Making Tax Digital for Tradespeople: What You Actually Need to Do in 2026
You've probably seen the letters from HMRC. Maybe you've ignored them. Maybe your accountant mentioned it and you nodded and then forgot about it.
Making Tax Digital for Income Tax — MTD ITSA — is now live. And if your turnover from your trade was over £50,000, it applies to you right now.
This isn't another piece of government jargon you can put off until January. Here's what it actually means, what happens if you do nothing, and what you need to do about it.
HMRC estimates that hundreds of thousands of sole traders will move into MTD over the next two years as the income threshold falls. If it doesn't apply to you today, there's a good chance it will by 2028.
Does it apply to you?
MTD ITSA applies to you if your gross income from self-employment (and any rental income) was over £50,000 in the 2024–25 tax year. (Check your status on gov.uk.)
From 6 April 2027, the threshold drops to £30,000. From 6 April 2028, it drops again to £20,000.
So if you're doing decent money as a sole trader — and most established electricians, plumbers, and builders are — this either affects you now or it's coming for you within two years.
What does it actually mean?
Two things have changed.
First: you have to keep digital records. Not a spreadsheet saved to your desktop. Not a folder of scanned receipts in Google Drive. Records kept in software that talks directly to HMRC's systems.
Second: you have to submit quarterly. Instead of one Self Assessment return in January, you now file four updates a year — roughly every three months — plus a final annual declaration.
The deadlines for the standard tax year quarters are:
- 7 August (April–June)
- 7 November (July–September)
- 7 February (October–December)
- 7 May (January–March)
- 31 January — final declaration (same as before)
That's five touchpoints with HMRC a year instead of one. (HMRC's guidance on how the updates work.)
For most tradespeople, that's the real issue. Not the tax itself — the admin. The work hasn't changed. The paperwork has.
What happens if you ignore it?
HMRC has already written to around 864,000 sole traders and landlords it believes are in scope. If you got a letter and binned it, the obligation didn't go with it.
There's one piece of breathing room worth knowing: for the first year (2026/27), HMRC won't issue penalty points for late quarterly updates (gov.uk guidance). But don't mistake that for a reprieve. It's a soft landing to get yourself set up — the points-based penalty system (think driving-licence points: rack up enough and you get a fixed fine) applies after that, late-payment penalties still apply throughout, and the digital-records requirement is in force now regardless.
The real cost of waiting isn't the fine. It's that reconstructing a year of missing records is a lot harder than keeping up in the first place.
What "digital records" actually means
This is where most of the confusion is.
Digital records doesn't mean typing your expenses into a spreadsheet. It means keeping records in software that:
- Captures income and expenses in real time (or close to it)
- Categorises expenses using HMRC's MTD categories
- Can submit quarterly updates directly to HMRC through the API
The MTD expense categories HMRC wants records in are things like: cost of goods and materials, vehicle and travel costs, tools and equipment, premises costs, professional fees, and so on. Everything has to go in the right bucket.
If your current system is a folder of Screwfix receipts and a spreadsheet your wife put together, that's not going to cut it.
The problem with the obvious solutions
The standard advice is: get some accounting software. Xero, QuickBooks, FreeAgent.
Here's the reality.
Those products are built for accountants and bookkeepers — people who sit at a desk, like doing admin, and have time to learn a new system. They're not built for someone who's on a roof at 8am and just wants to log a receipt.
The reality is that many tradespeople start with accounting software and then gradually stop using it consistently. Not because they're lazy, but because keeping records often gets pushed behind quoting, buying materials and getting jobs finished. You'd have to log in, find the right screen, manually enter the supplier, choose the category, upload the receipt. At the end of a full day on site, that's not happening.
The other option people try: hand it all to the accountant at year end and let them sort it. That works for Self Assessment. It doesn't work for MTD — because the whole point is quarterly submissions, and your accountant can't submit what doesn't exist.
What actually works for a tradesperson
The best MTD solution for a tradesperson is one that creates records without you having to do any extra admin. Where the record-keeping happens as a byproduct of things you already do.
That's what TradesOffice does.
Amy is a WhatsApp contact you save once. When you invoice a customer — from the van, on the way home, in 20 seconds — that's a record. When you photograph a receipt from the merchant and send it on WhatsApp, it's categorised under the right MTD expense category automatically. Your mileage, your jobs, your income — all of it gets logged as you work, not at the weekend.
Your accountant gets a clean quarterly export with everything already categorised correctly. Nothing to chase, nothing to reclassify.
The builder who messages Amy "invoice Dave £2,400 bathroom" and goes home — his records are MTD-ready, sorted the moment he hit send. He doesn't know it and he doesn't need to. (To be straight: TradesOffice keeps the records; your accountant still files the quarterly update. We do the part that's been impossible to keep on top of, not the professional advice.)
A typical week of MTD-quality record keeping (without noticing)
Monday 7:32am Amy's morning briefing arrives. Three outstanding invoices. Two jobs today.
Monday 4:47pm "Invoice Sarah Patel, £1,800 labour and £340 materials, bathroom refurb." Done. Invoice sent. Income recorded.
Tuesday 5:03pm Photo of Screwfix receipt, £64.80. Expense logged. MTD category: cost of goods and materials.
Wednesday 5:38pm "42 miles today, Patel job." Mileage logged at 45p/mile. Running total updated.
Thursday CIS invoice for the contractor job. Gross amount, deduction, net payment — all recorded. Reference stored.
By the end of the week, every transaction is where it needs to be. No spreadsheet. No log-in. No accountant on the phone asking you to find receipts from November.
Three things to do this week
1. Check whether MTD applies to you now. If your gross self-employment income in 2024–25 was over £50,000, you're in scope from April 2026. Check your last Self Assessment return, HMRC's eligibility checker, or ask your accountant.
2. Tell your accountant. They'll know about MTD but they may not have chased you. Let them know you're sorting the record-keeping side — it'll save everyone time at year end.
3. Stop deferring on the software decision. Every month you don't have a system is a month of records you'll have to reconstruct. The sooner you start, the easier the first quarterly submission will be.
The bottom line
MTD ITSA is not a future problem. For sole traders with turnover over £50,000, it's now.
The quarterly submissions aren't optional. The digital records requirement isn't optional. And once the first-year easement ends, repeated missed submissions will cost you penalty points and, eventually, money.
The best MTD system is the one you forget you're using. The records keep themselves. The export is ready when the accountant needs it. And you go back to doing the work.
Frequently asked questions
Who does Making Tax Digital for Income Tax apply to in 2026? Sole traders and landlords whose gross income (turnover, before expenses) from self-employment and property combined was over £50,000 in the 2024–25 tax year. The threshold drops to £30,000 in April 2027 and £20,000 in April 2028.
Is the £50,000 my profit or my turnover? Turnover — your gross income before you take any expenses off. If you invoice more than £50,000, you're in scope even if your profit after materials and costs is lower.
Are there penalties yet? For the first year (2026/27), HMRC will not issue penalty points for late quarterly updates — a deliberate soft landing. The points-based late-submission system applies after that, and late-payment penalties apply throughout. The digital-records requirement is in force from day one.
Does TradesOffice file my tax return for me? No. TradesOffice keeps your income, expenses and mileage as clean, HMRC-categorised digital records as you work, so you or your accountant have everything ready when a quarterly update is due. The filing — and the professional advice — stays with your accountant.
What's the simplest way for a tradesperson to keep MTD records? Capture them as a byproduct of work you already do. With TradesOffice you save one WhatsApp contact and message her as you go — invoice a customer, photograph a receipt, log your miles — and the MTD-ready record is created automatically. No app, no new number, no forms.
TradesOffice is a WhatsApp-first administration service for UK sole traders. Amy handles your invoices, expenses, mileage and MTD records via your existing WhatsApp — no app, no new number, no forms.
Amy starts work the moment you save her number.
No app. No new number. Register in 60 seconds and send your first message tonight.
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