Making Tax Digital for sole traders: the plain-English guide
If your self-employed turnover (with any rental income) was over £50,000 on your 2024/25 return, Making Tax Digital for Income Tax has applied to you since April 2026. From April 2027 the line drops to £30,000. Here's what that means for your books.
Who's in, and when
| Qualifying income on your return for | Is more than | You start MTD on |
|---|---|---|
| 2024 to 2025 | £50,000 | 6 April 2026 |
| 2025 to 2026 | £30,000 | 6 April 2027 |
| 2026 to 2027 | £20,000 | 6 April 2028 |
Qualifying income is your self-employment turnover plus any property income, before expenses. Wages from a job, pensions and savings interest don't count. Not sure? Try our Am I in MTD? checker. MTD for Income Tax doesn't apply to limited companies or partnerships.
What you send, and when
You keep digital records and send HMRC a summary four times a year, then a final declaration after the year ends. Each update is cumulative, covering 6 April to the end of that quarter, so a correction in your records flows into the next update. The 2026/27 updates are due on 7 August, 7 November, 7 February and 7 May. See every date on our deadlines page.
What goes in a sole trader's update
Totals, not receipts, in the categories from the self-employment pages of the tax return (SA103):
- Income: turnover, and other business income such as grants.
- Expenses: cost of goods; subcontractors; wages; car, van and travel; rent, rates, power and insurance; repairs; phone and office costs; advertising; business entertainment; loan interest; bank charges; bad debts; professional fees; other expenses.
If your turnover is under £90,000 a year, you can send allowable expenses as one consolidated figure instead.
Disallowable costs and business use
When you itemise, you report each expense total and, separately, the part that isn't allowable for tax.
Business entertainment, such as a client lunch, is never allowable: report it all as disallowable. Personal spending, drawings and equipment purchases stay out of your expenses altogether; equipment is dealt with as capital allowances at the year end.
Mileage rates for 2026/27
| Vehicle | First 10,000 business miles | Over 10,000 miles |
|---|---|---|
| Cars and goods vehicles | 55p a mile | 25p a mile |
| Motorcycles | 24p a mile | 24p a mile |
The car rate rose from 45p to 55p from 6 April 2026. If you use the flat rate for a vehicle, you can't also claim its fuel, insurance or repairs. Train fares, parking and hotels can still be claimed as normal.
Can I still use a spreadsheet?
Yes, with bridging software that reads your figures and sends them to HMRC. HMRC lists compatible products, including free ones, on its software finder; we explain how different tools read a spreadsheet in our bridging software guide.
Our Sole Trader MTD Kit is a workbook built for this: SA103 categories, business-use %, a mileage log at the 2026/27 rates, and sheets ready for bridging software.
At the end of the year
Your final declaration for 2026/27 is due by 31 January 2028. That's where capital allowances, working from home and the £1,000 trading allowance are dealt with. HMRC won't give penalty points for late quarterly updates in 2026/27; from April 2027, four late updates bring a £200 penalty.
Common questions
Can I keep using a spreadsheet for MTD as a sole trader?
Yes, if you pair it with MTD-compatible bridging software that reads your figures and sends them to HMRC. Don't retype totals: HMRC requires a digital link.
What are the mileage rates for 2026/27?
55p a mile for the first 10,000 business miles in a car or goods vehicle, then 25p. Motorcycles are 24p a mile.
Do I have to itemise my expenses?
Not if your turnover is under £90,000 a year. You can send allowable expenses as one consolidated figure.
Sources
- GOV.UK: Use Making Tax Digital for Income Tax, before you use this guide
- GOV.UK: Send quarterly updates
- GOV.UK: Simplified expenses, vehicles
- GOV.UK: Self-employment (full) SA103F
- GOV.UK: Find software that's compatible with MTD for Income Tax
This guide is general information, not tax advice. Read how we write and check our guides.