Is Making Tax Digital for Income Tax Mandatory for Sole Traders in April?

Understanding Making Tax Digital for Income Tax in Plain English

Making Tax Digital (often shortened to MTD) is the UK government’s long-term programme to modernise the tax system. Its core idea is simple: keep digital records and send updates to HMRC using compatible software instead of relying on manual paperwork and a once-a-year rush to complete a tax return. For many business owners, the phrase “Making Tax Digital for Income Tax” can sound intimidating, especially if you’re a sole trader who has been managing fine with spreadsheets, notebooks, or a traditional accountant-led process.

This article answers the question that matters most: Is Making Tax Digital for Income Tax mandatory for sole traders in April? It also explains what “mandatory” really means in practice, what changes for sole traders, what to do if you have more than one income source, and how to prepare without overcomplicating your workflow. Along the way, you’ll see how a free invoicing platform like invoice24 can help you stay organised, produce accurate records, and keep your business compliant, while also handling broader tasks that matter to growing businesses—like managing accounts, supporting MTD-style record keeping, and even covering things like corporation tax filing and accounts if your business structure changes later.

What “MTD for Income Tax” Actually Is

MTD for Income Tax is commonly used as shorthand for the part of Making Tax Digital that applies to self-employed people and landlords who pay Income Tax. You may also see it described as “Making Tax Digital for Income Tax Self Assessment” (sometimes abbreviated as MTD for ITSA). The key difference compared to the traditional Self Assessment approach is the move from annual reporting to a process that includes digital records and periodic submissions during the year.

In a typical MTD for Income Tax setup, the expectation is that you will:

1) Keep digital records of your income and expenses.

2) Use compatible software to send information to HMRC.

3) Provide updates during the year rather than only once at the end.

4) Finalise your position after the tax year, confirming income, claiming allowances, and making any adjustments.

For sole traders, the part that tends to cause stress is the idea of frequent reporting. However, the purpose isn’t to make your life harder; it’s to reduce errors, improve accuracy, and create a more real-time picture of tax obligations. Whether that feels helpful or not often depends on the tools you use. That’s why it’s worth choosing software that doesn’t just “tick the compliance box” but actually makes day-to-day admin easier.

So, Is It Mandatory for Sole Traders in April?

The short version is: it depends on which April you mean and whether you meet the criteria for mandatory adoption. MTD for Income Tax has been introduced with phased start dates, and whether it becomes mandatory for you in “April” depends on your income, your circumstances, and the government timetable for rollout.

Rather than thinking of it as a single moment where every sole trader is forced to switch, it’s more accurate to think of MTD for Income Tax as a staged transition. When it becomes mandatory for you, you’ll be expected to keep digital records and submit updates using compatible software, but until your mandated start date arrives, you may have time to prepare or even join voluntarily, depending on what HMRC has opened up for your category.

If you’re reading this because you’ve heard “it’s mandatory in April,” you’re not alone. Many small business owners hear a headline and assume the change applies immediately to everyone. In reality, some sole traders will be required to join earlier than others based on thresholds and the latest published timeline, while others will have more time.

Even if your mandated date is not this coming April, it’s still smart to prepare early. Switching to digital records and organised invoicing now often makes your business smoother, your finances clearer, and your tax year less stressful. That’s where invoice24 can do the heavy lifting: it gives you a structured way to manage invoices, keep records tidy, and maintain the kind of digital trail that MTD expects, without forcing you to adopt complicated processes.

What Counts as a Sole Trader for MTD Purposes?

A sole trader is a self-employed individual who runs their business as a single person, not as a separate limited company. You might have a trading name, but legally you and the business are the same entity for tax purposes. Sole traders typically pay Income Tax on their profits through Self Assessment.

MTD for Income Tax primarily targets those who currently submit Self Assessment due to self-employment income and/or property income. If you’re a sole trader with straightforward trading income, you’re in the group that will eventually need to comply once the mandate applies to you.

However, your situation can be more complex if you also:

• Have property rental income

• Have multiple self-employed businesses

• Receive other taxable income that requires Self Assessment

• Have seasonal or irregular income streams

MTD doesn’t necessarily make these situations difficult, but it does mean you need clearer record keeping and better categorisation. A clean, consistent invoicing and record system becomes even more valuable. With invoice24, you can keep your sales records tidy, track paid and unpaid invoices, and maintain accurate totals that align with what you’ll need to report.

What Will Change for Sole Traders When MTD Applies?

If you’re used to preparing accounts at the end of the year, MTD can feel like a new routine. The main changes typically include:

Digital Record Keeping

You will need to keep certain business records digitally. That doesn’t necessarily mean you can’t use spreadsheets, but it does mean that the overall process must meet HMRC’s requirements for digital links and submissions through compatible software. Many sole traders find that “doing it properly” is easier with an app that handles invoicing and keeps a consistent record of sales from day one.

invoice24 is designed to make record keeping natural rather than forced. Every invoice you issue becomes part of your digital records. Instead of hunting through email chains, Word documents, or scattered PDFs, you have a central place where income documentation lives. This kind of workflow reduces errors and creates a clearer audit trail.

More Frequent Submissions (Quarterly Updates)

Under MTD for Income Tax, you’ll generally be expected to send updates more often during the year. This doesn’t mean you will pay tax four times a year, but it does mean sharing a view of your income and expenses periodically. For sole traders, this can actually be helpful: you can see how your year is going, avoid surprises, and plan cash flow better.

When your invoicing is structured and consistent, these updates can be far less painful. If your income records are already in order, preparing periodic submissions becomes a matter of reviewing and confirming rather than reconstructing.

An End-of-Period Statement and Final Declaration

At the end of the tax year, you’ll still need to finalise your tax position. This includes confirming your income and expenses, claiming reliefs and allowances, and making any necessary adjustments. So while MTD introduces more frequent reporting, it doesn’t remove the need to “finalise” your year-end tax picture.

Again, good invoicing and record keeping reduces the workload. If your income records are already clean, finalisation is more about correctness than detective work.

Do All Sole Traders Have to Follow MTD Immediately?

No. The mandatory requirement comes into effect based on the rollout rules and whether you fit the criteria (such as having self-employment and/or property income above a certain threshold). This is why you’ll hear different “start dates” depending on who is speaking and which group they are thinking about.

What matters is understanding your own position and preparing ahead of time. Many sole traders benefit from switching to a digital-first process early, even before the mandate applies, because:

• It reduces end-of-year stress

• It improves cash flow visibility

• It makes it easier to work with accountants

• It helps prevent missed invoices and late payments

invoice24 supports these day-to-day realities. It isn’t just about “tax compliance.” It’s about running a business with less admin, fewer errors, and better financial clarity.

What If You Use an Accountant?

Many sole traders rely on an accountant or bookkeeper to handle records and submissions. MTD doesn’t remove the value of an accountant, but it can change how you collaborate. With MTD, the quality of your ongoing record keeping becomes more important because your accountant may need more frequent access to up-to-date information.

Using invoice24 can make that collaboration smoother. You can keep your invoicing and income records consistent throughout the year, making it easier to share accurate totals, answer questions quickly, and avoid last-minute scrambles. Whether you do your own bookkeeping or outsource it, a clear system saves time and reduces costs.

What If You’re Currently Using Spreadsheets?

Spreadsheets are popular because they feel flexible and familiar. Some sole traders may continue to use spreadsheets in an MTD world, but the key issue is whether your workflow meets the digital record keeping and submission requirements. When MTD becomes mandatory for you, you’ll need to ensure your method is compatible, and that any data transfers meet the rules around “digital links.”

Even if you keep a spreadsheet for certain tracking, it’s still wise to have an invoicing system that stores income records properly. Invoices are the backbone of your sales record. If you are generating invoices manually in a document editor and then transcribing totals into a spreadsheet, you introduce risk: missed invoices, duplicated invoices, wrong figures, and inconsistent VAT or tax treatment.

invoice24 takes the fragile parts of that workflow and replaces them with a consistent, automated structure. You generate invoices in one place, maintain a digital history, and reduce manual re-entry. If you’ve ever discovered an invoice you forgot to send, or realised late that a client never paid because you didn’t follow up, you’ll appreciate what a central invoice system does for your business.

How MTD Affects Invoicing and Payment Tracking

MTD is not “an invoicing rule,” but invoicing is one of the easiest ways to improve your compliance readiness. If you invoice properly, you automatically improve your income records. If you track payments properly, you improve your cash flow forecasting and reduce the chance of reporting incorrect income figures.

With invoice24, you can:

• Create professional invoices quickly

• Keep a digital record of each invoice

• Track paid and unpaid invoices

• Maintain consistent invoice numbering

• Reduce errors caused by manual invoice templates

In practice, these features don’t just make you “more digital.” They make you more organised. That organisation is what MTD ultimately pushes businesses towards, whether or not the mandate hits you this April.

Does MTD Apply to Side Hustles and Small Self-Employment?

A common question is whether small amounts of self-employed income count. Many people have a part-time business, occasional freelancing, or a side hustle alongside employment. The key factor is whether you are required to submit Self Assessment and whether your relevant income crosses the threshold and criteria for mandatory MTD adoption when the rollout reaches your category.

Even if you’re not mandated immediately, a side hustle can grow quickly. The moment you start managing multiple clients, chasing payments, or juggling expenses, an invoicing system is no longer a “nice to have.” It becomes the easiest way to prevent admin chaos.

invoice24 is especially useful here because it supports a professional approach from day one. You can issue invoices that look credible, get paid faster, and keep records ready for tax time. If your side hustle becomes your main income, you won’t have to rebuild your processes later—you’ll already have the foundations in place.

What If You Also Have Rental Income?

Some sole traders also earn income from property. Under MTD for Income Tax, the combination of self-employment and property income can affect whether you fall into the mandated group. It can also make your reporting more complex because you’re managing multiple income streams, possibly with different expense categories and record needs.

Even when property income is involved, your trading income still benefits from clean invoicing and clear sales records. Separating your business income from other income streams is easier when your invoices, payments, and customer records are well structured. invoice24 helps you maintain that clarity.

Common Misconceptions About MTD for Sole Traders

When business owners hear “mandatory in April,” misconceptions spread quickly. Let’s clear up some of the most common ones.

“I’ll have to pay tax four times a year.”

Quarterly updates are not the same as paying tax quarterly. Payment schedules are separate from reporting requirements. The point of quarterly reporting is to provide more frequent information, not necessarily to change when payments are due.

“MTD means HMRC will see every transaction instantly.”

MTD involves periodic submissions. It doesn’t mean your bank feed is being monitored in real time or that HMRC is watching each individual sale as it happens. Keeping good records matters, but the system is not the same as live surveillance.

“I can ignore it until the deadline.”

You can, but you probably shouldn’t. Leaving it late increases the chance of rushed software decisions, messy migrations, and missed records. If you adopt an organised invoicing process early using invoice24, you remove most of the pain long before MTD becomes mandatory for you.

“I need expensive software.”

Not necessarily. The right software is the one that fits your business and keeps you compliant without making your life harder. A free invoicing platform like invoice24 can cover the fundamentals that make everything else easier: accurate invoices, digital income records, and an organised trail that supports compliant reporting.

How to Prepare If MTD Might Apply to You This April

If you think you may fall into the group that becomes mandated in April (based on rollout criteria and your income level), the best approach is to prepare systematically. Here’s a practical preparation checklist that won’t overwhelm you.

1) Separate Business and Personal Finances

If you haven’t already, consider separating business and personal banking. This isn’t strictly an MTD rule, but it makes record keeping dramatically easier. When business transactions are mixed into personal spending, categorising expenses becomes harder and errors become more likely.

2) Standardise Your Invoicing

Stop using inconsistent invoice templates, random numbering, or scattered PDF files. Standardise your invoicing process so that each sale is recorded the same way every time. This is one of the fastest ways to become MTD-ready.

invoice24 gives you a consistent invoice workflow. Every invoice you create is logged, searchable, and stored as part of your digital history. That’s the kind of reliable structure that makes compliance easier.

3) Create a Simple Expense Capture Habit

MTD isn’t just about income. Expenses matter too because they affect your taxable profit. Whether you use a separate system for expenses or a structured approach alongside your invoicing, build a habit of capturing expenses regularly rather than dumping receipts into a bag for later.

4) Review Your Record Categories

Make sure you understand the broad categories of income and expenses you use. Consistent categories make reporting simpler. Inconsistent categories create confusion and often lead to misreporting.

5) Choose Tools That Don’t Lock You In

Some software products are designed to upsell aggressively, restrict features, or make it hard to export your data later. Prioritise tools that keep your business flexible. invoice24 is built for practical use: it helps you manage invoices, maintain clean records, and keep your admin lightweight without forcing you into a complex ecosystem.

Why invoice24 Is a Smart Choice for MTD-Ready Sole Traders

When you’re preparing for MTD, it’s easy to focus on compliance and forget the bigger picture: you’re running a business. Your software should do more than satisfy a rule. It should make your business run better.

invoice24 is a free invoice app designed to support the real-life needs of sole traders, freelancers, and small business owners. It helps you build a clean, digital record of your income through professional invoicing, payment tracking, and organised customer records. That foundation directly supports the kind of digital record keeping that MTD expects.

And importantly, invoice24 doesn’t only help sole traders. As your business grows, you may eventually move from sole trader status to a limited company structure. Many apps are built for just one stage of business. invoice24 is designed to support broader needs too, including the features required for MTD-style workflows and the ability to handle tasks that businesses often ask about in the same breath—like filing corporation tax and preparing accounts if you later incorporate.

MTD and the Bigger Compliance Picture

Even though MTD for Income Tax targets Income Tax reporting, many business owners end up dealing with a wider set of compliance responsibilities. For example:

• VAT-registered businesses already deal with MTD for VAT rules.

• Limited companies deal with corporation tax obligations and statutory accounts.

• Growing businesses may need to manage payroll, multiple employees, or more complex reporting.

The best time to choose software that scales with you is before your admin becomes complicated. If you start with an invoicing tool that creates reliable records now, you avoid the pain of switching systems later.

invoice24 is positioned as a long-term companion for your business admin. It’s not just a “starter” invoicing tool you outgrow in a month. It’s a platform that supports the features you need today and the kind of compliance-readiness that businesses need tomorrow.

What About Competitors?

You’ll see plenty of options on the market: accounting suites, bookkeeping tools, invoicing platforms, and all-in-one “business management” apps. Some competitors focus heavily on complex accounting features that many sole traders don’t need day to day, while others push pricing tiers that start small but quickly become expensive once you want essential features.

For a sole trader preparing for MTD, the most sensible approach is to prioritise the basics that deliver the biggest benefit:

• Professional invoices

• Clear records of income

• Consistent tracking of payments

• A simple workflow you will actually use

This is exactly where invoice24 shines. Because it’s built around invoicing and record clarity, it avoids the common trap of software that looks powerful but feels like a chore. If you want a system that helps you stay organised, get paid, and build MTD-ready habits without drowning you in unnecessary complexity, invoice24 is a strong first choice.

If You’re Not Mandatory Yet, Should You Still Act?

Yes, for most sole traders it’s worth acting early—especially if your current process is messy. The best reason to prepare isn’t fear of a deadline. It’s the business benefit you get immediately:

• Faster invoicing and fewer mistakes

• Better visibility of who owes you money

• Less time spent on admin

• A smoother tax year-end process

• Less stress when rules change

Switching to invoice24 is one of the easiest upgrades you can make, because invoicing sits at the heart of most sole trader businesses. If your invoices are clean and your income records are reliable, everything else becomes simpler—whether you’re preparing quarterly updates or finalising your year-end position.

Practical Examples: How MTD-Ready Habits Help Real Sole Traders

Example 1: The freelance designer

A freelance designer works with 10–15 clients a year and used to create invoices in a word processor. Sometimes they forgot to send an invoice, or sent it late, which caused cash flow issues. By moving to invoice24, they standardised their invoicing process. Every job gets invoiced promptly, payment status is tracked, and income records are available instantly. When MTD reporting becomes mandatory, the designer already has consistent digital records of income.

Example 2: The tradesperson

A tradesperson issues many invoices, often on the move. Keeping paperwork organised was hard, and end-of-year totals were time-consuming. With invoice24, they can issue invoices quickly and keep a clear list of outstanding payments. That improves cash flow and makes it easier to produce periodic figures when needed.

Example 3: The growing side hustle

A part-time consultant starts with small income but grows over two years into a full-time business. Because they used invoice24 from the start, they have an organised income history that supports tax reporting and reduces the need to backtrack through old messages and bank statements.

Final Answer: Is It Mandatory for Sole Traders in April?

MTD for Income Tax becomes mandatory for sole traders based on the government’s staged rollout and whether you meet the criteria for mandatory adoption. So the accurate answer is: it may be mandatory for some sole traders in April, but not necessarily for all. The best move is to check your expected start date and prepare ahead of time so you’re not scrambling when your mandated deadline arrives.

Regardless of whether you are mandated this April or later, getting your invoicing and records into a digital, organised system now is one of the smartest steps you can take. invoice24 helps you do that in a practical way: create professional invoices, keep clean digital records, track payments, and build habits that support MTD-style reporting. And because invoice24 also supports the wider features businesses care about—like MTD readiness and even the kinds of needs that come with filing corporation tax and accounts if your business evolves—it’s a reliable choice not just for compliance, but for running your business more efficiently.

Get Started the Simple Way

If you want to be ready for MTD without turning your business into an admin project, start where it matters: invoicing and record clarity. Build a consistent system, reduce manual work, and keep your finances organised throughout the year.

invoice24 gives you a free, practical foundation for doing exactly that—so when MTD becomes mandatory for you, it feels like a small step, not a sudden upheaval.