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HomeMaking Tax Digital for Income TaxMTD for Sole Traders

Making Tax Digital for Sole Traders

Simple MTD software for self-employed businesses

Stay compliant with Making Tax Digital (MTD) for Income Tax using software built specifically for sole traders. Track income and expenses, keep digital records, and submit quarterly updates to HMRC, all in one place.

Start your free 14-day trial today and prepare for MTD.

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What is Making Tax Digital for Sole Traders?

Making Tax Digital (MTD) is HMRC’s new system for reporting self-employed income and expenses digitally.

Instead of submitting a single Self Assessment tax return each year, eligible sole traders will need to:

  • Keep digital records of income and expenses
  • Submit quarterly updates to HMRC
  • File a MTD tax return at the end of the tax year

From 6 April 2026, sole traders earning over £50,000 from self-employment or property income must use MTD-compatible software. From April 2027, the threshold drops to £30,000 and from April 2028, the threshold drops to £20,000.

With the right software, staying compliant has never been simpler.

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How MTD Works for Sole Traders

1.

Keep digital records

Track all your business income and expenses digitally - no more spreadsheets or paper receipts.

2.

Submit quarterly updates

Send summaries of your income and expenses to HMRC every three months. Coconut formats everything correctly for MTD compliance.

3.

View your estimated tax bill

Get real-time updates on your tax obligations so there are no surprises at the end of the year.

4.

File your MTD Tax Return

Confirm your totals and submit your end-of-year tax return directly to HMRC - all from one platform.

Why Sole Traders Choose Coconut

Automatic transaction tracking

Connect your bank account and watch your income and expenses import automatically.

Real-time tax estimates

See exactly how much tax you need to save throughout the year.

Simplified quarterly submissions

Coconut handles the HMRC-compatible formatting, so you can submit updates with just a few clicks.

Designed for self-employed businesses

Coconut is built specifically for sole traders, freelancers, and small business owners.

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Who Needs MTD Software?

You’ll need MTD software if you are a sole trader or self-employed individual and:

  • Your total income from self-employment or property is over £50,000 from April 2026

  • Your income exceeds £30,000 from April 2027

  • Your income exceeds £20,000 from April 2028

Even if your income is below these thresholds, you can choose to use MTD-compatible software voluntarily to simplify record-keeping and get ahead of future changes.

MTD Made Simple for All Sole Traders

Whether you’re a freelancer, contractor, tradesperson, or online seller, Coconut makes Making Tax Digital easy.

  • Keep digital records of all income and expenses

  • Automatically categorise transactions for HMRC compliance

  • Submit quarterly updates quickly, without manual spreadsheets

  • Track tax in real time so you always know what you owe

With Coconut, every sole trader, no matter your industry, can stay compliant, save time, and manage finances effortlessly.

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Why choose !Coconut?

!Coconut has been designed specifically for sole traders and landlords. It's simple to use, HMRC recognised, securely connects with your bank and gives you the full picture of your finances in real-time.

Business finance all in on place

Keep track of your financial records as you go for a stress-free tax return

Save for tax with confidence

Find out how much tax to set aside throughout the year - no more guesswork

Automatic sync with bank statement feeds

See new transactions in real-time, without manually adding them

Professional invoices on the go

Create, send and track invoices in just a few clicks

Frequently Asked Questions

Do sole traders have to use MTD software?

Yes, if your income exceeds the qualifying income threshold, you must keep digital records and submit quarterly updates using compatible software.

How often do sole traders submit MTD updates?

Most sole traders submit four quarterly updates per year, followed by a final declaration.

1st Quarterly update 7th August (6th April – 5th July)
2nd Quarterly update 7th November (6th July – 5th October)
3rd Quarterly update 7th February (6th October – 5th January)
4th Quarterly update 7th May (6th January – 5th April)
Can I join MTD early?

Yes, voluntary participation lets you get used to digital record-keeping before the deadline.

What records do I need to keep?

You must keep digital records of all business income and expenses, including invoices, receipts, and payments.

Can I still file a Self Assessment tax return?

For tax years before April 2026, yes. After that, eligible sole traders must follow the MTD system.