Reacting to: Sole traders hold off on HMRC's Making Tax Digital scheme (This Is Money) →
Making Tax Digital for Income Tax has been live since 6 April this year for anyone self-employed or letting property with qualifying income over £50,000 — and the first quarterly update is due to HMRC on 7 August. According to new Sage research covered by This Is Money, more than half a million affected sole traders may not be ready. Only 8% are currently using accounting software to keep digital records, seven in ten don't feel confident they know what compliance actually involves, and just 37% could correctly name the 7 August date. One finding says it plainly: more people polled could name football's transfer deadline day than the tax deadline that actually affects their business.
Why so many people missed this
MTD for Income Tax has been talked about, delayed and re-phased for years, which has left plenty of sole traders assuming — reasonably, if wrongly — that "eventually" is still a way off. It isn't. If your self-employment or property income was over £50,000 in the 2024–25 tax year, the digital record-keeping requirement already applies to you, and the clock on your first quarterly update started on 6 April. There is a 12-month grace period on penalty points for late quarterly submissions in this first year, which has taken some of the sting out of missing the earliest updates — but it doesn't remove the requirement, and it doesn't apply to your actual tax return.
What "digital records" actually means
It isn't a spreadsheet, and HMRC has been clear about that. You need MTD-compatible software that keeps a running digital record of income and expenses, connects to HMRC's systems, and lets you submit a quarterly summary rather than one annual return. Every transaction between 6 April and 5 July needed to be categorised and ready to submit for the first quarter, and the same pattern repeats every three months from here — a materially different rhythm to the one-a-year habit most sole traders have had for their entire working lives.
What to do this week if you're affected
First, check whether your qualifying income actually puts you inside scope — it's gross turnover from self-employment and property, not profit, so it catches more people than the "am I making enough to worry about this" instinct suggests. If you're over £50,000 and not yet using compatible software, that's the first and most urgent gap to close; the threshold drops to £30,000 in April 2027 and £20,000 in April 2028, so this isn't a one-off scramble, it's the new normal working its way down through smaller businesses. If you're unsure where you stand or the quarterly rhythm feels like more admin than you have time for, that's exactly what our Making Tax Digital service and Bookkeeping team are there to take off your plate — we'll get your records compliant and keep the quarterly submissions moving without you having to become a software expert on top of running your business.