MTD for sole traders: your tax sorted, all year round
MTD for Income Tax does mean more reporting than you’re used to. But quarterly updates to HMRC, done properly with the right software, stop the annual January panic before it starts. Your records stay tidy all year round, your tax bill isn’t a mystery until the deadline – and when THP is handling the compliance side, you barely have to think about HMRC at all.
When you use THP’s service, we set you up with free Making Tax Digital software, keep you compliant, and give you tips to keep your tax bill as low as possible.
Get FreeAgent free – worth £228 a year
When you use THP’s Self-Assessment Tax Return Service, we give you a free subscription to FreeAgent cloud accounting software.
That’s a saving of £228 a year as FreeAgent’s standard price for sole traders is £190 + VAT / £228 inc. VAT per year (This price excludes promotions and is correct as of February 2026).
FreeAgent is our recommended MTD software for sole traders. It connects directly to your bank account via Open Banking, automatically keeps your records up to date, and handles the quarterly submissions to HMRC when MTD becomes mandatory. You don’t need to be tech-savvy to use it. It’s designed for people who want to get on with their work – not spend their evenings doing tax admin.
With THP, you get expert accountants managing your tax affairs and the software to keep you fully compliant. No extra cost. No tech headaches. And, best of all, no nasty surprises.
Why you need to act now
MTD for Income Tax is being introduced in stages, based on your qualifying income (gross income from self-employment and/or property). Here’s when it affects sole traders:
April 2026
Mandatory for sole traders with qualifying income over £50,000
April 2027
Extends to those with qualifying income over £30,000
April 2028
Extends to those with qualifying income over £20,000
If your income currently sits below £20,000, you won’t be required to join at this stage – but HMRC has confirmed that MTD will eventually cover the vast majority of self-employed people, so getting a clean process in place now will save you a lot of stress later.
The most important thing to understand is this: instead of sorting your tax once a year, you’ll need to make four quarterly updates to HMRC throughout the year, plus additional submissions at the end of each tax year. If you currently keep records in a shoebox, a folder on your desktop, or just tidy everything up before the January deadline, now is exactly the right time to make a change.
The good news? Getting MTD-ready is much more straightforward than it sounds when you have THP in your corner.
What does MTD for Income Tax mean for sole traders?
When you switch to Making Tax Digital for Income Tax (also known as MTD ITSA), you’ll be required to do three things:
- Keep digital records of your business income and expenses throughout the year, using HMRC-recognised software such as FreeAgent. This replaces paper records, spreadsheets or the kind of “I’ll sort it all in January” approach that many sole traders are still relying on.
- Submit quarterly updates to HMRC every three months. These aren’t full tax returns – they’re a summary of your income and expenses for that period. But they have deadlines and missing them can result in penalty points building up against you.
- Complete a year-end finalisation at the end of the tax year. This is when you add any income from outside your business – savings interest, pension income, and so on – and formally finalise your tax position for the year.
Yes, it seems like more admin than you’re used to. But with FreeAgent running in the background, most of the record-keeping takes care of itself. Your bank transactions are imported automatically. Your expenses are logged on your phone as you go. And with THP preparing and submitting your quarterly updates, you’ll almost certainly have more time to spend on your business than you did before.
For a full overview of Making Tax Digital for sole traders and landlords, visit our Making Tax Digital accountants page.
How our MTD service works
You can use THP for any or all parts of the MTD process. Here’s what our service typically looks like:
Review
We review how you currently manage your records and confirm what needs to change to achieve MTD compliance. No jargon, no judgement – just a clear picture of where you are and what needs to happen next.
Set Up
We get FreeAgent set up for you, import your financial data, and make sure everything is connected and ready to use. You won’t be starting from scratch.
Manage (quarterly)
You use FreeAgent to record your income and expenses as you go. We keep an eye on things and can prepare and submit your quarterly updates to HMRC on your behalf, so you never have to worry about missing a deadline.
Finalise (year-end)
We complete your year-end submissions, identify tax allowances available to you, and advise on any planning opportunities that could reduce your tax bill in the coming years.
Why FreeAgent?
We’ve worked with many accounting software solutions over the years. For sole traders, FreeAgent consistently stands out. It’s built for people who are brilliant at what they do – but don’t necessarily want to become experts in tax admin.
Here’s what it does for you day to day:
- Connects directly to your bank account via Open Banking and imports transactions automatically
- Categorises your income and expenses with smart auto-matching
- Lets you send invoices by email – and follows them up automatically when payment is overdue
- Records expenses and mileage on the go via the mobile app – just snap a receipt and you’re done
- Tracks time and assigns it to projects, so you can invoice accurately
- Generates MTD-compliant quarterly updates ready to submit to HMRC
- Gives you a real-time view of your estimated tax bill throughout the year – so January is never a nasty surprise
- Files your Self-Assessment Tax Return directly from within the software
- Provides personalised insights and financial reminders via its Radar feature
See how FreeAgent works for sole traders
FreeAgent’s standard price for sole traders is £190 + VAT / £228 inc. VAT per year (price correct as of February 2026). As a THP Self-Assessment Tax Return client, you get it completely free, for as long as you use our service.
Customers of NatWest, RBS, Ulster Bank NI and Mettle can also access FreeAgent for free. But if you don’t want the hassle of switching banks – and most people don’t – we can provide it as part of our THP service.
What if I prefer different software?
FreeAgent is our first recommendation for most sole traders. But it isn’t the only MTD-compliant option, and we’re not tied to one product.
If you already use Xero or another cloud accounting package and would like to continue using it, we can fully support you. While we can’t provide other software for free, our MTD for sole traders service will still support you in exactly the same ways. Indeed, if you have more complex business needs or are planning to grow, software like Xero may be better suited to your needs.
If you’re unsure what software is likely to be best for your business, get in touch. We’ll make an honest recommendation on what is likely to work best for you.
I’m a landlord. Is this service for me?
If you are a landlord, you’ll benefit more from using cloud accounting software that’s designed for managing property portfolios. The good news is that we also offer a dedicated MTD for Landlords service which includes free MTD software designed by landlords for landlords.
Meet our MTD for sole traders team
MTD for Income Tax isn’t just a once-a-year task. It’s a year-round compliance process, with reporting deadlines spread throughout the tax year. That’s why having a knowledgeable accountant who knows your numbers – and keeps you on track between January rushes – makes such a real difference.
Here’s who you’ll be working with at THP.
Kirsty Demeza
With a portfolio that ranges from startups to companies with a £10 million turnover, Kirsty’s talent for working closely with her clients ensures her services remain in strong demand. “When you help a new business and watch it expand into new premises and secure big contracts, it’s a great feeling,” she says. As well as providing accounting services – from tax planning and bookkeeping to audit and Making Tax Digital – Kirsty is part of THP’s sales team and closely involved in helping THP’s trainees develop their skills.
Karen Jones
TEP ATT – Tax Manager
Having worked for one of the world’s largest accountancy firms, Karen uses her tax knowledge and skills to help clients (including sole traders) obtain substantial reductions to their tax liabilities. With an expanding portfolio of clients, she frequently faces a variety of challenges and relishes the experience she gains as she solves them and helps people to save money.
Debbie West
FMAAT – Client Manager
Debbie takes a tailored approach to working with businesses and often deals with clients looking for tax planning advice. To do this, she likes to gain a thorough understanding of what clients do and provide a personalised service. “How I help clients depends on their aims. It could be tax-efficient remuneration planning, making full use of expense claims, pension contributions, or something else,” she explains.
Kate Brasser
FCCA – Client Director
Kate has a deep understanding of owner-managed businesses, from sole traders to larger organisations. She also has significant experience in supporting clients, helping them to plan for the future and thrive. Kate explains: “No two businesses are exactly the same and I enjoy helping to meet their individual needs. It’s satisfying when you’ve pulled a lot of complex information together and provided your client with a service that exceeds their expectations.”
Waqar Aziz
CTA – Tax Manager
Waqar joined the THP tax team in Wanstead in late 2021 as part of the merger with Dutchmans. He is a fully qualified CTA and brings over 30 years of experience working in a small practice across all aspects of taxation. He looks forward to continuing to service his existing clients whilst also becoming involved with the wider THP tax department and supporting our MTD services.
Melanie Robinson
Melanie started with THP in Wanstead at the beginning of 2020. She is a self-taught expert in Xero cloud accounting software (and a dab hand at FreeAgent too) and genuinely enjoys helping clients transition away from paper records and manual processes. For sole traders nervous about MTD software, Melanie is exactly the person you want in your corner – she has a real talent for making the technology feel simple and manageable for clients who use our MTD for sole traders service.
MTD for Sole Traders FAQs
MTD for Income Tax becomes compulsory for sole traders earning over £50,000 from April 2026, over £30,000 from April 2027, and over £20,000 from April 2028. For a detailed breakdown of the rules and timelines, see our Making Tax Digital guide.
Yes. HMRC requires you to use software on its approved MTD list. FreeAgent is fully HMRC-recognised and compliant, and we provide it free to Self-Assessment Tax Return clients who want it. If you prefer to use a different product, we can advise on your options.
Technically, it’s possible to use a spreadsheet combined with ‘bridging software’ to meet the MTD requirements. In practice, most sole traders find it more trouble than it’s worth, particularly once you’re dealing with four quarterly deadlines instead of one. A full cloud accounting setup is more reliable, much easier to maintain, and far less likely to cause problems at year-end. We’re happy to talk through what would work best for you.
HMRC is introducing a points-based penalty system for MTD for Income Tax. Miss a quarterly update, and you accumulate a penalty point. Build up enough points and you’ll receive a financial penalty. HMRC has confirmed there’ll be no penalty points for late quarterly updates in the first 12 months for those joining from April 2026 – but you still need to submit updates, and penalties can still apply for late year-end returns. Getting set up properly from the outset is the safest approach.
Making Tax Digital for VAT and MTD for Income Tax are separate. If you’re already VAT-registered, you’ll be familiar with the broad principles – digital records, regular submissions and compliant software. MTD for Income Tax works in a similar way, but applies to your annual earnings (i.e., all the income you currently declare on your annual Self-Assessment Tax Return).
This is probably the most common concern we hear from sole traders about MTD. The honest answer is that FreeAgent is designed to be intuitive, even for people who don’t consider themselves tech-savvy. Many of our clients are genuinely surprised by how straightforward it is to use. And because THP handles everything from the initial setup through to your quarterly submissions, you’re never left to figure it out on your own. If you get stuck, we’re always here.
Ready to get MTD sorted?
If you’re a sole trader who wants to get Making Tax Digital right – without spending your evenings grappling with HMRC deadlines or tax software you don’t fully understand – we’d love to help.
Book a call with our team. We’ll talk you through your options, give you a tailored quote, and take it from there. Making Tax Digital doesn’t have to be complicated. With THP, it really isn’t.
Or call us on 0800 6520 025 – we’d be delighted to answer any questions you have.
Making Tax Digital News
Want to learn more about MTD? If so, please browse our blog articles.
Software for MTD – what’s right for you?
Making Tax Digital changes to affect sole traders & landlords
Free MTD software for THP clients
MTD: survey shows thousands unaware of Making Tax Digital
MTD for VAT penalties and reporting requirements
