Does MTD apply to sole traders below the VAT threshold?

Yes — MTD for Income Tax is separate from MTD for VAT. Even if your turnover is below the VAT registration threshold (£90,000), MTD for Income Tax applies based on your total income. From April 2026, any sole trader earning over £50,000 must comply, regardless of whether they are VAT registered.

Can I use a spreadsheet for MTD?

A basic spreadsheet on its own is not sufficient for MTD — you cannot submit directly to HMRC from a spreadsheet. However, you can use a spreadsheet alongside HMRC-registered bridging software that reads your data and submits it to HMRC. Using dedicated invoicing software like TraderInvoice is simpler because your income records are stored automatically — your accountant can then use our exports with their bridging software.

What is a quarterly update under MTD?

A quarterly update is a summary of your income and expenses submitted to HMRC every three months through HMRC-registered software. There are four submission periods per tax year. The update does not require you to calculate your tax — it informs HMRC of your running totals so they can provide a tax estimate. Your final tax bill is confirmed via an end-of-year final declaration.

Do I still need an accountant for MTD?

Many tradespeople use accountants under MTD to handle the quarterly submission step. Your accountant can access the income records you export from TraderInvoice and submit them to HMRC using HMRC-registered software. MTD does not remove the option to use an accountant — it changes how submissions reach HMRC.

What is the MTD for Income Tax start date for tradespeople?

The MTD for Income Tax start date for self-employed tradespeople earning over £50,000 is 6 April 2026. If your income is between £30,000 and £50,000, your start date is 6 April 2027. If your income is between £20,000 and £30,000, your start date is 6 April 2028.

Making Tax Digital for Tradespeople: Complete Guide (2026)

What MTD Means for Plumbers, Electricians and HVAC Techs

Making Tax Digital (MTD) is the UK government's plan to move all tax record-keeping online. For self-employed tradespeople, it means two things are changing:

Digital records: Every invoice you raise, every expense you incur, must be recorded digitally in software that stores that information. You can no longer keep paper records or use basic spreadsheets as your sole record.
Quarterly submissions to HMRC: Instead of one annual Self Assessment return, you or your accountant will submit a summary of your income and expenses to HMRC four times a year using HMRC-registered software.

For a plumber in Manchester invoicing ten customers a week, or an electrician in London running a busy domestic round, the digital record-keeping change is manageable if you are already using invoicing software. The quarterly submission step is typically handled by your accountant using bridging software that reads your income records and submits them to HMRC.

HVAC technicians face the same rules — every job, every invoice, every payment received must be in a digital record from the date MTD applies to you. Starting your digital record-keeping now means your records are complete when your deadline arrives.

Who is Affected and When

MTD for Income Tax is being rolled out in phases. Your start date depends on your total income from self-employment and property combined:

Start date	Income threshold
6 April 2026	Over £50,000
6 April 2027	Over £30,000
6 April 2028	Over £20,000
April 2031 (expected)	All remaining sole traders

Note that these thresholds apply to your gross income, not your profit. If you are a plumber turning over £55,000 a year but only making £30,000 profit after materials and expenses, you still fall in the April 2026 bracket.

Limited companies are not affected by MTD for Income Tax — it only applies to sole traders and landlords. However, if you operate as a sole trader, you are in scope.

Step by Step: How to Get MTD Ready

Getting MTD ready does not need to be complicated. Here is a practical checklist for tradespeople:

1
Check your income level
Add up all your self-employment income for the 2024/25 tax year. If it is over £50,000, MTD applies to you from April 2026. Use your invoices and bank statements to get an accurate total.
2
Start keeping digital records of every invoice
Use TraderInvoice to create every invoice so that your income is automatically logged digitally — date, amount, VAT, and customer. This is step one of MTD compliance: digital records of all your income.
3
Talk to your accountant about MTD submissions
Your accountant will handle the quarterly submission step using HMRC-registered software or bridging software. Share your exported TraderInvoice records with them each quarter. If you don't have an accountant, now is a good time to find one.
4
Register for MTD with HMRC
You must sign up for MTD for Income Tax through your HMRC online account or via your accountant. Do this before your start date — HMRC will confirm your sign-up and give you your first submission dates.
5
Submit quarterly updates via your accountant
Every quarter, export your income records from TraderInvoice and share them with your accountant. They will prepare and submit the quarterly summary to HMRC. HMRC will give you an estimate of your tax bill after each submission.
6
Submit your end-of-year final declaration
At the end of the tax year, your accountant will help you review your records and submit your final declaration. This replaces the traditional Self Assessment tax return.

What Software You Need

MTD compliance has two distinct software requirements:

Digital record-keeping software — to store your income (and ideally expenses) digitally throughout the year.
HMRC-registered submission software — to send your quarterly updates and final declaration to HMRC. This must be software that HMRC has approved and registered.

These can be the same product (all-in-one accounting software) or separate products used together. Here are the main options for tradespeople:

Full accounting software (all-in-one)

Apps like QuickBooks, Xero, and FreeAgent offer complete MTD compliance including direct HMRC submissions. They cover both record-keeping and submission in one product. They are powerful but come with a learning curve and monthly costs that can feel heavy for a sole trader.

TraderInvoice + accountant bridging software

TraderInvoice handles your income record-keeping automatically. Your accountant uses your exported records with their HMRC-registered bridging or accounting software to submit the quarterly summary to HMRC. This is a practical and cost-effective approach for most tradespeople who already have an accountant.

Spreadsheet + bridging software

You keep records in a spreadsheet and your accountant uses bridging software to submit. This works but requires manual discipline — spreadsheets are error-prone and time-consuming compared to an app that records invoices automatically.

Common Mistakes to Avoid

Many tradespeople will struggle with MTD not because it is technically difficult, but because of common misunderstandings. Here are the most important ones to avoid:

Mistake: Waiting until the deadline to start

Fix: MTD requires you to have digital records from your start date. If you wait until April 2026 to set up your software, you may have incomplete records for months before that. Start now so your records are complete from the beginning.

Mistake: Keeping some invoices on paper

Fix: Under MTD, every income record must be digital. You cannot keep some invoices in a book and some in an app. Your software must have a complete picture of all your income from your start date.

Mistake: Assuming your invoicing app handles the HMRC submission

Fix: Not all invoicing apps submit directly to HMRC. TraderInvoice keeps your digital records, but your accountant or HMRC-registered bridging software handles the submission step. Check that your chosen workflow covers both parts.

Mistake: Confusing MTD for VAT with MTD for Income Tax

Fix: MTD for VAT has been in place since 2019 for VAT-registered businesses. MTD for Income Tax is separate and applies from 2026. Being compliant with MTD for VAT does not automatically mean you are compliant with MTD for Income Tax.

Mistake: Missing quarterly submission deadlines

Fix: There are four quarterly submissions per tax year. Missing one earns a penalty point. Work with your accountant to set reminders, or ask them to manage submissions on your behalf.

How TraderInvoice Helps With MTD Record Keeping

TraderInvoice is built specifically for tradespeople. It handles the digital income record-keeping part of MTD automatically — which is step one of compliance. Every invoice you create stores:

Invoice date and due date
Customer name and address
Description of work carried out
Net amount, VAT amount, and gross total
Payment status (paid or unpaid)

This gives you a complete digital record of every penny of income — exactly what HMRC requires under MTD. You can export your invoice history at any time and share it with your accountant, who uses their HMRC-registered software to submit your quarterly updates.

The voice invoicing feature means there is no reason to keep paper records. You describe the job by voice on-site, the AI builds the invoice, and the record is stored digitally immediately. For tradespeople who have historically relied on paper invoice books, this is the simplest possible path to getting your digital records in order.

What TraderInvoice does: Keeps your income records digitally with all the required information. Exports your records for your accountant to use for MTD submissions.

What your accountant does: Takes your exported records, enters them into their HMRC-registered software, and submits your quarterly updates and final declaration to HMRC.

Start for free — no credit card required

TraderInvoice's free plan gives you 5 invoices per month with full digital record keeping. For unlimited invoices and a complete digital income record, upgrade to Starter at £29/month.

Start Free — Digital Records from Day One

Frequently Asked Questions

Does MTD apply to sole traders below the VAT threshold?: Yes — MTD for Income Tax is separate from MTD for VAT. Even if your turnover is below the VAT registration threshold (£90,000), MTD for Income Tax applies based on your total income. From April 2026, any sole trader earning over £50,000 must comply, regardless of whether they are VAT registered.
Can I use a spreadsheet for MTD?: A basic spreadsheet on its own is not sufficient for MTD — you cannot submit directly to HMRC from a spreadsheet. However, you can use a spreadsheet alongside HMRC-registered bridging software. Using invoicing software like TraderInvoice is simpler because your income records are stored automatically — your accountant can then use our exports with their bridging software.
What is a quarterly update under MTD?: A quarterly update is a summary of your income and expenses submitted to HMRC every three months through HMRC-registered software. There are four submission periods per tax year. The update does not require you to calculate your tax — it informs HMRC of your running totals so they can give you a tax estimate. Your final tax bill is confirmed at the end of year via a final declaration.
Do I still need an accountant for MTD?: Many tradespeople use accountants under MTD to handle the quarterly HMRC submission step. Your accountant can take the income records you export from TraderInvoice and submit them to HMRC using their HMRC-registered software. MTD does not remove the option to use an accountant — it simply changes how submissions reach HMRC.
What is the MTD for Income Tax start date for tradespeople?: The MTD for Income Tax start date for self-employed tradespeople earning over £50,000 is 6 April 2026. If your income is between £30,000 and £50,000, your start date is 6 April 2027. If your income is between £20,000 and £30,000, your start date is 6 April 2028.