Making Tax Digital (MTD) is changing how UK freelancers and sole traders manage tax — but many people still don’t know what it means, when it applies, or what they need to do.
This guide explains everything in plain English so you can prepare with confidence.
💼 What Is Making Tax Digital?
Making Tax Digital is an HMRC initiative to move all tax reporting online using approved software.
Instead of submitting one tax return a year via the GOV.UK portal, MTD requires:
- Quarterly income summaries
- Digital records of all transactions
- Submission through MTD-compliant software
📅 When Does It Start for Freelancers?
As of 2025, here’s what matters:
| Group | MTD Deadline |
|---|---|
| VAT-registered businesses | Already in effect |
| Self-employed earning over £50k | April 2026 |
| Self-employed earning £30k–50k | April 2027 |
| Under £30k | Not yet confirmed – under review |
So, if you’re a freelancer earning over £50,000 per year, MTD applies from April 2026.
🧾 What You’ll Need to Do
Once MTD applies to you, you’ll need to:
- Keep digital records of income and expenses
- Submit 4 quarterly updates to HMRC (not just once a year)
- Use HMRC-approved software to do it (no paper or spreadsheets)
✅ Best MTD-Compatible Tools for Freelancers
Start using one of these now to avoid future stress:
1. QuickBooks Self-Employed
- Tracks income, expenses, and mileage
- Easy tax estimates and reports
- MTD-ready
2. FreeAgent (Free via Mettle or NatWest)
- Fully MTD-compliant
- Built for UK sole traders
- Comes free with select bank accounts
3. Zoho Books (Free Plan under £35k)
- Free for eligible UK sole traders
- May support MTD in future (check updates)
❗ What Happens If You Ignore MTD?
Once you’re required to follow MTD, failing to use proper software can lead to:
- Penalties and fines
- Missed filing deadlines
- HMRC compliance issues
It’s easier (and cheaper) to get set up early while things are calm.
🧠 Final Thoughts
MTD isn’t here to make your life harder — it’s just HMRC’s way of keeping everything digital, accurate, and trackable.
If you’re earning over £30k/year, it’s time to choose a tool, get familiar, and stay one step ahead. Your future self will thank you.