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MTD Readiness Checker

Making Tax Digital for Income Tax Self Assessment (MTD for ITSA) starts April 2026 for sole traders earning over £50,000. Answer 5 questions to check if you're ready.

Deadline: 6 April 2026 (income over £50,000)
1

What's your annual self-employment income?

Your total income before expenses. If you're not sure, estimate based on last year's invoices.

2

Are you VAT registered?

Mandatory when your taxable turnover exceeds £90,000 in a rolling 12-month period.

3

How do you keep your business records?

HMRC requires digital records under MTD. Spreadsheets count if they connect to MTD software.

4

Could you submit income/expense summaries every quarter?

MTD for ITSA requires quarterly updates (not full tax returns — just income and expense totals).

5

Does your job management software connect to accounting software?

If your quoting/invoicing tool syncs with Xero or QuickBooks, your records may already be MTD-ready.

What is Making Tax Digital?

Making Tax Digital (MTD) is HMRC's programme to move the UK tax system online. It requires businesses to keep digital records and submit tax information to HMRC using MTD-compatible software. MTD for VAT has been live since April 2019 (mandatory since April 2022). MTD for Income Tax Self Assessment (ITSA) begins in April 2026.

For tradespeople, this means if you're a sole trader earning over £50,000, from April 2026 you'll need to submit quarterly income and expense updates to HMRC digitally — not just an annual tax return. You'll need MTD-compatible software to do this.

What do tradespeople need to do?

  • 1. Check if you're affected. If your self-employment income exceeds £50,000 in the 2024/25 tax year, you'll need to comply from April 2026.
  • 2. Get MTD-compatible software. This can be accounting software (Xero, QuickBooks, FreeAgent) or job management software that integrates with accounting tools (like Muster).
  • 3. Keep digital records. Record income and expenses digitally as they happen — not in a shoebox at year-end.
  • 4. Submit quarterly updates. Four times a year, submit a summary of income and expenses to HMRC through your software.
  • 5. Submit an annual finalisation. At year-end, confirm your figures and make any adjustments (similar to current Self Assessment, but through software).

Frequently asked questions

Do I need MTD if I'm a limited company?▾

Not yet. MTD for Corporation Tax has no confirmed start date. MTD for ITSA only affects sole traders and landlords initially. However, if you pay yourself a salary and have self-employment income, the self-employment portion may be caught.

Can I use spreadsheets for MTD?▾

Yes, but you'll need 'bridging software' that connects your spreadsheet to HMRC's systems. It's generally simpler to use MTD-compatible accounting software directly.

What are the penalties for non-compliance?▾

HMRC is introducing a new points-based penalty system. Late submissions earn penalty points — once you hit the threshold (typically 4 points for quarterly submissions), you'll face a £200 penalty. Further late submissions incur additional penalties.

What counts as 'income over £50,000'?▾

Your gross self-employment income (before expenses) plus any property income. If the combined total exceeds £50,000, you're caught. This is based on the 2024/25 tax year for the April 2026 start.