Zoho Books MTD for Income Tax Setup Guide: A Practical Walkthrough for UK Sole Traders
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This Is Live, and the Next Deadline Is Days Away
Making Tax Digital for Income Tax is not coming. It has applied since 6 April 2026 to sole traders and landlords with qualifying income above £50,000. The first quarterly deadline, 7 August 2026, has passed. The second is 7 November.
Three things about setting Zoho Books up for it are routinely misreported, and one of them will stop you before you start.
The MTD for Income Tax feature is enabled on request. It is not switched on by default — you contact Zoho’s UK support to have it turned on. If you go looking for it in your settings and cannot find it, that is why.
There is no End of Period Statement. The EOPS was part of the original MTD design and has been removed. The year end is one submission, the Final Declaration.
Zoho Books does this on the free plan, and there is no published turnover limit on that plan.
Here is the setup, with those corrections built in.
What MTD for Income Tax Actually Requires
Three Obligations, Not Four
- Keep digital records of your income and expenses
- Submit quarterly updates to HMRC, four a year
- Submit a Final Declaration after the tax year ends
The fourth item usually listed — an End of Period Statement — no longer exists. Year-end adjustments like capital allowances and private-use apportionments go into the Final Declaration instead.
Who Is In Scope
- £50,000 qualifying income — since 6 April 2026
- £30,000 — from April 2027
- £20,000 — from April 2028
Qualifying income is gross income from self-employment and property before expenses, assessed on an earlier tax year. A business with modest profits can be well inside the regime, which catches people out.
If you have both trading and property income, the two are reported as separate income sources with separate quarterly updates.
The Deadlines
| Quarter | Period | Deadline |
|---|---|---|
| Q1 | 6 April – 5 July | 7 August |
| Q2 | 6 July – 5 October | 7 November |
| Q3 | 6 October – 5 January | 7 February |
| Q4 | 6 January – 5 April | 7 May |
The Final Declaration is due by 31 January following the tax year — for 2026/27, that is 31 January 2028, which is also when the balancing payment falls due.
There is an option to align your quarterly period ends to calendar month ends rather than the 5th, if that suits your bookkeeping better. Confirm the mechanics with HMRC or your accountant before electing it; the standard dates above are what applies otherwise.
Before You Touch the Software
Step Zero: Request the Feature
This is the step no walkthrough mentions and the one that matters most.
Zoho Books’ MTD for Income Tax functionality is available on request. You email Zoho’s UK support to have it enabled on your account. Until that is done, the MTD for Income Tax option may simply not appear in your settings, and you will waste an afternoon hunting for it.
Do this first, and do it well before a deadline rather than in the week of one. If you are reading this with 7 November in view, it is today’s job.
Check Your Government Gateway Account
You need a Government Gateway account with your Self Assessment registration attached. If you have never filed Self Assessment, register with HMRC first — that can take weeks.
Authorising software is not the same as being signed up for MTD for Income Tax. These are separate steps, and connecting Zoho Books does not enrol you. Check your enrolment status on HMRC’s side.
Have These Ready
- Unique Taxpayer Reference (UTR)
- National Insurance number
- Business name and address
- The bank account you will be reconciling
Decide Your Income Categories
Zoho Books will ask you to classify the business. The two relevant for MTD:
- Self-employment, mapping to the SA103F (full) or SA103S (short) pages
- UK property income, mapping to SA105
Get this right at setup, because it determines how transactions are categorised and reported, and unpicking it later means amending submissions.
Zoho Books MTD for Income Tax Setup: The Walkthrough
Verify against Zoho’s current UK support documentation as you go — the in-product journey changes.
Step 1: Enable MTD in Settings
- Log in to Zoho Books
- Open Settings, the gear icon
- Find Taxes or Tax Settings
- Select MTD for Income Tax
- Follow the prompts to start the connection
If that option is absent, go back to Step Zero — the feature has not been enabled on your account yet.
Step 2: Authorise With HMRC
Zoho Books redirects you to the Government Gateway sign-in:
- Sign in with your Government Gateway credentials
- Grant Zoho Books permission to interact with HMRC on your behalf
- Return to Zoho Books and confirm the authorisation shows as active
That authorisation lets Zoho Books file your quarterly updates and Final Declaration directly, with no manual transcription.
Step 3: Confirm Your Income Sources
Zoho Books then asks which sources you are reporting: self-employment, property, or both. Each needs its own quarterly submission, so accuracy here saves real work later.
Categorising Transactions to Match HMRC
The fiddly part. Your categories need to line up with the boxes on the relevant supplementary pages, and Zoho Books does most of the mapping once your Chart of Accounts makes sense.
Self-Employment: SA103F and SA103S
The categories you will be reporting against:
- Turnover — gross trading income
- Cost of goods — materials and stock
- Employee costs — wages and subcontractors
- Premises costs — rent, rates, power
- Repairs — maintenance of business assets
- General administrative — phone, postage, stationery
- Motor expenses
- Travel and subsistence
- Advertising and marketing
- Accountancy and legal fees
- Interest and bank charges
- Other business expenses
Review the Chart of Accounts in Zoho Books against that list and add custom accounts where your business needs them. Watch the disallowable items too — client entertainment being the usual example — because the software will not flag them for you.
Property: SA105
Track total rents and other receipts, allowable expenses including repairs, insurance and letting agent fees, and mortgage interest subject to the finance cost restriction, which limits relief to the basic rate via a tax reducer rather than deducting it as an expense. Capital allowances where applicable.
Set property up as a separate income source and keep every property transaction inside it.
Bank Feed or Manual Entry
Use the bank feed. It imports transactions automatically and makes categorising a weekly habit rather than a quarter-end scramble, which is the whole behavioural shift MTD is asking for. If your bank is not supported, CSV import works — save as UTF-8 with ISO dates (YYYY-MM-DD) so nothing is misread.
Note the free plan limits you to 50 receipt autoscans a month, which is ample for most sole traders.
Submitting a Quarterly Update
- Open the MTD for Income Tax section
- Select the quarter
- Review the summary — income, expenses, profit for the period
- Clear any uncategorised transactions before going further
- Submit to HMRC
- Keep the confirmation as your evidence of filing
Two things to hold on to. A quarterly update is not a tax payment — it is an information submission, and your liability is calculated at the Final Declaration. And under the current rules quarterly updates are informational: they do not feed into the Final Declaration, which is built from your final accounts.
The Year End: One Submission
No EOPS. The Final Declaration replaces both the old Self Assessment return and the former end-of-period step.
It pulls together every income source, including anything outside Zoho Books such as employment income, dividends or savings interest, carries your year-end adjustments, and produces the final liability. Due 31 January following the tax year.
Zoho’s UK pricing page lists submitting the final return among the free plan’s features, so this is in scope on the free tier — worth confirming in-product for your own circumstances before you rely on it.
Penalties, and the Easement Nobody Mentions
The usual line is that it is points-based and you should not miss deadlines. The detail matters more.
If you were mandated in April 2026, your first four quarterly updates carry no penalty points. That covers 7 August 2026, 7 November 2026, 7 February 2027 and 7 May 2027. Late payment penalties also do not arise for up to 30 days, though interest can still run.
What the easement does not cover: the 2026/27 Final Declaration, due 31 January 2028, which is penalised normally.
From 2027/28, points apply. Quarterly filers reach a £200 penalty at four points, with another £200 for each subsequent late submission. Points expire after twelve months of on-time filing.
It is relief from points, not from filing. Digital records and quarterly submissions remain legally required.
The government has not confirmed whether the same easement will extend to the April 2027 and April 2028 cohorts, so later entrants should not assume it.
What This Costs
Zoho Books does MTD for Income Tax on the free plan, which is genuinely unusual. The free plan’s published limits:
- 1 user plus 1 accountant — the accountant does not use your seat
- 1,000 invoices and 1,000 expenses a year
- 3 projects, 50 receipt autoscans a month
- MTD for VAT filing as well as MTD for Income Tax
There is no published turnover limit. Figures of £35,000 and £50,000 circulate; neither is on Zoho’s UK pricing page, and the £50,000 is almost certainly a confusion with the MTD threshold itself.
Paid tiers start at £10 a month on annual billing for Standard, which adds multi-currency, automation and up to three users. Our Zoho Books pricing guide has the full ladder, and the FreeAgent comparison covers the main alternative — which is free if you bank with NatWest, RBS or Mettle.
FAQ
Is MTD for Income Tax still coming?
No. It has applied since 6 April 2026 above £50,000 of qualifying income. The next quarterly deadline is 7 November.
Do I still submit an End of Period Statement?
No. The EOPS has been removed. The year end is the Final Declaration alone, due 31 January, and that is where capital allowances and other adjustments go.
Why can’t I find MTD for Income Tax in my Zoho Books settings?
Because it is enabled on request. Contact Zoho’s UK support to have it switched on for your account, ideally well before a deadline.
Is Zoho Books free for this?
Yes, within the free plan’s limits, and there is no published turnover cap. It also files MTD for VAT on the free plan, which QuickBooks charges £16 a month for.
Can I handle self-employment and property income together?
Yes. Set them up as separate income sources and file separate quarterly updates for each, which is what HMRC requires.
What if I miss a quarterly deadline?
If you were mandated in April 2026, the first four updates carry no penalty points. From 2027/28, points apply, with £200 at four points and £200 for each subsequent late filing.
Do I need an accountant?
Not necessarily, but worth it for mixed income, capital allowances, prior-year losses, or if the terminology is unfamiliar. Your accountant can have free access on the Zoho Books free plan, which removes the usual cost objection.
Is there a QuickBooks equivalent of this guide?
Yes — our QuickBooks MTD setup guide covers the same ground for Intuit’s software, including which of its plans file quarterly updates.
The Bottom Line
Do these in order, and the first one is not in the software: request MTD for Income Tax from Zoho’s UK support, check your HMRC enrolment is actually in place, set your income sources up separately, get the Chart of Accounts to match the SA pages, and connect the bank feed so categorising becomes a weekly habit.
Then hold on to the two corrections that most guidance still gets wrong. There is no End of Period Statement — the year end is the Final Declaration, due 31 January. And your first four quarterly updates carry no penalty points if you were mandated in April 2026, which buys you room to get the process right rather than merely fast.
The next deadline is 7 November. If the feature is not enabled on your account yet, that is the thing to do today.
This article is general information, not tax advice, and it does not take account of your circumstances. Thresholds, deadlines, penalties and software capabilities change. Confirm the current position on GOV.UK and with a qualified accountant before relying on anything here.