Making Tax Digital for Plumbers, Electricians & Builders

If you're a self-employed plumber, electrician, builder, carpenter, painter, roofer, or any other tradesperson, Making Tax Digital for Income Tax is coming your way. From April 2026, sole traders earning over £50,000 must keep digital records and submit quarterly updates to HMRC.

Here's a practical guide to what's changing, what you actually need to do, and how to keep it simple.

Does MTD apply to me?

If you're self-employed (not on someone else's payroll) and your gross income — that's your total turnover before expenses — is over £50,000, then yes, from April 2026. The threshold drops to £30,000 in 2027 and £20,000 in 2028, so most self-employed tradespeople will be affected eventually.

A common misunderstanding: MTD uses your turnover, not your profit. If you invoice £60,000 but spend £25,000 on materials and subcontractors, your profit is £35,000 — but HMRC sees £60,000, so you're in scope.

If you work through a limited company (Ltd), MTD for Income Tax doesn't apply to you. It's specifically for sole traders and landlords.

Already VAT registered? If you're registered for VAT, you're most likely already using MTD-compatible software for your VAT returns. That software may also handle MTD for Income Tax — check with your provider first. Flonancial is designed for sole traders who aren't already using accounting software, so if you're set up for MTD for VAT, you may not need it.

What do I have to do?

Four times a year, you'll need to send HMRC a summary of your income and expenses for that quarter. Each update includes three numbers: total income, total expenses, and any other business income. That's it.

You are not paying tax quarterly. This is a common worry but it's not how it works. The quarterly updates are reporting only — you're telling HMRC how the year is going. Your tax bill is still calculated and paid annually through Self Assessment.

What records do I need?

HMRC requires digital records of every business transaction — the date, the amount, and what it was. A spreadsheet counts. A notebook, a box of receipts, or a pile of invoices on their own don't.

For tradespeople, the biggest challenge is often recording things in real time. You're on a job site, not at a desk. The key habit is to log income and expenses at the end of each day or week, rather than trying to reconstruct months of activity at the end of a quarter.

Typical expenses for tradespeople

• Materials and supplies
• Tool purchases and replacements
• Plant and equipment hire
• Van or vehicle costs (fuel, insurance, maintenance, road tax)
• Public liability and professional insurance
• Subcontractor payments
• Phone and data costs (business use)
• Workwear and PPE
• Trade body memberships and certifications
• Advertising, website, and signwriting costs
• Parking fees (not fines)
• Home office costs if you do admin from home (proportion of utilities)

Keep receipts for everything. Physical receipts from builders' merchants and fuel stations fade over time — take a photo or log the amount in your spreadsheet on the same day.

What about the CIS?

If you work in construction and are registered under the Construction Industry Scheme, MTD is a separate obligation that runs alongside CIS. Your CIS deductions (the 20% or 30% withheld by contractors) are handled through your Self Assessment. MTD quarterly updates are just your income and expenses summary — they don't replace or change anything about CIS.

One thing to be aware of: if you use subcontractors yourself, you need to keep clear records of what you pay them. Subcontractor costs are a legitimate business expense and should be included in your quarterly totals. If you're both a subcontractor and a contractor, you'll need to track both the deductions taken from your income and the payments you make to your own subbies.

Do I need to buy accounting software?

No. You need compatible software to submit your updates, but if you track your income and expenses in a spreadsheet, all you need is bridging software to send the totals to HMRC. Bridging software is HMRC-recognised — it's listed on their Software Choices page. You don't need to learn Xero, QuickBooks, or anything else.

Flonancial is free bridging software that works with your existing spreadsheet. Upload it, pick the cells with your totals, review, and submit. No monthly subscription.

Deadlines and penalties

Quarterly updates are due on the 7th of the month following the end of each quarter. For the first year (2026/27), HMRC has confirmed a soft landing — no penalties for late quarterly submissions. After that, four late submissions in 24 months triggers a £200 fine.

Getting started

If you already keep track of your jobs, invoices, and expenses in a spreadsheet, you're ready. If you don't, download the free Flonancial spreadsheet template — it has everything set up with income and expense columns and a Flo tab that auto-calculates your HMRC totals. Create a free Flonancial account and submit your first quarterly update in minutes.