Short answer
A sole trader needs an expense tracker that records allowable expenses with their receipts, groups them in a way that maps to the Self Assessment expense boxes, and gives quarterly totals for Making Tax Digital. NexaLink Scanner keeps the receipts and totals on your phone; your MTD-compatible software or accountant does the HMRC submission.
Key takeaways
- MTD for Income Tax started on 6 April 2026 for qualifying income over £50,000; £30,000 follows in April 2027 and £20,000 in April 2028.
- Qualifying income is turnover before expenses, and self-employment and property income are added together.
- Set up categories that mirror the SA103 expense boxes so year-end needs no re-sorting.
- Keep records for at least five years after the 31 January deadline for the tax year.
- NexaLink is not MTD-recognised software — it organises the receipts your MTD software or accountant uses.
When Making Tax Digital reaches you
HMRC uses your qualifying income — self-employment and property income added together, before expenses — from a past tax year to decide when you join MTD for Income Tax[1]. The thresholds are staged:
| Qualifying income in tax year | Threshold | Must use MTD from |
|---|---|---|
| 2024 to 2025 | over £50,000 | 6 April 2026 |
| 2025 to 2026 | over £30,000 | 6 April 2027 |
| 2026 to 2027 | over £20,000 | 6 April 2028 |
Once you are in, you keep digital records of income and expenses and send quarterly updates through MTD-compatible software, then submit your tax return through that software[3]. Our step-by-step guide is how to organise receipts for MTD.
What counts as an allowable expense
GOV.UK describes allowable expenses as the running costs of your business that you can deduct to reduce taxable profit. Its list includes office costs, travel (fuel, parking, train fares), uniforms, staff and subcontractor costs, stock and raw materials, insurance and bank charges, premises costs, advertising, trade subscriptions and training related to the business[4].
- Mixed-use costs: only the business share is allowable — for a phone bill that is partly personal, record the full receipt and note the business percentage.
- Trading allowance: if you use the £1,000 tax-free trading allowance you cannot also claim expenses[4]. Track receipts anyway until you know which is better for you.
- Equipment: under cash basis most equipment is claimed as an ordinary expense, but cars go through capital allowances[4]. Keep a separate category for big-ticket items.
Categories that match your Self Assessment
The full self-employment pages (SA103F) list fourteen expense boxes, from cost of goods (box 17) to other business expenses (box 30)[5]. If your turnover was below £90,000, the form lets you put total expenses in a single box (box 31)[5], but a category breakdown still helps you and your accountant spot mistakes. On NexaLink Pro, create custom categories with the same names so that the year-end summary reads like the form.
The full mapping, box by box, is on our self-employed expense categories template. If you are VAT-registered, also read UK VAT receipts — a VAT receipt needs more detail than an ordinary till slip.
A weekly routine that survives a busy month
- Capture on the day. Photograph each paper receipt after paying. The app reads merchant, date, total and VAT on the phone and asks you to confirm anything it is unsure of.
- Friday five minutes. Search for anything uncategorised and fix it while you still remember what it was.
- Quarter end. Set a custom period matching your MTD update period and note the category totals. If you are on calendar quarters, use 1 April to 30 June and so on; standard periods start on 6 April.
- Hand over. Export a CSV (free) for your MTD software or accountant. On Pro, add a PDF expense report.
How long to keep the records
You must keep self-employment records for at least five years after the 31 January submission deadline of the tax year they relate to[6]. For the 2025 to 2026 tax year, the online deadline is 31 January 2027[7], so those records need to last until at least 31 January 2032. Receipts stay on your phone in NexaLink; export a CSV each year and store it with your return as a second copy. More detail: how long to keep receipts.
Key facts about NexaLink Scanner
- What it is: NexaLink Scanner is a private receipt and expense organiser for iOS and Android, built for freelancers, sole traders, contractors and small businesses. It is not accounting software and does not file tax returns.
- How it reads receipts: text is read on the phone (on-device OCR) and capture works offline. Merchant, date, total and tax are filled in; any value it is unsure of is flagged, and a low-confidence total cannot be saved until you confirm it.
- Where data lives: receipts are stored on your phone and do not sync to the web. Data leaves only when you export it.
- Free plan: 50 receipts, on-device reading, search, 5 default categories and CSV export. CSV export is free on every plan, always.
- Pro: $4.99 a month or $39.99 a year — unlimited receipts, custom categories, projects and tags, a PDF expense report in the app, tax and multi-currency reports. Image ZIP export and Xero / QuickBooks import files are coming soon.
- Accounting connections (none live yet): Xero — First · V1.1 · QuickBooks Online — Next · V1.2 · FreeAgent — Planned · Sage Accounting — Planned · Zoho Books — Planned · TallyPrime — Import file first. CSV export works with any accounting tool today. Status as of 2026-11-10; see accounting integrations.
Frequently asked questions
Do sole traders have to use Making Tax Digital?
Only once your qualifying income is over the threshold: £50,000 (from April 2026), £30,000 (from April 2027) and £20,000 (from April 2028), based on an earlier tax year's return. Qualifying income is turnover before expenses, including property income. HMRC writes to you when you need to join.
Is NexaLink Scanner MTD-compatible software?
No. It does not submit anything to HMRC. It keeps your receipts and expense totals organised and exports them as CSV, which you bring into your MTD-compatible software or hand to your accountant. Think of it as the receipt drawer that sits behind your MTD software: it holds the evidence and the totals, while the compatible software holds the digital records HMRC receives.
What receipts should a sole trader keep?
Keep a record of every business expense you claim: receipts or invoices that show who you paid, what for, the date and the amount. GOV.UK's list of records includes all sales and income and all business expenses, plus VAT records if you are registered.
Can I claim expenses and the £1,000 trading allowance?
No. GOV.UK says you cannot claim expenses if you use the £1,000 trading allowance. Many small sole traders track receipts anyway, then compare the two options at year end. If your allowable costs are below £1,000 the allowance may be simpler; above it, claiming actual expenses usually gives a bigger deduction. Your accountant can confirm which applies.
Are photographed receipts acceptable to HMRC?
HMRC expects records that show your income and expenses accurately; a clear, complete image of the receipt is the practical way most sole traders keep them. Make sure the whole receipt is legible, including the date and VAT, and keep a backup. Check with your accountant if you are unsure for a specific document.
How much does NexaLink cost for a sole trader?
Free covers 50 receipts with CSV export. Pro is $4.99 a month or $39.99 a year and adds unlimited receipts, custom categories, projects and the PDF expense report. Full details are on the pricing section. If you stop paying, your receipts stay on the phone and remain exportable as CSV.
Will NexaLink connect to FreeAgent or Xero?
Not yet. Xero is first in line (V1.1, in development), QuickBooks Online is next, and FreeAgent and Sage are planned. Until then, CSV export works with them. See FreeAgent and Xero. Both accept CSV imports of expenses today, so you can keep your records flowing while the direct connections are built. You can join early access on the integrations page.
Sources
- GOV.UK — Work out your qualifying income for Making Tax Digital for Income Tax — checked on 2026-11-10
- GOV.UK — Check if you're eligible for Making Tax Digital for Income Tax — checked on 2026-11-10
- GOV.UK — Use Making Tax Digital for Income Tax — checked on 2026-11-10
- GOV.UK — Expenses if you're self-employed — checked on 2026-11-10
- GOV.UK — Self Assessment: Self-employment (full) (SA103F) form and notes — checked on 2026-11-10
- GOV.UK — Business records if you're self-employed: how long to keep your records — checked on 2026-11-10
- GOV.UK — Self Assessment tax returns: deadlines — checked on 2026-11-10