Making Tax Digital: What UK Sole Traders Need to Know
HMRC's digital requirements and how AI accounting simplifies compliance.
Making Tax Digital (MTD) requires UK businesses to keep digital records and submit VAT and income tax updates using compatible software. Understanding the timelines helps you stay compliant without last-minute stress.
Who must comply
VAT-registered businesses must already use MTD-compatible software for VAT returns. Income Tax Self Assessment (ITSA) under MTD is being phased in for sole traders and landlords with income above £50,000 from April 2026, with lower thresholds following in 2027.
Digital record-keeping requirements
You must maintain digital records of all income and expenses, not just summaries. Spreadsheets alone may not suffice unless they meet HMRC functional compatible software standards.
FinnAccountings qualifies as digital record-keeping software, automatically importing bank feeds, categorising transactions, and maintaining an audit trail.
Quarterly updates vs annual returns
Under MTD for ITSA, you send quarterly summaries to HMRC plus a final declaration. Our Compliance Agent tracks deadlines for both Revenue and HMRC and prepares filing reminders 30, 14, and 7 days in advance.
How to prepare
Connect your bank accounts, digitise receipts with our mobile scanner, and review AI categorisations monthly. Start a free trial to see how FinnAccountings keeps you MTD-ready year-round.
Sources & references
This article draws on official guidance and publications from the sources below.
- 1.Making Tax Digital
HM Revenue & Customs · Accessed 2026-06-26
- 2.Making Tax Digital for VAT
GOV.UK · Accessed 2026-06-26
Put this into practice
FinnAccountings helps with bookkeeping, tax, and VAT prep for Ireland and the UK — with Chartered Accountant insight on AI drafts. Educational articles are not filing advice.
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