Making Tax Digital for tradespeople: what actually changes

If you are a sole trader on the tools, you have probably had a letter about Making Tax Digital and put it on the pile with the rest of it. Here is the plain-English version: what is changing, whether it applies to you yet, and what you actually have to do about it.

The one-line version

From April 2026, sole traders and landlords over a certain income have to keep their income and expense records digitally, and send HMRC a short summary four times a year instead of once. That is it. It is not a new tax, and it is not four tax returns.

Does it apply to you yet?

It is being phased in by income. The bit that catches people out is that qualifying income means your turnover before expenses, not your profit.

• From 6 April 2026 — qualifying income over £50,000.
• From April 2027 — the threshold drops to £30,000.
• From April 2028 — it drops again to £20,000.

So if you turned over £60,000 last year but took home £28,000 after materials and running the van, you are in the first group. It is the £60,000 that counts, not the £28,000.

The first deadline: 7 August 2026

If you came in from April 2026, your first quarterly update covers 6 April to 5 July 2026, and it is due by 7 August 2026.

Worth knowing before you panic: HMRC has confirmed there are no late-submission penalty points for quarterly updates during the first year. From the second year a points-based system applies — a point for each missed deadline, and a £200 penalty once you reach four points. So year one is the one to get your habits sorted in, not the one to lose sleep over.

A quarterly update is not a tax return

This is the biggest misunderstanding by a mile. A quarterly update is a summary of your income and expense totals for the period. You are not working out your tax bill four times a year, you are not claiming your reliefs four times a year, and nothing is final until the end-of-year process.

If your records are in decent order, a quarterly update is a small job. If your receipts live in the glovebox and your figures live in a notebook, it becomes four small crises a year instead of one big one in January. Which points at the real problem.

It is a records problem, not a filing problem

Most tradespeople reading this already have an accountant, and that accountant will handle the filing. What they cannot do is invent the records. The change that actually lands on you is this: the records have to be kept digitally, as you go, rather than reconstructed from a carrier bag in January.

In practice that means keeping track through the year of what you invoiced and when, what you were actually paid, what you spent and on what, and the VAT on both sides if you are registered. Done as you go, that is a few minutes a week. Done in a shoebox, it is a weekend you will never get back.

What you actually need to do

1. Work out if you are in, and when. Check last year's turnover against the thresholds above — turnover, not profit.
2. Ask your accountant what they want. Most have a preferred setup for filing and a preferred way of receiving your figures. It is easier to fit their process than to fight it.
3. Start keeping records digitally now. Do not wait for a deadline to arrive. The habit is the hard part, not the software.
4. Get your quarterly totals over in good time, rather than the night before the date.

Where Larzo fits

Being straight with you, because plenty of software is not: Larzo does not file anything to HMRC. It is not HMRC-recognised filing software and it does not pretend to be.

What it does is the part that actually goes wrong — keeping the digital records MTD for Income Tax asks for, without you having to sit down at a computer on a Sunday. You quote and invoice from the van, snap receipts as you get them, and your income and expenses build up as you work. Your quarterly totals then get exported and emailed to your accountant, ready for them to file from. Your records live here, they file from there.

If you want the longer explainer, there is more detail on our Making Tax Digital page. If you would rather just start keeping the records properly, try Larzo free →

This is general information, not tax advice. Thresholds and dates come from HMRC guidance and can change — check your own position with your accountant or on GOV.UK.