Making Tax Digital · Sole traders
Making Tax Digital for sole traders.
Four updates a year instead of one return, and it's your turnover that decides when it starts — not the profit you actually live on. Here's what it means in practice, and why it's usually a smaller job than it sounds.
The short version
Your start date is set by turnover — everything you invoice, before a single cost comes off. Over £50,000 and you were in from April 2026. Over £30,000, April 2027. Over £20,000, April 2028.
Then it's digital records, four quarterly updates, and a final declaration that does the job your tax return does now. You don't pay tax four times a year.
Work out your start date
Your turnover before expenses. If you also let property, add the gross rent — the two are added together, not treated separately.
Your qualifying income: £38,000
Your start date
6 April 2027
A guide, not a ruling. HMRC works from a specific year's tax return. If you're near a threshold it's worth having someone check the actual figures.
Turnover, not profit
This is where nearly everyone gets it wrong. HMRC isn't looking at what you take home, or what's left after materials, fuel, tools and the van. It's looking at the top line — everything that comes in before anything goes out.
A joiner in Doncaster
He'd tell you he earns about thirty grand. HMRC says fifty-eight, and he was inside MTD from April 2026.
The thresholds
| From | Turnover over | Based on your return for |
|---|---|---|
| 6 April 2026 | £50,000 | 2024 to 2025 |
| 6 April 2027 | £30,000 | 2025 to 2026 |
| 6 April 2028 | £20,000 | 2026 to 2027 |
Two trades count as one figure. So does a trade plus a rental property — a plasterer turning over £24,000 with a flat bringing in £9,000 has £33,000 of qualifying income, and an April 2027 start date.
What the four updates actually involve
Less than the word "quarterly" suggests. An update is a summary of income and expenses sent from your software — not a tax return, not a calculation, and nothing to pay off the back of it.
They're cumulative, which matters more than it sounds: each one covers the tax year to date rather than just the last three months. Get something wrong in July and it's corrected in the November figures rather than needing an amendment.
| Period covered | Deadline |
|---|---|
| 6 April – 5 July | 7 August |
| 6 April – 5 October | 7 November |
| 6 April – 5 January | 7 February |
| 6 April – 5 April | 7 May |
Then the final declaration by 31 January, where the adjustments, reliefs and any other income go. That's the bit that replaces your Self Assessment return.
The easement that shrinks the job
If your gross income is under £90,000, you can use consolidated expenses — often called three-line accounts. Instead of categorising every cost, you report one total figure for expenses.
The £90,000 limit applies to each income source separately rather than to everything added together, so a sole trader turning over £70,000 with £15,000 of rent can use it on both sides. And if you decide to use consolidated expenses before the tax year starts, your quarterly updates can carry the total rather than a breakdown.
What you have to keep
Digitally, for every item of business income and expense: the amount, the date, and the category — unless you're using consolidated or simplified expenses, in which case the category drops away.
You need MTD-compatible software to send the updates. HMRC doesn't provide any. We work in Xero, QuickBooks and FreeAgent; if you're already on one of them we'll work in it rather than move you. A spreadsheet can still be used, but only with bridging software attached — and that keeps you doing the manual work four times a year instead of once, which rather defeats the object.
What to do now
- Check your turnover, not your profit. The tool above, or ring us and we'll read it off your last return.
- Find out whether consolidated expenses apply to you before the tax year starts — it changes what your quarterly updates have to contain.
- Get onto software before your start date. Moving mid-year is the painful version of this.
- Fix how receipts reach your records. Four deadlines a year is four chances to find out the shoebox is empty.
- Decide who files. You or an agent — both fine. Drifting into it is not.
We've been doing this since April.
We've been filing quarterly updates for sole traders since MTD went live, so we know where it actually snags rather than what the guidance says should happen.
We'll work out your start date, tell you whether the easement applies, get you onto software that fits how you work, and file all four updates plus the final declaration. One fixed fee, agreed before we start.
Message us on WhatsAppCall 07868 005731
Or email whitfieldandhanson@gmail.com — we reply the same working day.
- Your start date worked out free, on the phone
- Consolidated expenses applied where it fits
- Xero, QuickBooks or FreeAgent — whichever suits
- All four quarterly updates filed for you
- Final declaration handled, same as your return now
- Doncaster based, HMRC-registered agents
Common questions
Is it my turnover or my profit that decides my start date?
Turnover. Everything you invoice, before materials, fuel, tools, the van or anything else comes off. It's why a joiner invoicing £58,000 and living on £31,600 was inside MTD from April 2026.
Do I pay tax four times a year now?
No. The quarterly updates are information only — nothing is calculated and nothing is due. Your payment dates don't change, and neither do payments on account.
What if I'm employed as well as self-employed?
Your PAYE employment income doesn't count towards the threshold at all. Only self-employment and property do. The employment income still gets reported, but at the final declaration.
Do I have to categorise every expense four times a year?
Not if your gross income is under £90,000 and you use consolidated expenses. Then it's a single total rather than a breakdown. Decide before the tax year starts and your quarterly updates can carry the total figure too.
Can I keep using my spreadsheet?
Only with bridging software attached, since updates have to go to HMRC digitally. It's allowed, but you'd be doing the manual work four times a year rather than once — worth pricing properly against just moving to software.
What if I have two businesses?
They're added together for the threshold. Whether they're reported as separate businesses within your updates depends on how they're set up, which is worth a conversation rather than a guess.
My turnover dropped this year. Am I out?
No. Once a threshold has caught you the start date sticks. Genuinely ceasing to trade before your start date is the main way out.
Will you check my start date for free?
Yes. Ring 07868 005731 with a rough turnover figure and we'll tell you where you stand. Five minutes, no bill.
Related
General guidance, not advice. The rules as they stand on 12 August 2026. Not tax advice for your circumstances, and MTD is still moving — check anything important against GOV.UK or ring us.
Sources: HMRC guidance on eligibility and qualifying income (GOV.UK); Low Incomes Tax Reform Group guidance on record keeping, quarterly updates and consolidated expenses. Reviewed by Henry Hanson, HMRC-registered agent.