CIS, VAT and MTD, 29 October 2026
Making Tax Digital for tradespeople: the April 2027 £30,000 deadline
Making Tax Digital (MTD) for Income Tax applies to you from 6 April 2027 if you're a sole trader or landlord and your qualifying income for 2025 to 2026 was over £30,000. That's turnover before expenses, from self-employment and property added together. You'll keep digital records, send quarterly updates through compatible software and file a final return by 31 January.
Does MTD for Income Tax apply to you?
It applies to sole traders and landlords registered for Self Assessment whose qualifying income crosses the threshold. Run through this with your 2025 to 2026 figures, the year that ended on 5 April 2026 and that you'll file by 31 January 2027.
You were due to start on 6 April 2026. Sign up on GOV.UK now if you haven't, and get compatible software.
HMRC should write to you after it reviews your 2025 to 2026 return, but checking is your responsibility. Choose software this winter.
You can sign up voluntarily before then to get used to it.
Companies pay Corporation Tax, which MTD for Income Tax doesn't cover. HMRC says partnerships will join later, with the timeline still to be set.
Keep checking each year. You can still sign up voluntarily.
How do you work out qualifying income?
Add up the gross income from every self-employment and every property you have, before any expenses or allowances. Employment wages and pensions don't count. HMRC uses your Self Assessment return to check, so the figure is the turnover you put on that return.
Three trade set-ups checked against the April 2027 threshold
All figures are for the 2025 to 2026 tax year.
| Sole trader roofer: turnover £42,000, profit £24,000gross income, not profit, is tested | £42,000: in from April 2027 |
| Plumber: self-employed turnover £18,000 plus rent from a flat £14,000£18,000 + £14,000 | £32,000: in from April 2027 |
| Electrician trading through a limited company, paid salary and dividendscompany income isn't self-employment income | Not in MTD for Income Tax |
The roofer is the case most people get wrong. A tradesperson with a big materials spend can be well over £30,000 of turnover while taking home much less. MTD looks at the top line.
What will you have to do differently?
Three things change. You keep your business records digitally in software that works with MTD. You send a short quarterly summary of income and expenses from that software. And you file your final return through the software by 31 January following the tax year.
A quarterly update is not a tax return. It's cumulative totals for each income and expense category, from 6 April to the end of the quarter. HMRC doesn't see individual receipts or invoices. For your first year from April 2027, the deadlines are 7 August 2027, 7 November 2027, 7 February 2028 and 7 May 2028, with the return due by 31 January 2029. The how-to is in MTD quarterly updates for sole trader builders.
How do you get ready before April 2027?
You have about five months. That's enough if you start with records, not software.
Every digital record needs the amount, the date and a category that matches the Self Assessment categories. That's the part that hurts for trades: a shoebox of merchant receipts doesn't become four quarterly updates on its own.
What happens if you send an update late?
MTD uses penalty points. Each missed quarterly deadline earns a point, and at 4 points you pay a £200 penalty. HMRC said it wouldn't issue points for late quarterly updates in the 2026 to 2027 tax year, the first year for the over-£50,000 group. It hasn't said the same for 2027 to 2028, so plan as if points apply from your first quarter. Late payment and late return penalties still apply as now.
This guide covers HMRC's published rules. If you have several businesses, a partnership share, or think you might qualify for an exemption, check with your accountant or HMRC.
Where Nexley fits
Nexley is the AI back office for UK trade firms: five AI assistants run your tenders, quotes, buying, scheduling and invoicing. It connects to the tools you already work in, you run it all from WhatsApp, and you approve everything. £799 a month.
For record keeping, Nexley turns the receipts and supplier invoices you send over WhatsApp into categorised entries in your accounts software, so the digital records MTD needs build up during the quarter. You or your accountant still review and send the update.
Common questions
Is the £30,000 threshold turnover or profit?
Turnover. HMRC tests gross income from self-employment and property before any expenses or allowances. A tradesperson with large materials costs can be in MTD while making far less than £30,000 profit.
Do I need MTD if I'm a limited company?
Not for Income Tax. MTD for Income Tax covers sole traders and landlords registered for Self Assessment. If your company is VAT-registered, it already uses MTD for VAT.
Can I still use a spreadsheet?
Yes, with bridging software that connects the spreadsheet to HMRC. HMRC lists free and paid options. You still need digital records with amount, date and category.
Will HMRC tell me I need to join?
HMRC reviews Self Assessment returns and writes to people over the threshold. If you don't get a letter, it's still your responsibility to check and sign up.
Sources
- GOV.UK: Find out if and when you need to use Making Tax Digital for Income Tax
- GOV.UK: Sole traders and landlords earning more than £30,000 urged to act now (5 October 2026)
- GOV.UK: Using Making Tax Digital for Income Tax for the first time
- GOV.UK: Send quarterly updates
- GOV.UK: Deadline approaches for first Making Tax Digital quarterly update
- GOV.UK: Making Tax Digital for Income Tax Self Assessment for sole traders and landlords
- HMRC: Making Tax Digital for Income Tax guide
Every rule, rate and date above was checked against these sources on the date shown at the top.
Topic: CIS, VAT and MTD
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