Making Tax Digital for Tradesmen: What You Need to Know
Making Tax Digital (MTD) is HMRC's plan to move tax reporting online. If you're a self-employed tradesperson, it affects you. Here's what you actually need to know, in plain English.
What is Making Tax Digital?
Instead of filing one annual Self Assessment tax return, MTD requires you to:
- Keep digital records of income and expenses
- Submit quarterly summaries to HMRC (every 3 months)
- Use compatible software - spreadsheets alone won't cut it
Who Does It Affect?
MTD for Income Tax Self Assessment (MTD for ITSA) applies to self-employed individuals and landlords. The rollout timeline:
- April 2026: Self-employed with income over £50,000
- April 2027: Self-employed with income over £30,000
- Future: Lower thresholds may be introduced later
If your annual self-employed income is above these thresholds, you need to be ready.
What You Need to Do
1. Keep Digital Records
You need to record all business income and expenses digitally. This means using software or an app, not a shoebox of receipts.
What to track:
- Every invoice you send
- Every payment you receive
- All business expenses (materials, fuel, tools, insurance, etc.)
- Mileage if you claim travel expenses
2. Submit Quarterly Updates
Every 3 months, you'll submit a summary of your income and expenses to HMRC through your software. It doesn't change how much tax you pay - it just spreads the reporting through the year.
3. Use Compatible Software
HMRC publishes a list of compatible software. Popular options for tradespeople include Xero, QuickBooks, FreeAgent, and dedicated trade apps.
What This Means for Your Quoting
With MTD, keeping clean records of every quote and invoice becomes essential. Using proper quoting software like Jobnix means your quotes and invoices are already digital, timestamped, and trackable - making MTD compliance much easier.
Don't Panic
MTD isn't as scary as it sounds. If you're already using any kind of digital tool for invoicing, you're halfway there. The key changes are quarterly submissions and making sure your software is HMRC-compatible.
Talk to your accountant about which software works best for your situation, and start keeping digital records now even if MTD doesn't apply to you yet. It's good practice regardless.