Making Tax Digital for Income Tax: What Happens If Your Turnover Exceeded £50,000 on Your 2025 Tax Return

Robyn Moore
Jan 13
3 min read

From 6 April 2026, a major change is coming to the way sole traders report their tax affairs, thanks to Making Tax Digital for Income Tax Self-Assessment (MTD ITSA). Like it or not, spreadsheets will no longer cut it.

If you filed your 2024–25 tax return and your turnover (that's your total income before expenses) from self-employment and/or property was more than £50,000, the rules will apply to you. In other words, you'll be automatically enrolled into Making Tax Digital.

It's important to note that this £50K threshold has nothing to do with profit. You could have made a modest profit, or even barely broken even, but if your turnover was over that £50K threshold, you're still being enrolled into MTD. HMRC isn't interested in how much you kept, only how much came in.

It's also worth clarifying that the £50K threshold applies to your total qualifying income, which includes both self-employment and property income. So, if you earned £20,000 from property and £40,000 from self-employment, that’s £60,000 in total. Congratulations! You’re officially an MTD sole trader.

What Sole Traders Must Do For Making Tax Digital

For those “in scope” of MTD, from April 2026 you must change how and how often you report your tax information. The key steps are:

1. Use MTD-Compatible Software

You must keep your business income and expense records in digital form using software that is recognised by HMRC. We recommend using QuickBooks, as it's MTD ready and designed to adapt with your business as it grows.

Digital record-keeping doesn’t just mean typing numbers into a spreadsheet and hoping for the best. Your software must be able to:

Store records digitally, and
Send data directly to HMRC.

If your software can’t talk to HMRC, it’s not MTD-compliant, no matter how tidy your tabs look.

2. Submit Quarterly Updates

Instead of just filing one annual Self Assessment return, you will now need to send four quarterly updates during the tax year. Each one summarises your income and expenses for that period.

The upside? Less last-minute panic in January.

The downside? You can’t ignore your bookkeeping for 11 months anymore.

3. Final Declaration

Finally, you’ll send a final declaration through your MTD software instead of submitting the traditional full Self Assessment.

Don’t worry, though, as the tax payment deadlines haven’t changed. You’ll still pay tax as usual; it’s just the reporting that’s gone digital.

Why This Matters

This change is one of the biggest shifts in UK tax reporting for sole traders in a generation. Rather than manually entering figures into HMRC’s online Self Assessment once a year, you will be expected to maintain digital records and report regularly throughout the year.

For anyone used to paper records, spreadsheets, or a once-a-year bookkeeping sprint, this can feel like a big shift- and it is.

Many sole traders are still unprepared, with a large number continuing to track income and expenses on paper or basic spreadsheets. Unfortunately, these methods won’t meet HMRC’s standards once MTD comes into force.

Final Thoughts 💭

If you’re a sole trader whose turnover exceeded £50,000 on your 2024–25 tax return, Making Tax Digital for Income Tax will change how you manage your tax reporting from April 2026, and it’s something you should start preparing for now, not later.

Need help choosing the right software or getting your digital records set up properly? Just ask, that’s what we’re here for 😊

For more info on MTD, check out our YouTube video linked below!

MTD ITSA: What UK Sole Traders & Landlords Must Know