No. If you're a sole trader, nothing in the Making Tax Digital rules says you have to open a business bank account. HMRC wants a digital record of each bit of income and each expense, with the amount, the date and a category. Where the money sat while it moved is up to you. But most people will still want a separate account once they've done one quarter without it, and the reason is the bank feed.

What's a bank feed, and why does a mixed account make it harder?

A bank feed is a link between your bank and your MTD software. Every payment in and out of the account drops into the software on its own, so nobody types it in. That's the good part.

The software can see that you spent £62.40 at Tesco. It can't see whether that was diesel at the pump, a work phone top-up or the family shop. So every line still needs someone to say "business" or "personal", and which category it goes in. HMRC's own guidance says you may need to add the category yourself, that some transactions won't come through the feed in full, and that it's your job to check the records are right before each quarterly update goes in.

On an account that only holds work money, that's quick. Depot payments in, fuel, insurance and the van lease out, and almost every line is obvious. On an account that also holds the rent, the kids' football club, Friday's takeaway and the money you send home every month, the work lines are buried. And you go through all of them, four times a year, before 7 August, 7 November, 7 February and 7 May.

HMRC also asks you to make the records as close to the date as you can, not in a pile the night before the deadline. That's much easier when there's less to pick through.

When one account is genuinely fine

For some people it honestly is. If you do a few jobs a month, get paid by one or two customers and buy your materials on the same card every time, sorting a mixed account takes ten minutes. Nobody needs to open a new account for that.

There's a middle option too. A second personal current account used only for work gives you a clean feed without business banking fees. Check the terms first, though. A lot of personal accounts say they're for personal use only, and a bank closing your account halfway through the year is a headache you don't want.

If you keep one account, a few habits help:

  • Pay every work cost with the same card, and nothing personal on that card
  • Photograph receipts on the day, before they fade on the dashboard
  • Mark personal lines as personal or drawings as you go, not at quarter end
  • Split anything that's partly work, like a phone used for both, and record only the business share

When a second account is worth it

If your account has hundreds of lines a month and most of them are home life, a separate account is the simplest fix there is. It won't categorise anything for you, and it doesn't take away your responsibility to check. What it does is cut the pile down to the lines that matter. Several banks offer free accounts for sole traders, so compare the fees and terms rather than picking the first one. We wrote about this for parcel delivery drivers back in September, and the same logic applies whether you drive, build or work agency shifts.

As a reminder of who's in: MTD for Income Tax covers sole traders and landlords with qualifying income over £50,000 from April 2026, over £30,000 from April 2027 and over £20,000 from April 2028. Qualifying income is turnover plus gross rent, before expenses.

On our bookkeeping plans we connect the feed and do the sorting for you, whichever kind of account you use. If you're not sure which way to go, get in touch and Alex or Anca will tell you which makes sense for the way you work. There's more on the Making Tax Digital page.

Sources: HMRC, Create digital records for Making Tax Digital for Income Tax, Send quarterly updates, Find out if and when you need to use Making Tax Digital for Income Tax and Work out your qualifying income. Correct as at November 2026.