Making Tax Digital for Tradesmen: Your 2026 Survival Guide

If you're a self-employed tradesman in the UK earning over £50,000, Making Tax Digital (MTD) for Income Tax Self Assessment kicks in from April 2026. That's not far off — and if your books are still in a shoebox or a crumpled spreadsheet, you need to act now.

Here's everything you need to know, written in plain English.

What Is Making Tax Digital?

Making Tax Digital is HMRC's plan to move tax reporting online. Instead of filing one annual Self Assessment return, you'll need to:

1. 1.Keep digital records of all income and expenses
2. 2.Submit quarterly updates to HMRC (every 3 months)
3. 3.Use compatible software that connects to HMRC's systems

The goal is to reduce tax errors and give you a more up-to-date picture of your tax position throughout the year.

Who Does It Affect?

From April 2026: Self-employed individuals and landlords with annual business or property income above £50,000.

From April 2027: The threshold drops to £30,000.

If you're a sole trader plumber earning £60k, you're in scope from April 2026. If you're a two-person building firm each earning £35k as sole traders, you'll be caught from April 2027.

Limited companies are not affected by MTD for Income Tax — they already file digitally through Corporation Tax.

What Records Do You Need to Keep?

Under MTD, you must keep digital records of:

• •All income — every quote that converts to a paid job
• •All expenses — materials, tools, van costs, subcontractors
• •Invoices and receipts — digitally stored, not paper
• •Bank transactions — reconciled against your records

The key word is digital. A paper receipt in your glovebox won't cut it anymore.

What Software Do You Need?

You need MTD-compatible software that can:

• •Store your income and expense records digitally
• •Submit quarterly updates to HMRC via their API
• •Generate a final End of Period Statement

Popular options for tradesmen include:

• •FreeAgent (from £14.50/mo)
• •QuickBooks Self-Employed (from £8/mo)
• •Xero (from £15/mo)

You can also use bridging software if you want to keep your spreadsheet but need to submit digitally — though this is a short-term fix, not a long-term strategy.

How Digital Quoting Fits In

Here's where most tradesmen don't connect the dots: your quotes are the start of your financial trail.

When a quote converts to a job, that's income. When you buy the materials on that quote, that's expenses. If your quotes are digital and itemised from the start, you've already got half your MTD records sorted.

That's one of the reasons we built QuoteCraft AI with MTD in mind:

• •Every quote is stored digitally with a unique reference number
• •Line items break down materials vs labour — ready for expense categorisation
• •PDF records provide the audit trail HMRC expects
• •Quote history gives you a complete log of all quoted and completed work

It's not accounting software (you'll still need FreeAgent or similar), but it means the data flowing into your accounts is clean, itemised, and digital from day one.

What Happens If You Don't Comply?

HMRC hasn't been specific about penalty amounts yet, but they've confirmed that:

• •Late submission penalties will apply for missed quarterly updates
• •Late payment penalties will be calculated on a points-based system
• •Interest will be charged on late payments

The first year is expected to have a "soft landing" with reduced penalties, but don't bank on HMRC being lenient forever.

Your Action Plan

Here's what to do now, before April 2026:

1. 1.Check if you're in scope — do you earn over £50k from self-employment?
2. 2.Choose MTD-compatible accounting software and start using it now
3. 3.Digitise your quoting process — stop writing quotes on paper
4. 4.Set up a system for receipts — photo them and store digitally
5. 5.Talk to your accountant — make sure they're ready for quarterly submissions
6. 6.Start a test quarter — try submitting a trial update before the deadline

Don't Panic, But Don't Ignore It

MTD isn't going away, and the threshold will only get lower over time. The tradesmen who get ahead of this now will have a smooth transition. The ones who leave it until March 2026 will be scrambling.

The good news? Going digital doesn't have to mean going complicated. Tools like QuoteCraft AI make it dead simple to create professional, digital quotes that feed naturally into your MTD workflow.

Start quoting digitally today — try QuoteCraft AI free.