Making Tax Digital for Sole Traders: What You Need to Know in 2026

Tori Jones MSc ACCA
Feb 1
2 min read

If you’re a sole trader in the UK, you’ve probably heard about Making Tax Digital (MTD), but many business owners are still unsure what it means in practice. With major changes rolling out, understanding how MTD affects you is essential to staying compliant and avoiding penalties.

In this guide, we’ll break down what Making Tax Digital is, how it impacts sole traders, and how you can prepare your business for a smooth transition.

Need any further help? We'd love to hear from you!

Strata Management Support Ltd are your local, hands on accountants. Based in Kenilworth, Warwickshire, we help local sole traders stay compliant, so you can concentrate on what you do best. Get in touch today and us take the stress of MTD off your shoulders - 01926 217 640

What is Making Tax Digital (MTD)?

Making Tax Digital is a government initiative designed to modernise the UK tax system. It requires individuals and businesses to:

Keep digital records of income and expenses
Use compatible software to submit tax updates
Send quarterly updates to HMRC, as well as your annual self-assessment return

The goal is to make tax reporting more accurate, efficient, and easier to manage over time.

Will I be Affected by MTD?

Most likely - however MTD is being rolled out gradually, and whether you are affected or not depends on your current annual turnover.

Key Rollout Dates

From April 2026: Sole traders earning over £50,000 annually must comply
From April 2027: Threshold lowers to £30,000

What is my Annual Turnover?

Your annual turnover is the gross taxable income that you include on your self assessment return. This is before any costs are applied or any taxes.

How Can I Prepare for MTD

Getting ahead of the changes will save time and stress later. Here are practical steps you can take:

1. Assess Your Income

Check whether your turnover exceeds the upcoming thresholds.

2. Choose MTD-Compatible Software

Look for accounting tools that are HMRC compliant and suited to small businesses.

3. Digitise Your Records

Start keeping digital records now to ease the transition.

4. Get Professional Support

Working with an expert can ensure you remain compliant and avoid costly mistakes.

How Strata Support Can Help

Strata Support is a Midlands based accountancy practice that specialises in helping sole traders navigate tax changes with confidence. Whether you’re new to digital accounting or need general business advice, our team can guide you every step of the way.

We provide:

MTD ready bookkeeping solutions
Software setup and training
Ongoing tax compliance support
Tailored business advice for sole traders

If you’d like help getting MTD-ready, contact Strata Support today and ensure your business is prepared for the future of tax.