If you work as a builder, electrician, plumber, plasterer, roofer or any other trade, Making Tax Digital for Income Tax applies to you in exactly the same way it applies to any other sole trader. The rules — digital records, quarterly updates, compatible software, final declaration by 31 January — are identical.
What is different is the practical side. Tradespeople buy materials from merchants on site, get paid in cash, drive between jobs, and many are within the Construction Industry Scheme (CIS). This guide focuses on those trade-specific challenges. For the generic MTD rules, see our MTD for Income Tax explained guide.
What Is MTD for Tradespeople?
MTD for tradespeople is Making Tax Digital for Income Tax applied to skilled trades — builders, electricians, plumbers, plasterers, and roofers. The rules are identical to any other sole trader: digital records, quarterly updates, compatible software. What makes tradespeople different is the practical side: capturing receipts bought on site, recording cash jobs, handling CIS deductions, and tracking vehicle costs between jobs. Your gross turnover, including CIS income before deductions, is what counts toward the MTD threshold.
Does MTD Apply to Tradespeople?
Yes, if your qualifying income is above the MTD eligibility threshold. Qualifying income is your gross self-employment turnover — the total amount you invoiced or received, before expenses and before any CIS deductions.
| Phase | Start date | Qualifying income threshold |
|---|---|---|
| Phase 1 | 6 April 2026 | Over £50,000 |
| Phase 2 | 6 April 2027 | Over £30,000 |
| Phase 3 | 6 April 2028 | Over £20,000 |
If your turnover from your trade is above £50,000, you must use MTD from April 2026. For the full threshold rules and what counts as qualifying income, see our MTD qualifying income thresholds guide.
What Counts as Qualifying Income for Tradespeople
This is where tradespeople get caught, especially if you are within CIS.
CIS income: gross, not net
If a contractor deducts 20% CIS from your invoice, your qualifying income is the gross invoice amount, not the amount you received after deduction. For example:
- You invoice a contractor £1,000 for labour
- The contractor deducts 20% CIS (£200) and pays you £800
- Your qualifying income from this job is £1,000, not £800
The CIS deduction is an advance payment of tax, not a reduction of your income, as set out in HMRC’s guidance on the Construction Industry Scheme. You reconcile it at your final declaration. For the full CIS rules and how deductions work, see our CIS for subcontractors guide.
Cash jobs
Cash income counts toward your qualifying income in exactly the same way as invoiced work. If you are paid £150 in cash for a small job, that £150 is part of your turnover. Recording it digitally means entering it into your software with the date, amount and a description — not writing it in a paper notebook.
Materials and VAT
Your qualifying income is your gross turnover, which is the total you charge customers including materials (but not VAT if you are VAT-registered). If you bill a customer £2,000 including £500 of materials, your turnover from that job is £2,000. The £500 materials cost is an expense you deduct separately.
Record-Keeping on Site: The Real MTD Challenge
This is the part that changes most for tradespeople. Under Self Assessment, many tradespeople keep a shoebox of merchant receipts and enter everything in January. Under MTD, that does not work. Your records must be digital and kept up to date throughout the year.
Photograph receipts immediately
The biggest practical shift is capturing receipts at the point of purchase. Most MTD-compatible software includes a mobile app that lets you:
- Photograph a receipt from your phone
- Extract the date, amount and supplier automatically
- Categorise it as materials, fuel, tools, etc.
- Store the image as your digital record
This takes seconds at the merchant counter or fuel station. The alternative — keeping paper receipts in the van and entering them later — means you are doing bookkeeping in batches, which is exactly the habit MTD is designed to move you away from.
Cash receipts
For cash purchases (e.g. small items from a local supplier), photograph the receipt or hand-written note the same way. If you do not get a receipt, make a note in your software with the date, amount, supplier and what it was for. See our do you need an invoice to claim an expense guide for what records HMRC accepts.
Merchant accounts
Most builders’ merchants and trade counters offer online accounts that export purchase history as CSV or PDF. If you buy from the same merchants regularly, importing these exports into your software can save time on data entry. Some accounting packages can connect to merchant accounts directly, but most tradespeople find the receipt photo approach simpler.
Top Expense Categories for Tradespeople
These are the expense categories that tend to matter most for trades. Each should be set up in your software so transactions are categorised consistently.
Materials and supplies
The biggest expense for most tradespeople. This includes:
- Timber, plaster, cable, pipes, fittings — anything that goes into the job
- Screws, nails, sealant, blades — consumables used on the job
- Paint, finishes, adhesives
Record each purchase in your software, either by photographing the receipt or importing the merchant statement.
Tools and equipment
Tools that last more than a year (drills, saws, ladders) are capital items, not expenses. You claim them through capital allowances or the Annual Investment Allowance (AIA). Most accounting software handles this automatically if you tag the purchase as a capital asset rather than an expense.
Small tools that wear out quickly (drill bits, blades) can be claimed as expenses in the normal way.
Vehicle costs
Tradespeople typically drive between jobs daily, so vehicle costs are significant. You have two choices:
- Simplified mileage rate — 45p per mile for the first 10,000 business miles, 25p thereafter. No need to track fuel, servicing, insurance or MOT separately. You do need a mileage log.
- Actual costs — claim fuel, servicing, MOT, insurance, road tax and depreciation (capital allowances). More work to track but can save more if your costs are high.
For the full comparison and which method suits you, see our car expenses for sole traders guide.
Fuel and parking
If you use the simplified mileage rate, you cannot also claim fuel separately. If you use actual costs, fuel is part of your vehicle expenses. Parking for work (including parking meters on site) is an allowable expense regardless of which vehicle method you use.
Work clothing and PPE
Clothing that is specifically protective or required for the trade is allowable — steel toe boots, high-vis vests, hard hats, gloves. General workwear (jeans, t-shirts) is not, even if you only wear it for work.
Subcontractor costs
If you sub-contract work to others, their invoices are an expense. If they are CIS-registered, you may need to deduct CIS from their payment — see our CIS guide for your obligations as a contractor.
Use of home as office
If you do your admin, quoting and invoicing from home, you can claim a portion of your home costs. The simplified rate is £6 per week. Alternatively, you can claim a proportion of actual bills based on the space used. See our trading allowance vs expenses guide for how this works.
Phone and internet
If you use your phone for work calls and your mobile data for looking up parts or sending quotes, you can claim the business portion. If you have a separate work phone, claim the full cost.
Software That Fits Tradespeople
The killer feature for tradespeople is mobile receipt capture. If your software cannot photograph a receipt on site and store it digitally, you will end up with paper receipts in the van — which is the problem MTD is supposed to solve.
Recommended options
- FreeAgent — strong mobile app with receipt capture, free with NatWest/RBS/Mettle/Ulster Bank business accounts. Good for sole traders who want bank feeds and receipt photos in one app.
- Coconut — designed specifically for sole traders, simple interface, receipt capture and mileage tracking built in. Good if you want something straightforward.
- QuickBooks Self-Employed — receipt capture, mileage tracking, and bank feeds. Well-known and widely used.
- Sage — established option with a free sole trader tier (with limits). Receipt capture available in paid tiers.
Spreadsheet bridging: less suitable for trades
Spreadsheet bridging software (123 Sheets, VitalTax, Acxite) works well for people whose records are already digital — like online sellers with platform exports. For tradespeople, most receipts are physical, so you would be typing them into a spreadsheet manually. That is slower than photographing them into an app, and it defeats the point of digital record-keeping.
For the full cost comparison, see our cheapest MTD software for sole traders guide.
Worked Example: One Quarter for an Electrician
Here is how a typical quarter looks for a sole trader electrician in Q1 (6 April to 5 July 2026).
Income
| Date | Job | Amount |
|---|---|---|
| 12 April | Rewire, domestic customer (invoiced) | £2,800 |
| 28 April | Commercial job via contractor (CIS deducted) | £4,500 gross (£3,600 received after 20% CIS) |
| 15 May | Small job, cash | £350 |
| 3 June | Consumer unit replacement (invoiced) | £1,900 |
| 22 June | Fault finding, cash | £150 |
| 1 July | Commercial job via contractor (CIS deducted) | £3,200 gross (£2,560 received after 20% CIS) |
Total income for the quarter: £12,900 (gross, including CIS income at the gross amount)
Expenses
| Category | Amount |
|---|---|
| Materials (cable, consumer units, accessories) | £4,100 |
| Fuel (mileage tracked: 840 business miles at 45p) | £378 |
| Parking on site | £45 |
| New drill (capital — AIA claim) | £220 |
| Work boots and gloves | £65 |
| Phone (business portion) | £18 |
Total expenses for the quarter: £4,826
What goes into the quarterly update
Your software totals these digital records and sends a summary to HMRC by 7 August 2026. The summary shows approximately £12,900 income and £4,826 expenses. No tax is due at this point — the quarterly update is informational. CIS deductions (£900 + £640 = £1,540) are reconciled at the final declaration, not in the quarterly update.
VAT-Registered Tradespeople
If you are VAT-registered, you are already using MTD for VAT — it has been mandatory since 2019. MTD for Income Tax is a separate requirement that runs alongside your VAT obligations. Most accounting software handles both in one package, so you will not need separate software.
For the VAT registration threshold and rules, see our VAT registration for sole traders guide.
The Bottom Line
MTD for tradespeople is mostly about changing how you capture receipts — from paper in the van to a photo on your phone. The rules are the same as for any sole trader, but the practical shift is bigger because tradespeople have more physical receipts and more cash transactions than most other professions.
The key steps:
- Check your qualifying income — gross turnover including CIS income
- Choose software with mobile receipt capture — FreeAgent, Coconut or QuickBooks
- Photograph every receipt at the point of purchase — do not wait until January
- Track your mileage — if you use the simplified rate
- Submit your quarterly updates by 7 August, 7 November, 7 February and 7 May
For the complete MTD overview, see our Making Tax Digital guide. For threshold details, see MTD qualifying income thresholds. For CIS rules and how deductions interact with MTD, see our CIS for subcontractors guide. For the full profession hub, see MTD by profession.