From 6 April 2026, many sole traders in the UK face a new way of handling tax. If your combined gross income from self-employment and any property business exceeded £50,000 in the 2024/25 tax year, Making Tax Digital (MTD) for Income Tax becomes mandatory.

Instead of one big Self Assessment return each year, you keep digital records all year and send four quarterly updates to HMRC. These are simple summaries of your income and expenses. At the end of the tax year, you submit a final declaration to confirm everything and pay any tax due.

The change aims to spread the workload and reduce errors, but it requires a routine. The first quarterly update covers April to July 2026 and is due by 7 August 2026. There is no penalty for late updates in the first year (2026/27), which gives breathing space.

Here is a practical, step-by-step workflow that keeps things straightforward for sole traders.

Step 1: Get Set Up Before April 2026

Sign up for MTD with HMRC using your Government Gateway account. Do this early to test the system.

Choose compatible software. Many options exist, from full accounting apps to basic bridging tools that link to spreadsheets. Look for ones with:

  • Easy bank feeds
  • Simple categorisation of income and expenses
  • Automatic quarterly summaries
  • Direct submission to HMRC

Popular choices include free or low-cost versions for smaller setups. Test it with sample data now.

Link your business bank accounts where possible. This pulls transactions in automatically and meets the digital link requirement.

Step 2: Build a Weekly or Monthly Record-Keeping Habit

The foundation is consistent digital records from 6 April 2026.

Set aside time each week or month to:

  • Review incoming payments and categorise them (sales, refunds, other income)
  • Log expenses with receipts scanned or photographed
  • Reconcile bank feeds
  • Note any cash transactions

Categorise properly: use standard headings like cost of sales, office expenses, travel. Good software suggests categories and learns from your choices.

This habit makes quarterly updates quick, often just a review and submit.

Step 3: Prepare Each Quarterly Update

The quarters run:

  • Q1: 6 April to 5 July (update due 7 August)
  • Q2: 6 July to 5 October (update due 7 November)
  • Q3: 6 October to 5 January (update due 7 February)
  • Q4: 6 January to 5 April (update due 7 May)

About a week before the deadline:

  • Run a report in your software for the quarter’s totals
  • Check income and expenses look accurate
  • Make adjustments if needed (e.g. accruals or prepayments if your software supports them)
  • Submit the update via the software

These updates are not payments, just figures. HMRC uses them to track your position.

Step 4: Handle the Year-End Final Declaration

After 5 April 2027, your software pre-fills much of the final declaration from the quarterly data.

Add:

  • Other income (e.g. savings interest)
  • Allowances and reliefs
  • Capital allowances
  • Any adjustments

Submit by 31 January 2028 and pay any tax owed (or claim a refund).

Payments on account continue as normal.

Step 5: Review and Improve Each Quarter

After each submission, note what worked well or took time. Adjust your routine.

If figures surprise you, dig into why. Better records early prevent bigger issues later.

If you use an accountant, share access so they can review updates.

Stay Organised with Helpful Tools

Beyond accounting software, quick access to your business details supports overall admin. For sole traders who also run limited company side activities or need to check related filings, having fast company information at hand saves effort.

The Companies House on the Go app lets you search company records, view accounts, confirmation statements, and updates directly from your phone.

Download for iOS: https://apps.apple.com/us/app/uk-companies-house-on-the-go/id6743302358

Or Android: https://play.google.com/store/apps/details?id=com.companiesonthe.go

For more on managing company-related tasks efficiently, visit Companies on the Go.

Quarterly updates under MTD shift tax from an annual rush to a steady process. Many sole traders find it improves cash flow visibility and reduces year-end stress once the routine clicks.

Start small: set up software, build weekly habits, and use the first year’s grace period wisely.

With consistent effort, these updates become routine rather than a burden. Prepare now, and you will handle 2026 smoothly.