Making Tax Digital for sole-trader trades: are you in, and what is due on 7 November

Making Tax Digital for Income Tax (MTD) went live on 6 April 2026. If you are a sole trader in the trades, there is a fair chance it already applies to you, even if your profit is well under the threshold. The next deadline is 7 November. Here is how to check, and what to do.

Who is in

From 6 April 2026, you must use MTD if you are a sole trader or landlord registered for Self Assessment and your qualifying income was over £50,000 in the 2024 to 2025 tax year. The line then drops:

The catch: turnover, not profit

HMRC says qualifying income is your total income from self-employment and property before expenses. That is turnover, not profit, and it is where trades firms get caught out, because materials are a big share of what you bill.

Take a sole-trader electrician who billed £68,000 in 2024 to 2025. After £21,000 of materials, a van and tools, and £6,000 of other costs, the profit is £41,000. Plenty of people in that position assume they are under the £50,000 line. They are not. Turnover of £68,000 is qualifying income of £68,000, so this electrician has been in MTD since April.

Income from a rented-out flat counts too, added to the trade income. HMRC's own example adds £25,000 of rent to £27,000 from self-employment to reach £52,000.

What does not count: wages from a job, dividends, pensions, and your share of profit as a partner in a partnership. And if you trade through a limited company, MTD for Income Tax does not apply to the company's income at all.

What you have to do

1. Keep digital records of income and expenses in software that works with MTD. A spreadsheet is fine if you link it to bridging software.
2. Send a quarterly update to HMRC through that software. Each one is cumulative from the start of the tax year:

You can choose calendar quarters (to 30 June, 30 September and so on) instead, but you have to set that in your software before you send your first update.

3. File your tax return after the year end through the software, as before. The deadline is still 31 January.

Penalties: easy this year, real from next

For the 2026 to 2027 tax year HMRC says it will not give penalty points for late quarterly updates. You still have to send all four before you can file the return. From 2027 to 2028, late updates earn points, and four points means a £200 penalty.

So if you missed 7 August, you are not being fined, but you do need to catch up. Sending the update due on 7 November covers everything from 6 April anyway, because it is cumulative.

Choosing software

This is where the forums fill up. One ElectriciansForums.net thread from a sole trader asking for simple, Mac-friendly MTD software has over 1,200 views. HMRC publishes a list of software that works with MTD, including some free products. If you already use job management software, check whether it can export to one of them before paying for a second app. Our comparison of Tradify and ServiceM8 for a small firm covers the cost of the job side.

The easiest records are the ones you keep as you go. Every invoice you raise and every merchant receipt you photograph on the day is one less job in January. Our invoice maker for trades gives you numbered invoices to work from, and the VAT calculator handles receipts if you are VAT registered.

This is general information, not tax advice. If you are near a threshold or have more than one income source, ask your accountant whether you are in.