Making Tax Digital (MTD) is a government programme that changes how self-employed people report their income to HMRC. Instead of filling in one big Self Assessment tax return at the end of the year, you will need to keep digital records of what you earn and spend throughout the year, and send HMRC a summary every quarter.
Why is HMRC doing this? Put simply, the old system led to mistakes. People left everything to the last minute, forgot expenses, and errors crept in. HMRC believes that if you keep on top of your numbers throughout the year using digital tools, your tax will be more accurate and there will be fewer surprises when the bill arrives.
If you are a self-employed tradesperson -- whether you are a builder, plumber, electrician, roofer, plasterer, decorator, or any other trade -- and you earn above certain income thresholds, MTD will apply to you. But there is no need to panic. The change is straightforward, and with the right setup it takes almost no extra time at all.
Key dates
Here is when Making Tax Digital for Income Tax kicks in, based on your self-employment income.
Self-employed individuals and landlords with annual income over £50,000 must start keeping digital records and submitting quarterly updates to HMRC.
The threshold drops. Self-employed individuals and landlords earning over £30,000 will also need to comply with MTD for Income Tax.
HMRC has confirmed that MTD will eventually extend to those earning below £30,000. Exact dates and thresholds have not been announced yet, but it is a matter of when, not if.
| Annual Income | MTD Start Date | Status |
|---|---|---|
| Over £50,000 | April 2026 | Approaching |
| £30,000 - £50,000 | April 2027 | Confirmed |
| Under £30,000 | To be announced | Pending |
Plain English
Forget the jargon. Here is exactly what changes for you and your business.
Every invoice you send to a customer, every receipt for materials from Screwfix or Toolstation, every fuel top-up, every van payment -- it all needs to be recorded digitally. No more shoeboxes stuffed with receipts. This does not mean you need a computer or accounting software. With 123Tax, you just photograph each receipt and send it to us on WhatsApp. That counts as a digital record.
Instead of one annual tax return, you will now send HMRC a summary of your income and expenses every three months. Think of it as a quick check-in rather than the big yearly headache. Each update covers a quarter of the tax year. With 123Tax, we prepare your quarterly summary, send it to you on WhatsApp, and you just reply to confirm. We then submit it to HMRC for you.
At the end of the tax year, you submit a final declaration that confirms your full-year figures. This replaces the old Self Assessment tax return. Because you have been sending quarterly updates all year, most of the work is already done. Your final declaration is essentially a confirmation of everything you have already submitted.
HMRC uses a points-based penalty system. Every time you miss a quarterly submission deadline, you pick up a penalty point. Once you hit the threshold (currently four points for quarterly obligations), you receive an automatic £200 fine. Each further missed deadline after that triggers another £200 penalty. There are also separate penalties for paying your tax late. The fines are not enormous at first, but they add up fast if you ignore them. The simplest way to avoid all of this is to get set up with MTD-compatible software now -- before the deadlines start.
The easy way
No app. No software. No spreadsheets. Just WhatsApp.
Photograph any receipt, invoice, or expense and WhatsApp it to 123Tax. Takes seconds.
We categorise your income and expenses into HMRC-approved categories and keep your digital records in order.
Each quarter we send you a summary. Confirm it with a reply, and we submit your MTD return. Done.
"I was dreading MTD. I can barely work a laptop, let alone accounting software. Then a mate told me about 123Tax. I just WhatsApp my receipts and they handle everything. My first quarterly update went in without me lifting a finger. Wish I'd found them years ago."
Kev
Electrician, Leeds
No credit card required. No app to download.
Common questions
Plain answers to the questions tradespeople ask us most.
If your self-employment income is over £50,000, you need to be ready by April 2026. That means you should be signing up for MTD-compatible software now so you can start keeping digital records from the beginning of your next tax year. If you earn between £30,000 and £50,000, your deadline is April 2027. Even if you are below these thresholds, it is worth getting set up early so you are not scrambling when your turn comes.
You need HMRC-recognised software that can keep digital records and submit quarterly updates. 123Tax is HMRC-recognised and works entirely through WhatsApp -- no app to download, no accounting software to learn. You just send us your receipts and invoices by message and we handle the rest.
You need digital records of all your business income and expenses. This includes invoices you send to customers, receipts for materials and tools, fuel costs, vehicle expenses, and any other costs related to your work. With 123Tax, you simply photograph each receipt or invoice and send it to us on WhatsApp. We categorise everything and keep your records in order.
HMRC uses a points-based system. Each missed quarterly deadline earns you a penalty point. Once you reach the threshold (four points for quarterly obligations), you get an automatic £200 fine. Each further missed deadline after that triggers another £200 penalty. There are also separate penalties for late payment of tax. The fines start small but add up quickly if you ignore them.
If your income is currently below £30,000, you do not need to comply straight away. However, HMRC has confirmed the threshold will be lowered over time. Getting set up early means you will not have to rush when the rules change, and you benefit from better record-keeping and clearer visibility of your finances right now.
A quarterly update is a summary of your business income and expenses for a three-month period, submitted digitally to HMRC. You will submit four per year, plus a final end-of-period statement and a final declaration (which replaces your Self Assessment tax return). With 123Tax, we prepare your quarterly update and send you a summary on WhatsApp. You reply to confirm, and we submit it to HMRC on your behalf.
123Tax is the simplest way for tradespeople to meet MTD requirements. No software to learn, no app to download. Just WhatsApp us your receipts and we handle the rest.
No credit card required. Cancel anytime. From £19/month.