MTD ITSA - UK - 2026 rules - All guides
Making Tax Digital for Income Tax: Sole Traders
If you are a sole trader, Making Tax Digital for Income Tax replaces your annual Self Assessment return with quarterly digital reporting once your income crosses the threshold. Here is exactly when it applies to you and what changes.
MTD ITSA applies to sole traders whose gross self-employment income (combined with any UK property income) is above the threshold for their phase — over £50,000 from 6 April 2026, over £30,000 from 6 April 2027, and over £20,000 from 6 April 2028.
Does it apply to you?
As a sole trader you are in the first group HMRC is moving to MTD ITSA. Whether you are mandated, and from when, depends on your qualifying income — the gross turnover from your self-employment, before you take off any expenses. If that turnover is over £50,000 you must start from 6 April 2026; over £30,000 from 6 April 2027; and over £20,000 from 6 April 2028. HMRC works out which group you are in from a previous tax return: your 2024/25 return (due 31 January 2026) determines the April 2026 start, and your 2025/26 return determines the April 2027 start.
The thresholds and dates
What counts toward your threshold
Your threshold is tested on gross income, not profit — so a sole trader turning over £55,000 but making £20,000 profit is still measured at £55,000 and is in scope. If you also receive UK rental income, the two are added together: £40,000 of self-employment plus £15,000 of rent is £55,000 of qualifying income. Income covered entirely by the £1,000 trading allowance does not count, and employment (PAYE) wages, pensions, dividends and savings interest are all excluded from the test.
What you will need to do
Once mandated you keep digital records of your business income and expenses, use MTD-compatible software, and send HMRC four quarterly updates each tax year (the first deadline for the 2026/27 year is 7 August 2026), followed by a Final Declaration that replaces your old annual return. The quarterly periods follow the tax year regardless of your accounting date.
Common questions
I am a sole trader earning under £50,000 — do I need MTD ITSA in 2026?
Not in April 2026. The first phase only mandates sole traders with qualifying income over £50,000. If your gross income is over £30,000 you join from April 2027, and over £20,000 from April 2028. Below £20,000 you are not currently mandated, though this may change in future.
Is the threshold based on my turnover or my profit?
Turnover. MTD ITSA tests your gross income before expenses, so it is your total sales or fees that matter, not what you keep after costs.
I just started as a sole trader — when am I assessed?
HMRC looks at your qualifying income on your previous Self Assessment return. If you have a part-year of trading, HMRC adjusts the figure proportionally to compare a full 12 months against the threshold.
Does my part-time PAYE job count toward the threshold?
No. Employment income through PAYE is excluded. Only your gross self-employment and UK property income count toward the MTD ITSA threshold.
How often will I file once I am in MTD ITSA?
Four quarterly updates per tax year plus a Final Declaration after the year ends — five submissions in total, replacing the single annual Self Assessment return.
Never miss a quarterly MTD deadline
AdminShield tracks your MTD ITSA quarterly updates and Final Declaration, reminds you before each falls due, and keeps your records organised - built for UK sole traders and the accountants who support them.
Start free - no card requiredThis guide is general information about Making Tax Digital for Income Tax based on current HMRC rules and is not tax advice. Thresholds and dates may change; check your own circumstances with HMRC or a qualified accountant.