Guide

Making Tax Digital for tradespeople: when do you need it?

16 October 2026Shaun, 20+ years in UK construction

When Making Tax Digital for Income Tax starts for a UK trade: the £50,000, £30,000 and £20,000 lines, the quarterly dates, and the 2026 to 2027 penalty rule.

Making Tax Digital for Income Tax is not a new tax. It is a way of keeping digital records and sending figures to HMRC from software, on a timetable that depends on your income. A chat tool is not that software. It cannot sign you up, and it cannot decide that you are under the line because you typed a rough turnover.

The thresholds and dates below were read from GOV.UK on 16 October 2026. None of the links are affiliate links.

Shaun, 20+ years in UK construction, still checks the threshold on HMRC's own page before he treats a year as "in" or "out". We search the AI world every week so you don't have to. The start date is HMRC's. The records are yours.

The three start dates

HMRC's guide (opens in a new tab) says you need to use Making Tax Digital for Income Tax if you are a sole trader or a landlord registered for Self Assessment, you get income from self-employment or property or both, and your qualifying income is over the threshold for that tax year. If your qualifying income is over:

£50,000 for the 2024 to 2025 tax year, you should have started from 6 April 2026. You can still sign up if you have not.
£30,000 for the 2025 to 2026 tax year, from 6 April 2027.
£20,000 for the 2026 to 2027 tax year, from 6 April 2028.

Partnerships will need to use it later. HMRC says it will set that timeline out at a later date. You still submit a Self Assessment tax return for the tax year before you start. To sign up you must be registered for Self Assessment and have submitted a return in the last two years.

HMRC reviews the return and writes if you are over the line for the following tax year. The guide's example: to check the April 2026 start, HMRC reviewed the 2024 to 2025 return, and qualifying income over £50,000 should have produced a letter. Not getting a letter does not remove the job of checking. If you disagree that you need to use it, the same page says contact HMRC.

Exemptions exist, including where someone is digitally excluded. The list is on GOV.UK from that guide. A chat tool cannot grant one.

What the threshold counts

HMRC's qualifying income page (opens in a new tab) says qualifying income is your total income from self-employment and property, before expenses. That is turnover. It can come from more than one self-employment and from property. Other income does not count. HMRC's example on that page: £25,000 of rental income plus £27,000 of self-employment income is £52,000 of qualifying income.

That is gross, not profit. Materials, fuel, and subcontractors come off the profit. They do not come off the figure HMRC uses for this test. A year with £55,000 of takings and £20,000 of allowable costs is still over £50,000 of qualifying income. What HMRC allows you to deduct is a separate question, covered in the allowable expenses guide.

Income from employment, a pension, or savings is not in the total. A CIS deduction is not a reduction of qualifying income either. The contractor took a percentage and paid it to HMRC. Your turnover for this test is the pay before that deduction. How the percentage was worked out is in the CIS guide. VAT on an invoice between two VAT-registered construction businesses is a different scheme again, in the reverse charge guide.

If the trade did not run for a full year, HMRC says it will annualise a sole trader's income where it has the information. The checker asks about 2024 to 2025, 2025 to 2026, 2026 to 2027, and exemptions. Do not ask a chat tool to spread three months into an answer.

Quarterly updates: 7 August, 7 November, 7 February, 7 May

Once you are in, you keep digital records in compatible software and send quarterly updates from that software. HMRC's page on sending updates (opens in a new tab) gives the standard periods and the deadlines:

6 April to 5 July, due by 7 August
6 April to 5 October, due by 7 November
6 April to 5 January, due by 7 February
6 April to 5 April, due by 7 May in the following tax year

Some people use calendar update periods instead. HMRC's note on the first update (opens in a new tab) says the first of those ran from 1 April to 30 June, and that the deadline for everyone was still 7 August 2026. The update is income and expenses for the quarter. It is not a tax return.

The guide for people who started in April 2026 (opens in a new tab) sets the first year out as dates, not just months. Digital records from 6 April 2026 if you use standard periods, or from 1 April 2026 if you use calendar periods. Updates by 7 August 2026, 7 November 2026, 7 February 2027, and 7 May 2027. The tax return goes through the software by 31 January 2028. If your start date is 6 April 2027 or 6 April 2028, those 2026 dates are not yours. The months are the pattern. The year is the one on the checker.

The return due on 31 January 2027 is a different job. That is the Self Assessment return for 2025 to 2026, including for people who have already started Making Tax Digital. The dates are in the Self Assessment guide. A chat tool that merges "January" into one deadline has mixed two years.

A chatbot is not compatible software, and typing takings into one does not send the update. The bookkeeping guide does not change the start date.

No penalty points for a late quarterly update in 2026 to 2027

HMRC's penalties guidance (opens in a new tab) says there are no penalties for missing a quarterly update deadline in the 2026 to 2027 tax year. The updates page (opens in a new tab) says HMRC will not apply penalty points for those late quarterly updates. You still keep digital records, and you still send the updates before you can submit the tax return. Penalty points still apply to a late tax return. Late payment is a separate penalty, set out on the penalties page. "No points this year" is not "no bill, and no return".

After the 2026 to 2027 tax year, the same page says a late quarterly update gets one penalty point. At 4 points there is a £200 penalty, and a further £200 each time another deadline is missed. You can only get one point per deadline, even with more than one business. While someone is volunteering, the updates page says penalties do not apply to their late quarterly updates. Penalty points still apply to a late tax return.

List these Making Tax Digital dates as a plain checklist. UK English. Do not tell me I am over or under a threshold. Do not invent income. Do not say a late update has no consequence beyond what I type. If a line is blank, write NOT SUPPLIED.

Qualifying income I have already taken from my return, or "not worked out":
Tax year that income belongs to:
Start date the checker gave me, or "not checked":
Update deadlines for my year, if I already have them:
Tax return date for that Making Tax Digital year, if I already have it:

If the checker is still unopened, the checklist should say so. Do not let the draft fill £50,000 in because that is the number it has read about most often. The £50,000 line is the 2024 to 2025 test for an April 2026 start. The £30,000 line is the 2025 to 2026 test for April 2027. The £20,000 line is the 2026 to 2027 test for April 2028. They are not three tests of the same year.

Explain this short section of a GOV.UK page in plain English for a UK sole trader in the construction trades. Do not add a rule that is not in the text. If the text does not say whether I must start, say that it does not.

My question: [one line]
Page URL, for my own notes: [paste the gov.uk address]
Text:
[paste a short section]

Keep the URL next to the answer. If you cannot remember which page the paragraph came from, do not treat the explanation as the rule. The sign-up, if the checker says you need it, is on GOV.UK.

Coming soon

Coming soon: The Trades Tax Pack

The pack is not on sale yet. Until then, the free prompt pack comes with the weekly email: prompts for quotes, chasing payment, tax admin, and customers.

Common questions

When does Making Tax Digital for Income Tax start?

HMRC's guide says over £50,000 of qualifying income for 2024 to 2025, from 6 April 2026; over £30,000 for 2025 to 2026, from 6 April 2027; over £20,000 for 2026 to 2027, from 6 April 2028. Qualifying income is turnover from self-employment and property, before expenses.

When are the quarterly updates due?

HMRC's standard deadlines are 7 August, 7 November, 7 February, and 7 May. For people who started in April 2026, those are 7 August 2026, 7 November 2026, 7 February 2027, and 7 May 2027. The tax return through the software is due by 31 January 2028.

Are there penalty points for a late quarterly update in 2026 to 2027?

No. HMRC says it will not apply penalty points for late quarterly updates in the 2026 to 2027 tax year. You still have to send the updates before you can submit the tax return. Late tax returns and late payment are still penalised.