What Sole Traders Need to Know About Quarterly Estimates

Quarterly NI Estimates for Sole Traders

28 May 2025

Starting April 2026, a major change is coming for sole traders in the UK with an annual turnover of over £30,000. As part of the ongoing rollout of Making Tax Digital (MTD) for Income Tax Self Assessment (ITSA), HMRC will require affected individuals to submit quarterly estimates of their earnings and expenses. Here’s what you need to know and how to prepare.

What’s Changing?

Currently, most sole traders report their income and expenses once a year via the Self Assessment tax return. From April 2026, this will change for sole traders and landlords with gross income exceeding £30,000. They’ll need to:

Keep digital records
Submit quarterly updates to HMRC of income and expenses
Provide an annual finalisation statement (similar to the current tax return)

This is part of the phased rollout of Making Tax Digital for ITSA, aimed at modernising the tax system and improving accuracy.

Quarterly Reporting: What Will Be Required?

Every three months, affected taxpayers will need to submit a summary of:

Income
Allowable business expenses
Estimates of profits

These updates are not tax returns — they’re estimates. You won’t need to make tax payments quarterly (yet), but HMRC may give you an updated estimate of your tax liability based on the data submitted.

Timeline & Deadlines

Quarterly updates must be submitted by the following deadlines:

Period Deadline

6 April – 5 July: 5 August
6 July – 5 October: 5 November
6 October – 5 January: 5 February
6 January – 5 April: 5 May

You can align your reporting periods to calendar quarters, but you’ll need to apply for that with HMRC.

Who Is Affected?

You must follow the new rules if:

You're a sole trader or landlord
Your total income from these sources is more than £30,000
You're registered for Self Assessment

If you fall below the £30,000 threshold, you won’t be required to comply (yet), but voluntary participation is possible.

How to Prepare Now

1. Review Your Income
If you're close to the £30,000 mark, it’s worth reviewing your turnover over the past few years.

2. Switch to Digital Record-Keeping
You’ll need to use MTD-compatible software like QuickBooks, Xero, or FreeAgent.

3. Speak to Evans Entwistle
Professional guidance can help you transition smoothly and avoid penalties for non-compliance.

4. Test Your System
Try quarterly reporting now to get used to the rhythm, even before it's mandatory.

Benefits of Quarterly Estimates

Improved cash flow awareness
Fewer year-end surprises
Better financial planning and forecasting
More frequent engagement with your finances

Final Thoughts

Though this change may feel like extra admin at first, it ultimately encourages better business habits. Sole traders earning over £30,000 should begin preparing well in advance to avoid disruption. The earlier you adapt to digital systems and quarterly reporting, the easier it will be to stay compliant — and in control of your finances.