker — thirty seconds.
- Separate business money if you haven't — one account for business in and out makes digital records nearly automatic.
- Choose your tool. Full accounting suites work but are overkill for simple books; spreadsheets still work via bridging software; and NippyTax is being built as the dead-simple, MTD-only option — join the waitlist.
- Know the penalties so they never apply to you: the points system explained.
Frequently asked questions
Does MTD apply to sole traders?
Yes — sole traders are the core of MTD for Income Tax. Over £50,000 turnover on your 2024/25 return means you have been in since 6 April 2026. Over £30,000 joins in April 2027 and over £20,000 in April 2028.
Is the MTD threshold turnover or profit?
Turnover — your gross takings before expenses. A tradesperson billing £60,000 with £25,000 of materials is over the £50,000 threshold even though profit is £35,000.
I have a side hustle alongside my job — am I in?
Your salary is irrelevant; only self-employment and property income count. £28,000 of freelance turnover on your 2026/27 return puts you in the April 2028 wave.
What about CIS subcontractors?
CIS subcontractors are sole traders like any other for MTD: gross income (before CIS deductions) counts towards the threshold, and quarterly updates are required once you are over it.
Do I still do a Self Assessment tax return?
The annual return is replaced by a final declaration due 31 January — same deadline, similar job, but submitted through your MTD software with your quarterly data already in it.
What records do I actually have to keep?
Each business transaction — date, amount, category — recorded digitally, in software or a spreadsheet with a digital link to submission software. Paper receipts can stay in the drawer as backup; the record itself must be digital.
Get NippyTax when it launches
We are building the simplest possible way to do MTD quarterly updates — no accounting suite, no jargon. Join the waitlist and be first in when it launches.