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5 Steps How to Register for MTD and File Your First Update (Easy Guide for Sole Traders)

  • Jun 25
  • 5 min read

By Sam | June 24, 2026

If you’re a sole trader in the UK, you’ve probably heard the term "Making Tax Digital" (MTD) floating around for years. Well, we are now officially in the era of MTD for Income Tax Self Assessment (ITSA). As of April 2026, the rules have changed for many of us, and the clock is ticking toward that very first quarterly update deadline.

I know, "tax" and "deadlines" aren't usually the highlight of anyone's morning. But the good news is that MTD isn't actually designed to make your life harder: it’s meant to bring the UK tax system into the 21st century, reducing errors and giving you a much clearer picture of your finances throughout the year.

If you’ve got a turnover of more than £50,000, you’re already in the mandatory window. If you’re feeling a bit overwhelmed about how to get started, don’t worry. I’ve broken it down into five simple, manageable steps to get you registered and ready for your first filing this August.

Step 1: Check Your Eligibility (The £50k Rule)

The first thing to do is confirm that you actually need to be registered right now. HMRC has phased this rollout to make it easier on everyone.

As of April 6, 2026, MTD for ITSA became mandatory for sole traders and landlords with a total qualifying income of more than £50,000.

If your income is between £30,000 and £50,000, you have a little more breathing room: you won’t be mandated to join until April 2027. However, many business owners in this bracket are choosing to sign up early anyway. Why? Because getting into the habit of digital record-keeping now means no nasty surprises when the "hard" deadline hits next year.

If you’re unsure where you sit, it’s worth checking your last tax return or chatting with a pro. You can find an expert accountant through our matching service who can review your turnover and tell you exactly where you stand.

Step 2: Choose Your MTD-Compatible Software

MTD is called "digital" for a reason: you can no longer just send HMRC a paper form or use a basic spreadsheet that isn't linked to their systems. You need "compatible software."

Think of this software as the bridge between your business bank account and HMRC. It tracks your income and expenses and "talks" to the tax office on your behalf.

A close-up of a laptop screen showing a modern accounting dashboard.

When choosing software, look for:

  • HMRC Recognition: Make sure the software is on the official HMRC list of compatible products.

  • Ease of Use: If you hate tech, go for something with a simple mobile app.

  • Bank Feeds: This is a lifesaver. It automatically pulls your transactions into the software so you don't have to type them in manually.

Most popular platforms like Xero, QuickBooks, and Sage have dedicated MTD for ITSA modules. If you're looking for something more tailored to sole traders, there are also smaller, "app-first" providers that make the process feel more like checking social media than doing accounts.

Step 3: Register Through the Government Gateway

Once you’ve got your software picked out, it’s time to tell HMRC you’re ready to play. You don't just "start" using the software; you have to officially sign up for MTD for Income Tax.

Here is the quick walkthrough:

  1. Head over to the HMRC website and sign in using your Government Gateway user ID and password.

  2. You’ll need your Unique Taxpayer Reference (UTR) and your National Insurance number handy.

  3. Choose the option to sign up for "Making Tax Digital for Income Tax."

  4. You’ll be asked to provide the name of the software you’ve chosen. This is how HMRC "links" your digital tax account to your records.

Pro tip: Don't leave this until the day before your deadline. It can take a few days for HMRC to process your registration and send you a confirmation email. Wait for that confirmation before you try to file anything.

Step 4: Start Your Digital Record Keeping

This is the part that changes your day-to-day life. Under MTD, you are required to keep "digital records."

What does that actually mean? It means every sale you make and every business expense you pay for needs to be recorded in your software. You don't necessarily have to scan every receipt (though it's a great idea!), but the data: date, amount, and category: must be stored digitally.

A sole trader looking at a tablet in a cafe, managing his business finances digitally.

Since we are currently in June 2026, you should be recording everything that has happened since April 6, 2026. This forms your first "quarter."

  • Quarter 1: April 6 to July 5.

  • Deadline: August 7.

If you’ve been using your software correctly since April, this next step will be a breeze. If you’ve got a shoe box full of receipts from the last two months, now is the time to start entering them!

Step 5: Filing Your First Quarterly Update

This is the big one: the "Update." Unlike the old Self Assessment where you did one big filing a year, MTD requires four smaller updates throughout the year.

The first update for the 2026/27 tax year covers April 6 to July 5. You must submit this by August 7, 2026.

How to do it:

  1. Reconcile: Open your software and make sure all your bank transactions for that period are categorized (e.g., "Office Supplies," "Marketing," "Sales").

  2. Review: Most software will have an "MTD Update" button. Click it to see a summary of your income and expenses for that quarter.

  3. Submit: Once you’re happy the numbers look right, hit the submit button. The software will ask you to authorize the connection to HMRC (usually with a quick login), and then off it goes!

Remember, these quarterly updates don't include things like personal tax reliefs or complex adjustments. They are just a snapshot of your business activity. You’ll still do a "Final Declaration" at the end of the tax year to wrap everything up.

Why You Might Want Some Help

While MTD is designed to be DIY-friendly, the reality of running a business is that you’re busy. The last thing you want is to be staring at a software error message at 11 PM on August 6.

Working with an accountant can take the pressure off. They can:

  • Set up your software correctly from the start.

  • Review your quarterly updates before they go to HMRC to ensure you aren't missing any tax-deductible expenses.

  • Advise you on how much tax to set aside based on your real-time data.

Two professionals meeting to discuss business growth and tax strategy.

At Accountant Search, we specialize in matching SME owners and sole traders with the perfect accounting partner. Whether you need someone to handle everything or just someone to check your work once a quarter, we can help.

Quick Recap: The MTD Timeline for 2026

  • April 6, 2026: MTD for ITSA becomes mandatory for those over £50k.

  • July 5, 2026: End of the first digital record-keeping quarter.

  • August 7, 2026: Deadline for your very first quarterly update.

Don't wait until August to get your digital house in order. Follow these five steps now, and you’ll find that the new "digital" way of doing things actually gives you more time to focus on what you do best( running your business!)

 
 
 

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