From 6 April 2026, Making Tax Digital (MTD) for Income Tax is mandatory for sole traders and landlords whose combined gross income from self-employment and property exceeds GBP 50,000. Affected taxpayers must keep digital records, use MTD-compatible software, and file quarterly updates plus a year-end return. The threshold drops to GBP 30,000 in April 2027 and GBP 20,000 in April 2028, with HMRC estimating over 860,000 people in the first phase.
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Making Tax Digital for Income Tax now mandatory for sole traders over GBP 50,000
Why this matters for founders
If you run your startup as a sole trader (not a limited company) and gross income tops GBP 50,000, sign up now and move to MTD-compatible bookkeeping software before your first quarterly deadline; HMRC waives late-update penalty points only for 2026-27, so set up early.
Source: GOV.UK (HMRC)
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