Making Tax Digital for sole traders in Brighton: the complete guide

If you are self-employed and based in Brighton or Hove, Making Tax Digital for Income Tax will change the way you report your earnings to HMRC. For many sole traders, it means the familiar annual Self Assessment return is being replaced by quarterly digital submissions.

This guide covers exactly what MTD means for sole traders, when it applies to you, and what you need to do to be ready.

When does MTD apply to Brighton sole traders?

MTD for Income Tax (MTD for IT) affects sole traders whose total qualifying income exceeds certain thresholds. Qualifying income includes self-employment income plus any property rental income you receive.

• From April 2026: Total qualifying income over £50,000
• From April 2027: Total qualifying income over £30,000
• From April 2028: Total qualifying income over £20,000 (expected)

If you are currently earning below these thresholds, MTD does not apply yet — but it is worth preparing now, as income can grow and the lower thresholds will catch more sole traders over time.

What changes under MTD for sole traders?

Currently, sole traders file one Self Assessment tax return per year, covering the previous tax year, by 31 January. Under MTD, this changes to:

• Four quarterly updates sent to HMRC during the year, each summarising your income and expenses for that quarter
• One final declaration at year end to confirm all income, claim allowances and reliefs, and finalise your tax liability

The good news: the total tax you pay does not change. MTD is a reporting change, not a tax increase. You will still pay your tax by the same 31 January and 31 July payment deadlines as now.

What counts as allowable expenses for sole traders?

The rules on what you can claim do not change under MTD. Common allowable expenses for Brighton sole traders include:

• Use of home as office (flat rate or calculated allowance)
• Business mileage and travel
• Equipment and tools
• Professional subscriptions and training
• Marketing and advertising
• Accountancy fees
• Phone and internet costs (business proportion)
• Software subscriptions used for work

The difference under MTD is that you need to record these expenses digitally throughout the year, not scramble to find receipts in January.

The cash basis and MTD

Sole traders with turnover below £150,000 have traditionally been able to use the cash basis for calculating profits — recording income when received and expenses when paid. From April 2024, the cash basis became the default method for sole traders, with accruals basis available if preferred. MTD works with the cash basis without any issue.

Do you need an accountant for MTD?

You are not required to use an accountant, but most sole traders find it saves time and avoids errors. The quarterly deadlines add up — four updates plus a final declaration means five separate HMRC submissions per year, each requiring your records to be accurate and up to date.

For many Brighton sole traders we work with, handing the quarterly submissions to us costs less than the time they would spend doing it themselves — and eliminates the risk of penalties for late or incorrect submissions.

Getting ready for MTD as a Brighton sole trader

The steps to prepare are straightforward:

1. Check whether your income puts you in scope for April 2026 or a later date
2. Choose MTD-compatible software — we recommend QuickBooks or FreeAgent for most sole traders
3. Start keeping digital records of all income and expenses now, rather than waiting until your start date
4. Make sure you have a Government Gateway account and that it is linked to your UTR (Unique Taxpayer Reference)

If you are already using accounting software, check whether it is on HMRC's approved list for MTD for Income Tax.

How Fitzpatrick Co helps Brighton sole traders with MTD

We handle MTD for Brighton sole traders on a fixed monthly retainer. That includes setting up your software, reviewing your records each quarter, submitting all quarterly updates before the deadline, and completing your year-end final declaration.

You focus on running your business. We take care of HMRC.

Frequently asked questions