Do you need a separate bank account for Making Tax Digital?

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Short answer: no. Making Tax Digital for Income Tax doesn't require sole traders or landlords to have a separate bank account. HMRC requires digital records of your business income and expenses, not a particular account. In practice, a separate account makes MTD much easier, because your software can pull in every business transaction without you sorting out personal spending first. Several business accounts are free and file your MTD updates for you.

(Limited companies are different: they must keep company money separate, but they aren't in MTD for Income Tax.)

Why a separate account helps under MTD

MTD asks you to record every business transaction with a date, amount and category, and send HMRC a running total each quarter. If business and personal money share one account:

• your software's bank feed pulls in everything, so you have to mark each coffee and grocery shop as personal, every quarter;
• it's easy to miss a business expense hidden among personal ones, which means paying more tax than you need to;
• if HMRC ever checks your figures, untangling one mixed account is slow and stressful.

With a separate account, the bank feed is your business record. Categorising takes minutes.

Can I use a second personal account instead?

Yes. Lots of sole traders and landlords open a second personal current account and use it only for business. It does the same job. Check your bank's terms first, as some banks don't allow business use of personal accounts. A business account also gives you a business name on invoices and, with the options below, built-in MTD tools.

Free and low-cost accounts with MTD built in

Checked on provider websites on 4 October 2026:

Not every business account supports MTD for Income Tax. Some only mention MTD for VAT, so check the provider says "Income Tax" specifically, or look the product up on HMRC's find software tool.

Landlords: does rent need its own account?

Not by law, but the same logic applies. Rent coming into an account that only handles your lettings means your software can match each payment to a property automatically. If you own a property jointly, a joint account for that property makes it simple to split income by owner. Landlord apps such as Hammock and Landlord Studio can connect to ordinary personal accounts, so you don't have to open a business account to get bank feeds. See best MTD software for landlords.

What to do next

1. Check if MTD applies to you. Over £30,000 combined self-employed and property income in 2025–26 means you start on 6 April 2027 (our guide).
2. Decide: one app or two. A free business account with MTD built in (Tide, ANNA) covers banking and filing in one place. Or keep your current bank and add software that connects to it.
3. Open the account before January 2027, so you have a few months of clean records before your first MTD quarter starts in April.

Sources: provider websites and pricing pages (checked 4 October 2026); GOV.UK: check if you're eligible; GOV.UK: find compatible software.

More MTD guides

• Best MTD software for landlords (2026): 12 options compared by priceEvery HMRC-recognised Making Tax Digital app a UK landlord is likely to consider, with the cheapest MTD-capable plan, what it costs per year and who it suits.
• Cheapest HMRC-recognised MTD software for sole traders (2026)The lowest-cost ways for a UK sole trader to meet Making Tax Digital for Income Tax, from free business accounts to £5-a-month bookkeeping, with the catches spelled out.
• MTD bridging software vs full bookkeeping software: which do you need?Can you keep your spreadsheet under Making Tax Digital? How bridging software works, what it costs, and when full bookkeeping software is the better buy.
• MTD for Income Tax at £30,000: what changes in April 2027 and what to do nowIf your self-employed and rental income is over £30,000, Making Tax Digital applies to you from 6 April 2027. Here's who's affected, the deadlines, penalties and a six-step plan.