What is Sole trader?
Last verified 31 October 2026
A sole trader is an individual who runs their own business and is self-employed. They report the profit or loss on their own tax return and may pay Income Tax and National Insurance contributions on it.
Why it matters to landlords
HMRC says sole traders must keep business records from the day they start trading, because those records are used to work out profit or loss for the tax return. Making Tax Digital for Income Tax applies to sole traders and landlords alike, and qualifying income is the total of self-employment and property turnover before expenses.
Letting property is normally reported as a UK property business, not as self-employment. A landlord with a side business is therefore running two income sources, each with its own quarterly updates, and the two incomes are added together when testing the threshold. Partners, limited companies and employees are handled differently: partnership, company and employment income is not added as an MTD income source, though it still belongs on the tax return.
Example
Kofi works as a self-employed electrician with £22,000 of turnover and lets a flat for £10,000 a year. His qualifying income is £32,000. He sends separate quarterly updates for the trade and for the UK property business.
MTD for Sole Traders With Rental Income (2026) →