Making Tax Digital for Tradespeople: What You Need to Know

8 February 2026

If you're a self-employed tradesperson in the UK, you've probably heard the phrase "Making Tax Digital" floating around. Maybe your accountant mentioned it, or you spotted it on the HMRC website. Either way, April 2026 is when the big change arrives for income tax, and it's worth understanding what it means for your business.

Here's a straightforward guide to what's happening, who it affects, and what you need to do.

What is Making Tax Digital for Income Tax?

Making Tax Digital for Income Tax Self Assessment (MTD ITSA) is HMRC's plan to move the UK tax system online. Instead of filing one annual Self Assessment tax return, you'll need to keep digital records of your income and expenses and send quarterly updates to HMRC using compatible software.

The idea is to reduce errors, make tax reporting more accurate, and give you a clearer picture of your tax position throughout the year rather than getting a nasty surprise in January.

Who Does It Affect?

MTD ITSA rolls out in phases based on your gross self-employment income:

• From April 2026: Self-employed individuals and landlords with annual gross business and property income over £50,000 must comply.
• From April 2027: The threshold drops to £30,000, bringing many more sole traders into scope.
• From April 2028: The threshold drops again to £20,000, covering the vast majority of full-time tradespeople.

If you're a plumber, electrician, builder, carpenter, or any other tradesperson earning above these thresholds, this applies to you. It doesn't matter whether you're VAT-registered or not — MTD ITSA is about income tax, not VAT.

What Records Need to Be Digital?

Under MTD ITSA, you'll need to maintain digital records of:

• All business income — every invoice, quote that converted to a job, and payment received
• All business expenses — materials, tools, fuel, insurance, subcontractor costs
• The date of each transaction
• The amount and a brief description of what it was for

The key word is "digital." A shoebox of receipts won't cut it anymore. Your records need to be stored in software that can connect to HMRC's systems, or at the very least, in a digital format that compatible software can read.

What Are Quarterly Updates?

Instead of one big tax return in January, you'll send HMRC a summary of your income and expenses every three months. The deadlines are:

• 7 August (for 6 April – 5 July)
• 7 November (for 6 July – 5 October)
• 7 February (for 6 October – 5 January)
• 7 May (for 6 January – 5 April)

After the fourth quarter, you'll also submit a final declaration by 31 January of the following year — the same deadline as the old Self Assessment return. This is where you can claim allowances, reliefs, and make adjustments. The final declaration must be submitted through MTD-compatible software, not through the HMRC Self Assessment portal.

How to Prepare: Practical Steps

The good news is that preparing doesn't need to be complicated. Here's what you can do right now:

• Start keeping digital records today. Don't wait until April. The sooner you build the habit, the easier the transition will be.
• Track every invoice and quote. If you're creating paper quotes or sending prices over text messages, switch to a tool that keeps a proper record.
• Separate business and personal spending. If you haven't already, get a dedicated business bank account. It makes record-keeping far simpler.
• Talk to your accountant. They'll need to use MTD-compatible software on their end too, so make sure you're both on the same page.
• Choose the right tools. You don't need expensive accounting software. You need something that records your transactions digitally and lets you export the data when needed.

How NippyAgent Helps

NippyAgent is built for tradespeople who want to stay on top of their paperwork without faffing about with apps and logins. Every quote and invoice you create through NippyAgent is stored digitally with the date, customer details, line items, and amounts — exactly the kind of records HMRC expects.

You can export all your documents as a CSV file at any time, giving you (or your accountant) a clean spreadsheet of every quote and invoice you've issued. That's a solid foundation for your quarterly updates.

Important disclaimer: NippyAgent creates and stores your quote and invoice records, but it does not submit tax returns or quarterly updates to HMRC directly. You'll still need MTD-compatible accounting software (like Xero, FreeAgent, or QuickBooks) or an accountant to handle the actual HMRC submissions. Think of NippyAgent as the tool that keeps your records tidy so the submission part is straightforward.

Don't Leave It to the Last Minute

April 2026 is just around the corner. If your gross business income is above £50,000, you need to be ready. Even if you're below that threshold, the £30,000 limit arrives in April 2027 and £20,000 in April 2028, so it's worth getting ahead of it.

The tradespeople who'll find this easiest are the ones who are already keeping good digital records. Start now, keep it simple, and you'll barely notice the change when it arrives.