Making Tax Digital for Sole Traders

Making Tax Digital is a government initiative to improve tax administration. It started with VAT but from April 2026 it will be extended to cover Sole traders and Landlords. We understand that it will be a big change, not only for sole traders, but also accountants, and that is why here at Monahans we have a dedicated team to help with the transition of MTD ITSA.

• Who is affected, what are the thresholds?
  From April 2026, sole traders that have gross rental income of £50,000 or more during a tax year will fall under the new MTD ITSA rules. This will change from April 2027 to £30,000 per tax year.

• What needs to be done if you are affected?
  

  Currently you only need to complete one Self-Assessment tax return per year, but this will be changing. From April 2026 you will be required to keep digital records and send HMRC quarterly updates of your income and expenditure.

After all four quarters have been submitted, you are required to complete an End of Period Statement (EOPS) to finalise the income and expenditure, and you will then need to complete a Final Declaration to confirm whether you have received any other taxable income.

This means that instead of having to complete just one self-assessment tax return per year, you will be required to make six submissions to HMRC.

• What can/will Monahans do?
  Monahans have an expert team of individuals with years of experience that will be able to help you transition and maintain that you are compliant under this new way of working. They will be able to help guide you through the steps that need to be made to make it as easy as possible.

We also have access to a market leading software, Xero. It is very easy to use, and we have trained individuals that can help you if you ever have questions. It allows you to keep digital records, keep up to date with how your business is performing, and it gives you more up to date information to help you make better informed business decisions.

• What services we offer?
  Monahans can offer you different levels of service to fit your needs. For example, we can complete everything from the bookkeeping and digitalisation of your records all the way through to the Final Declaration, or we can just complete the End of Period Statement (EOPS) and Final Declaration with you making the quarterly submissions. Please get in touch with a member of the team and we can discuss what options are available and what would be best for you.

The MTD ITSA team can assist you with any queries you have. If you would like to contact us on MTD@monahans.co.uk or via the contact us box, we will get back to you as soon as possible.