Making Tax Digital for sole traders
Turnover decides it, not profit. Here is what changes, what it costs, and what happens to your Self Assessment return.
Who is caught, and when
If you are self-employed and your turnover is above the threshold, Making Tax Digital for Income Tax applies to you. It started on 6 April 2026 for income over £50,000, falls to £30,000 from April 2027 and £20,000 from April 2028.
It is turnover that counts, not profit. If you invoice £55,000 and spend £20,000 on materials, you are inside it even though you keep £35,000. And if you also let out a property, the two are added together.
A job and a side business
Wages taxed through PAYE do not count towards the threshold, so a salary plus a side business is tested on the business alone. That still catches more people than expected, because it is measured on what the business invoices rather than what is left at the end.
What changes day to day
- The shoebox stops working. Records have to be kept digitally, in software HMRC recognises.
- Receipts get captured as you go, usually by photographing them, rather than found in a glovebox in January.
- Four short updates replace the annual scramble, due 7 August, 7 November, 7 February and 7 May.
- The final declaration by 31 January replaces your Self Assessment return.
CIS, VAT and payroll
If you are a CIS subcontractor, your deductions still need tracking and we keep them straight for your return. If you are a contractor paying subcontractors, or VAT registered, or running payroll, those are separate jobs priced openly in the quote rather than bundled into a vague monthly figure.
What it costs
Sole traders start at £45 a month excluding VAT, covering digital records, the four quarterly updates and the final declaration. Add-ons like VAT, payroll and CIS are priced as you answer. See your own number in the quote builder, or read how Making Tax Digital works first.
Have it handled for a fixed monthly fee
B Keepers is the dedicated Making Tax Digital service of AIM GB LTD, accountants and bookkeepers with over 25 years behind them. We set the software up, connect your bank, keep the records straight and file every quarterly update. One fixed monthly fee, agreed before we start.
Launch offer: sign up by 31 December 2026 and your assisted bookkeeping is free until 5 April 2027, normally £7.50 a month.
Prefer to talk it through? Call 0333 121 1940 or send us a message.
Your questions, answered
Does Making Tax Digital apply to sole traders?
Yes, if your self-employment turnover is over the threshold: £50,000 from 6 April 2026, £30,000 from April 2027 and £20,000 from April 2028. It is turnover before expenses that counts, not profit.
Is it turnover or profit that decides it?
Turnover. If you invoice £55,000 and spend £20,000 on materials you are inside Making Tax Digital, even though your profit is £35,000.
I have a job and a side business. Does the side business count?
Your wages are taxed through PAYE and do not count towards the threshold. The self-employed income does, measured on what the business invoices.
Can I still use a spreadsheet?
Not on its own. Records must be kept digitally in HMRC-recognised software, and updates must be filed from it. Bridging software can connect a spreadsheet, but for most sole traders proper software with a bank feed is less work.
What happens to my Self Assessment return?
It is replaced by the final declaration, due by 31 January after the tax year ends, alongside the four quarterly updates.
What does an accountant charge for sole trader Making Tax Digital?
B Keepers charges from £45 a month excluding VAT for sole traders, covering digital record keeping, the four quarterly updates and the final declaration, with VAT, payroll and CIS priced separately and shown in the quote.