Last reviewed: 3 June 2026
Quick summary
- MTD for Income Tax requires affected sole traders to keep digital records and use compatible software for quarterly updates and the tax return process.
- Check the tax year, income source, records and threshold before relying on a broad rule.
- Use the preparation checklist on this page before speaking to an accountant.
Direct answer
MTD for Income Tax requires affected sole traders to keep digital records and use compatible software for quarterly updates and the tax return process.
What this means in practice
- GOV.UK states the first Income Tax MTD wave applies from 6 April 2026 for qualifying income over £50,000.
- Qualifying income is not the same as profit.
- Software choice should follow your records and accountant workflow.
The best next step is usually to gather the facts before asking for advice: income, expenses, dates, software, previous returns and any HMRC letters. That gives an accountant something concrete to review.
What to prepare before speaking to an accountant
- Latest tax return figures and expected qualifying income.
- Current bookkeeping method.
- Software currently used, if any.
- Whether you also have property income.
- How often you update records now.
Examples of how the answer can change
If your income is below the relevant threshold and your records are already digital, MTD preparation may be mostly about keeping an eye on future income and software compatibility.
MTD preparation becomes more involved if you use paper records, have both trade and property income, work from spreadsheets, or need to change software before quarterly updates begin.
The useful pattern is to separate facts from judgement. Facts are things like dates, turnover, software, invoices, bank statements, ownership and deadlines. Judgement is where a rule has to be applied to those facts. The more judgement involved, the more valuable a focused accountant conversation becomes.
Common real-world questions this guide answers
- Is the MTD threshold based on profit? GOV.UK frames the first wave around qualifying income, so do not use profit after expenses as the first filter.
- Does PAYE income count? The practical check is self-employment and property income. Employment wages are a separate tax issue, even though your overall tax position still matters.
- Can my accountant file the quarterly updates? An agent can help, but you should still confirm who keeps the records, who submits updates, what software is used and what fee is included.
- Do I need to abandon spreadsheets? Not always. The key issue is whether the records and submissions use an MTD-compatible digital route.
How to use this guide before you speak to anyone
Prepare your latest tax return, expected qualifying income, current bookkeeping method, software access and how often you update records.
Then write down the decision you are trying to make in one sentence. For example, you might be trying to decide whether to file yourself, change software, register for VAT, switch accountant or clean up records before a deadline. A clear question helps an accountant respond more usefully and helps you compare answers from different providers.
Do not treat the first call as only a price check. Use it to test whether the accountant understands the situation, can explain the next step in plain English and can tell you what information they need before giving a firm view.
How to compare your options
It usually helps to compare three routes: doing it yourself, using software or bookkeeping support, and speaking to an accountant. The right route depends on the risk of getting it wrong, how much time you have, whether deadlines are close and whether the answer affects future tax or compliance.
DIY can be sensible when records are tidy, the rules are easy to check and the financial impact is modest. Software can help when the main issue is organisation, recurring transactions or digital records. Accountant support becomes more useful when interpretation, judgement, deadlines or business structure are involved.
When comparing accountants, ask for the scope in writing. A good comparison should tell you what is included, what is excluded, who will do the work, how quickly they respond, what records they need and whether they understand your business type.
A quick quality check before you decide
- Can you explain the issue in one sentence
- Do you have evidence for the figures or records involved
- Have you checked the official guidance linked on this page
- Would a mistake create penalties, extra tax, missed deadlines or messy records next year
- Do you know what you want an accountant to answer
If several of those answers are unclear, the next step is not necessarily a long engagement. It may simply be a short accountant conversation to confirm the right route and avoid building the rest of the year on a weak assumption.
What this guide is focusing on
Use this guide if you are trying to work out whether MTD applies to their exact income mix, software and record-keeping habits. For Making Tax Digital for sole traders: what should you know, focus on how the rule meets the records, thresholds, software and decisions you actually have in front of you.
What figure, record or decision should you pin down?
Pin down qualifying income, tax year, income source, current software, digital records and whether quarterly updates will be handled by the reader or an accountant. That gives an accountant something specific to check and stops the conversation becoming a vague discussion about tax in general.
Records to gather
- qualifying income by tax year
- income source split between trade and property
- current bookkeeping method
- software or spreadsheet setup
- deadline or HMRC notice
Real examples for this situation
- A landlord with one property may only need a clean rent and expense trail, while a landlord with PAYE income needs to know that wages are a separate question.
- A sole trader using a spreadsheet may be organised, but still needs to check whether the spreadsheet workflow is compatible with MTD software.
- A reader with both trade and property income should separate each source before asking whether thresholds combine.
A common mistake is assuming MTD is only a software purchase rather than a record-keeping and filing workflow. The safest pattern is to write down the figure, source, date and evidence before deciding whether DIY, software or accountant support is enough.
When to speak to an accountant
Speak to an accountant if qualifying income may exceed the MTD threshold, if records are still paper or spreadsheet-based, or if you want help choosing software before deadlines arrive.
Questions to ask an accountant
- Does my qualifying income bring me into scope
- Which software is compatible and realistic for me
- Who will submit quarterly updates
- What changes before the first MTD period
- How will errors be corrected
Mistakes to avoid
- Confusing profit with qualifying income.
- Waiting until the first quarterly update is due.
- Choosing software without accountant access.
- Assuming MTD is only a year-end filing change.
Key takeaway
MTD for Income Tax requires affected sole traders to keep digital records and use compatible software for quarterly updates and the tax return process. If the facts are not simple, use this as a prompt for a proper accountant conversation rather than a final personal answer.
Official guidance checked on 3 June 2026
Use these links to check current rules, thresholds and deadlines. They were checked during the current content pass, but should be rechecked before important decisions.
Related guides
Related accountancy pages
FAQs
How should I use this guide
Use it to understand the issue, gather useful records and prepare better questions for an accountant.
What should I check before acting
Check current GOV.UK or HMRC guidance, your own records and whether your circumstances have details that change the answer.
When is it worth speaking to an accountant
When the decision affects tax, deadlines, VAT, MTD, company structure, property income, payroll, software setup or anything you are not confident checking yourself.
Keep this current
Tax rules and thresholds can change. Check the linked official guidance and speak to an accountant before making important decisions.