MTD for Sole Traders: What's Changing in 2026 and How to Get Ready
Making Tax Digital is rolling out to sole traders. Here's what it actually means, what you have to do, and the easiest way to stay compliant without paying an accountant £500 a year.
By GraftLog
Making Tax Digital (MTD) is the biggest change to how UK sole traders handle their tax in a generation. HMRC is rolling it out in stages, and if you earn over the income tax threshold, you'll need to keep digital records and submit quarterly updates.
What MTD actually means
Before MTD, you could keep your business records in a notebook, a spreadsheet, or a shoebox of receipts. You filled in a Self Assessment once a year, and that was it.
After MTD, you have to:
- Keep digital records of all your income and expenses using MTD-compatible software.
- Submit a quarterly update to HMRC within a month of each quarter ending.
- File a final declaration at year-end to confirm everything is right.
You don't have to use software that files directly with HMRC yet — your accountant or bridging software can submit on your behalf. But you do need to keep your records in MTD-compatible software.
When does it affect you?
MTD for Income Tax is being phased in:
- From 6 April 2026: sole traders and landlords with gross income over £50,000.
- From 6 April 2027: the threshold drops to £30,000.
- From 6 April 2028: the threshold drops to £20,000.
If you earn more than £20,000 a year from your trade, MTD will eventually apply to you.
What "MTD-compatible" means in practice
HMRC publishes a list of recognised software. The records must be:
- Digital — not paper, not a spreadsheet you edit by hand.
- Preserved — you can't delete entries once they're saved.
- Linked to a source — receipts, bank statements, invoices.
- Exportable as CSV — for your accountant or bridging software to submit.
GraftLog is built around these requirements. Every quote, invoice, and expense is digitised at source, and you can export your quarterly summary as CSV in one click.
The three things to do this month
- Stop using paper for invoices and receipts. Snap a photo with your phone the moment you issue or receive one.
- Pick software that exports quarterly CSVs. Free spreadsheets don't count — they're not "preserved" in HMRC's eyes.
- Set a 15-minute weekly habit. Sit down every Sunday, log the week's expenses, mark invoices as paid. That's it.
What you'll need to submit each quarter
| Quarter | Period | Deadline |
|---|---|---|
| Q1 | 6 Apr – 5 Jul | 5 Aug |
| Q2 | 6 Jul – 5 Oct | 5 Nov |
| Q3 | 6 Oct – 5 Jan | 5 Feb |
| Q4 | 6 Jan – 5 Apr | 5 May |
A quarter is just a list of all your invoices (money in) and expenses (money out), totalled. If your software does this for you, MTD is genuinely not painful.
The bottom line
MTD is coming whether we like it or not. The tradespeople who get ahead of it now will spend about 15 minutes a month on tax admin. The ones who ignore it will be paying accountants £300–£600 a year to clean up shoeboxes of receipts at filing time.
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