What is Making Tax Digital for Income Tax?

Making Tax Digital for Income Tax (MTD for ITSA) is an HMRC initiative that requires self-employed people and landlords to keep digital records of their income and expenses, and submit quarterly updates to HMRC using compatible software. It replaces the annual Self Assessment tax return for qualifying individuals. MTD for Income Tax is designed to reduce errors and make tax reporting more accurate and timely.

When does MTD apply to self-employed tradespeople?

MTD for Income Tax applies in phases based on your total annual income. From 6 April 2026, it applies to self-employed people and landlords with combined income over £50,000. From April 2027, the threshold drops to £30,000. From April 2028, it applies to those earning over £20,000. If you earn below £20,000, you are not currently required to comply, though the rules may change.

What counts as MTD-compatible software?

MTD-compatible software is any application registered with HMRC that can digitally record your income and expenses and submit quarterly updates directly through the HMRC API. For the digital record-keeping requirement — keeping every invoice stored digitally with date, amount, and description — TraderInvoice provides that foundation. Your accountant can then use our exports for the quarterly HMRC submission step.

Do plumbers and electricians need to use MTD software?

Yes — if you are a self-employed plumber, electrician, HVAC technician, roofer or any other tradesperson earning over £50,000 from April 2026, you must keep digital records and submit quarterly updates. TraderInvoice handles the digital record-keeping part automatically. You will also need HMRC-registered software or an accountant to handle the quarterly submissions to HMRC.

What records do I need to keep for MTD?

For MTD, you must keep digital records of all business income (money you receive from customers), business expenses (materials, tools, van costs, etc.), and VAT if you are VAT-registered. Each record must include the date, amount, and a description. You cannot keep these records on paper — they must be stored digitally. TraderInvoice automatically records every invoice you create, giving you a complete digital record of all your business income.

How do I submit quarterly updates to HMRC?

Under MTD, you must send a summary of your income and expenses to HMRC every quarter through HMRC-registered software or via an accountant using bridging software. TraderInvoice stores your income records in a format that can be exported for your accountant or bridging software to use when making the quarterly submission. We are working toward direct HMRC API integration in a future update.

What happens if I don't comply with MTD?

Failing to comply with MTD requirements can result in penalties from HMRC. HMRC uses a points-based penalty system — each missed submission earns a penalty point, and once you reach a threshold, you receive a financial penalty. There are also late payment penalties if you do not pay your tax on time. It is important to start keeping digital records and working with your accountant before the deadline that applies to you.

Does TraderInvoice help with MTD compliance?

TraderInvoice helps with the digital record-keeping part of MTD compliance — which is the foundation. Every invoice you create is stored digitally with date, amount, VAT, and customer details. You can export these records for your accountant to use when submitting your quarterly updates to HMRC. TraderInvoice is not currently registered with HMRC as a full MTD submission provider, so you will need an accountant or bridging software for the submission step.

MTD Ready Record Keeping

Making Tax Digital for Tradespeople — Are You Ready?

From 6 April 2026, self-employed tradespeople earning over £50,000 must keep digital records and submit quarterly updates to HMRC. TraderInvoice automatically stores every invoice as a digital record — the foundation of MTD compliance.

Start Free — Digital Records from Day One

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How TraderInvoice fits into MTD: TraderInvoice handles Step 1 of MTD — keeping digital records of all your income. Your accountant uses our exports to submit quarterly updates to HMRC. We are not currently registered with HMRC as a full MTD submission provider.

What is Making Tax Digital and Does It Affect You?

Making Tax Digital (MTD) is HMRC's programme to move all tax record-keeping online. Under MTD for Income Tax Self Assessment (MTD for ITSA), self-employed people and landlords must:

Keep digital records of all business income and expenses
Submit quarterly updates to HMRC using HMRC-registered software or via an accountant
Submit a final end-of-year declaration (replacing the Self Assessment return)

Who is affected?

MTD for Income Tax applies to sole traders (including all self-employed tradespeople) and landlords. It is being rolled out in phases based on income:

From	Income threshold	Status
6 April 2026	Over £50,000	Act now
6 April 2027	Over £30,000	Coming soon
6 April 2028	Over £20,000	Planned
April 2031 (expected)	All remaining sole traders	Expected

What happens if you don't comply?

HMRC uses a points-based penalty system. Every missed quarterly submission earns a penalty point. Once you reach the threshold, you receive a £200 financial penalty. You can also face penalties for failing to keep digital records, and separate late payment penalties if your tax bill is not paid on time.

Step 1 of MTD compliance — digital record keeping

How TraderInvoice Helps You Prepare for MTD

TraderInvoice handles the digital record-keeping part of MTD automatically. Your accountant can use our exports for the quarterly HMRC submission step.

Digital Records for MTD

Every invoice you create is stored digitally with date, customer, amount and VAT breakdown. This meets HMRC's digital record-keeping requirement — the foundation of MTD compliance.

VAT Tracking

VAT is calculated and recorded on every invoice. Your VAT records are always accurate and available, whether you need them for quarterly VAT returns or MTD income records.

Income Tracking

All revenue is tracked with dates and amounts. Your quarterly income figures are always available in your dashboard, making it straightforward for your accountant to prepare MTD updates.

Export for Your Accountant

Download your invoice records as CSV and share with your accountant. They can use our exports with their HMRC-registered software to submit your quarterly updates.

Built for Tradespeople

No accounting knowledge needed. Create invoices by voice, track payments, and build up your digital income records — all in a simple app designed for plumbers, electricians and every trade.

Helps You Prepare for MTD

Starting now means your digital records are complete before your MTD deadline arrives. Every invoice created in TraderInvoice is one less record to reconstruct later.

MTD Timeline — When Does It Apply to You?

April 2026Act Now
Income over £50,000
Self-employed people and landlords with combined income exceeding £50,000 must start keeping digital records and submitting quarterly updates via HMRC-registered software or an accountant.
April 2027Coming Soon
Income over £30,000
The threshold drops to £30,000. If your trade income is above this level, MTD becomes mandatory.
April 2028Planned
Income over £20,000
MTD extends to self-employed people earning over £20,000 — covering the majority of full-time tradespeople.
April 2031 (expected)Expected
All remaining sole traders
HMRC expects to extend MTD to all remaining self-employed individuals, regardless of income level.

Making Tax Digital — Frequently Asked Questions

What is Making Tax Digital for Income Tax?: Making Tax Digital for Income Tax (MTD for ITSA) is an HMRC initiative that requires self-employed people and landlords to keep digital records of their income and expenses, and submit quarterly updates to HMRC using HMRC-registered software. It replaces the annual Self Assessment tax return for qualifying individuals. MTD is designed to reduce errors and make tax reporting more accurate and timely.
When does MTD apply to self-employed tradespeople?: MTD for Income Tax applies in phases based on your total annual income. From 6 April 2026, it applies to self-employed people and landlords with combined income over £50,000. From April 2027, the threshold drops to £30,000. From April 2028, it applies to those earning over £20,000.
What counts as MTD-compatible software?: MTD-compatible software is any application registered with HMRC that can submit quarterly updates directly through the HMRC API. For the digital record-keeping requirement — keeping every invoice stored digitally with date, amount, and description — TraderInvoice provides that foundation. Your accountant can then use our exports with their HMRC-registered software for the submission step.
Do plumbers and electricians need to use MTD software?: Yes — if you are a self-employed plumber, electrician, HVAC technician, roofer or any other tradesperson earning over £50,000 from April 2026, you must keep digital records and submit quarterly updates. TraderInvoice handles the digital record-keeping part automatically. Your accountant handles the HMRC submission step.
What records do I need to keep for MTD?: For MTD, you must keep digital records of all business income (money you receive from customers), business expenses (materials, tools, van costs, etc.), and VAT if you are VAT-registered. Each record must include the date, amount, and a description. You cannot keep these records on paper. TraderInvoice automatically records every invoice you create, giving you a complete digital record of all your business income.
How do I submit quarterly updates to HMRC?: Quarterly updates must be submitted through HMRC-registered software or by an accountant using bridging software. TraderInvoice stores your income records in a format that can be exported for your accountant or bridging software to use when making the submission. We are working on direct HMRC API integration for a future update.
What happens if I don't comply with MTD?: Failing to comply with MTD requirements can result in penalties from HMRC. HMRC uses a points-based penalty system — each missed submission earns a penalty point, and once you reach a threshold, you receive a financial penalty. There are also late payment penalties if you do not pay your tax on time.
Does TraderInvoice help with MTD compliance?: TraderInvoice helps with the digital record-keeping part of MTD compliance — which is the foundation. Every invoice you create is stored digitally with date, amount, VAT, and customer details. You can export these records for your accountant to use when submitting your quarterly updates to HMRC. TraderInvoice is not currently registered with HMRC as a full MTD submission provider, so you will need an accountant or bridging software for the submission step.

Digital Records for MTD

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