Making Tax Digital for Sole Traders, Keep Your Spreadsheet

Making Tax Digital for Income Tax has applied since 6 April 2026 for the first group of self-employed people with qualifying income over £50,000. If you are in that group, you need to keep digital records and submit quarterly updates to HMRC using compatible software.

That doesn't mean you need to buy Xero or learn QuickBooks. If you keep your records in a spreadsheet, you can keep doing exactly that.

What changes for sole traders?

Instead of one annual Self Assessment return, you'll send HMRC four quarterly updates during the tax year, plus a year-end tax return at the end. When the annual turnover for a sole-trader business is below £90,000, HMRC allows a simpler update containing total income and total expenses for the year so far.

The quarterly deadlines

For the standard April-to-April tax year:

• Quarter 1 (6 Apr – 5 Jul), submit by 7 August
• Quarter 2 (6 Jul – 5 Oct), submit by 7 November
• Quarter 3 (6 Oct – 5 Jan), submit by 7 February
• Quarter 4 (6 Jan – 5 Apr), submit by 7 May

What you need to submit

With this simpler reporting option, each quarterly update sends two cumulative figures to HMRC:

• Your total income year-to-date (turnover for a sole trader, rent for UK property)
• Your total allowable expenses year-to-date

These are cumulative figures. If your Q1 turnover was £10,000 and Q2 adds £8,000, your Q2 submission shows £18,000.

Do I need accounting software?

No. HMRC requires that your records are digital and that your submissions are sent through compatible software. A spreadsheet counts as digital records. Bridging software handles the submissions.

Accounting software like Xero or QuickBooks does much more than MTD requires. If you don't need invoicing, bank feeds, or automated bookkeeping, you don't need to pay for it.

What expenses can sole traders claim?

Common allowable expenses include:

• Office costs (stationery, phone bills, software)
• Travel costs (fuel, parking, public transport for business)
• Clothing (uniforms or protective equipment only)
• Professional fees (accountant, solicitor)
• Insurance (professional indemnity, public liability)
• Marketing and advertising
• Training directly related to your business

If you work from home, you can also claim a proportion of household costs or use HMRC's simplified expenses flat rate.

Getting started with flonancial

Flonancial is completely free. Upload your spreadsheet, pick your totals, and submit to HMRC. No accounting software needed, no monthly fees, no learning curve.