Making Tax Digital for heating and plumbing firms: what you actually need to know

If you run your trade as a sole trader with turnover over £50,000, Making Tax Digital for Income Tax already applies to you. It started on 6 April 2026, and it brings quarterly digital updates to HMRC, digital record keeping, and a points-based penalty system for missed deadlines.

Here’s the whole thing without the accountant jargon.

What is Making Tax Digital for Income Tax?

From 6 April 2026, the way millions of sole traders and landlords report income to HMRC changed. It’s called Making Tax Digital for Income Tax, shortened to MTD for ITSA, and it’s the biggest overhaul of UK self-employed tax reporting in decades.

The old system was one Self Assessment return a year, usually filed in a panic in late January. MTD replaces that single return with ongoing digital record keeping, four quarterly updates through the year, and a final year-end declaration.

For anyone used to the annual scramble it’s a change of habit. With the right software and a simple routine it takes less time overall, not more.

Who does it affect, and when?

The rollout is phased by income, so your start date depends on what you earned.

From 6 April 2026: sole traders and landlords with qualifying income above £50,000.
From 6 April 2027: the threshold drops to £30,000.
From 6 April 2028: it drops again to £20,000.

Enterprise Nation puts the first wave at 860,000 sole traders and landlords required to use digital software from 6 April 2026. Builders, plumbers, electricians, carpenters and every other trade running as a sole trader are in that group once turnover crosses the threshold.

The detail that catches people out is that it’s gross income, not profit. The threshold uses total turnover before expenses. Earn £55,000 and make £30,000 profit, and you’re still in scope from April 2026.

Rental income counts too, because self-employment and property income are combined. A sole trader earning £32,000 who also takes £20,000 in rent has qualifying income of £52,000, which is over the April 2026 threshold.

For context, Statista recorded approximately 745,000 self-employed workers in UK construction in the third quarter of 2024, more than any other industry.

What do you actually have to do?

1. Keep digital records

All business income and expenses have to be recorded digitally in MTD-compatible software. Paper records and standalone spreadsheets no longer qualify. Every invoice raised, every material bought and every fuel receipt lives inside a system that connects to HMRC.

2. Submit four quarterly updates

Four updates a year, each covering three months, summarising income and expenses. They aren’t full tax returns and need no accounting adjustments.

On standard tax-year quarters the deadlines are 7 August, 7 November, 7 February and 7 May. With software set up properly each one takes minutes.

3. File a final declaration

After the fourth quarter you file a Final Declaration by 31 January following the end of the tax year. It replaces the traditional Self Assessment return, confirming total income, claiming reliefs and allowances and finalising what you owe.

ICAEW confirms the first quarterly update, covering 6 April to 5 July 2026, was due on 7 August 2026. The first Final Declaration, for 2026/27, is due on 31 January 2028.

What about penalties?

HMRC’s new system works like driving points. Each missed quarterly update or Final Declaration earns one point, and four points triggers a £200 fine.

For the first year there’s a penalty holiday: no late submission points for the first four quarterly updates in 2026/27. Late payment penalties still apply, so the holiday covers filing rather than paying.

Does it apply to limited companies?

No. MTD for Income Tax covers sole traders and landlords only at this stage.

How do you check if you’re in scope?

Work out your qualifying income from self-employment or property in the 2024/25 tax year, the year of your most recent return. That’s total turnover before expenses, plus any rental income. Over £50,000 and you needed to be ready from 6 April 2026.

HMRC uses your 2024/25 return to set your start date, so if you haven’t filed it yet, file it.

What software do you need?

HMRC-recognised, MTD-compatible software, on HMRC’s approved list. Not all of it does everything you need.

What to check:

It’s on HMRC’s approved list
It handles both quarterly updates and the Final Declaration, since some tools stop at the quarterly filing
It connects to your bank account and pulls transactions in automatically
It’s built around jobs, invoices and materials rather than for office-based accountants

From April 2026, MTD users must submit their Self Assessment through their MTD software, which makes that second point worth checking before you pay for anything.

Mucka is built for this. Your invoices, expenses and job data flow through to your quarterly submissions with no rekeying, no bridging software and no spreadsheet workarounds.

A practical checklist to get MTD-ready

Check your 2024/25 gross turnover, before expenses. Over £50,000 and you’re in scope now.
Add any rental income to your trade income for your combined qualifying income.
Choose and set up HMRC-approved MTD software before your first quarter closes.
Connect your business bank account so transactions are captured automatically.
Register for MTD through HMRC’s online service. HMRC won’t sign you up for you.
Put 7 August, 7 November, 7 February and 7 May in your calendar.
File your Final Declaration by 31 January each year.

The ATT reported that HMRC wrote to affected taxpayers during February and March 2026. If one of those letters arrived, it wasn’t junk.

The bigger picture

More trade businesses come into scope each year. HMRC estimates around 4.2 million self-employed individuals and landlords will eventually be covered, and the £20,000 threshold in 2028 will pull in a lot of sole traders who currently assume they’re too small to worry.

Firms already logging jobs, raising invoices and tracking expenses digitally will barely notice the change. A shoebox of receipts and a January panic will make it hard.

HMRC has delayed MTD several times over the years, and the current position is that no further extensions have been granted beyond the confirmed 2026 and 2027 start dates.

FAQ

Does Making Tax Digital apply to me if I’m a sole trader heating engineer?

Yes, if your gross turnover from self-employment, combined with any rental income, exceeded £50,000 in the 2024/25 tax year.

Do I have to do four full tax returns a year now?

No. A quarterly update summarises business income and expenses by category, such as total sales, total materials, total vehicle costs. Your full position is only finalised in the Final Declaration in January.

What if I miss a quarterly deadline?

There are no penalties for missing a quarterly update deadline in 2026/27. From 2027/28, missed updates earn points, and four points means a £200 fine. Late payment penalties apply throughout.

What counts as qualifying income for MTD?

Combined gross income from all self-employment and property rental, measured before expenses. PAYE wages, dividends, investment income and pensions don’t count towards the threshold.

Does MTD apply if I operate through a limited company?

No, it applies to sole traders and landlords only. If the change makes you wonder whether your business structure still fits, that’s a conversation for an accountant.

Get sorted with Mucka

MTD is one more reason to run your trade on a proper digital system. Mucka handles your invoices, expenses, and job management and keeps your records MTD-ready without you thinking about it. Try Mucka free today.