What Is Making Tax Digital?
Making Tax Digital (MTD) is HMRC's programme to modernise the UK tax system. The idea is simple: instead of filing one annual tax return, you keep digital records throughout the year and send quarterly updates to HMRC using compatible software.
MTD for VAT has been live since 2019 — if you're VAT-registered, you're already using it. The next phase is MTD for Income Tax Self Assessment (MTD for ITSA), which affects self-employed individuals and landlords.
Who does MTD for ITSA affect?
- Self-employed individuals (sole traders) earning over the threshold
- Landlords with property income over the threshold
- This includes plumbers, electricians, builders, decorators, roofers, carpenters — anyone self-employed in the trades
If you're a self-employed tradesperson earning above the threshold, you'll need to use MTD-compatible software to keep digital records and submit quarterly updates to HMRC. Paper records and spreadsheets alone won't cut it anymore.
Don't wait until the deadline
Start Scanning FreeKey Dates & Timeline
MTD for ITSA is being rolled out in phases based on how much you earn. Here are the dates you need to know:
MTD mandatory for income over £50,000
Self-employed individuals and landlords with annual business or property income above £50,000 must use MTD-compatible software for digital record keeping and quarterly updates.
Threshold drops to £30,000
The income threshold lowers, bringing an estimated 1.5 million additional sole traders and landlords into MTD. If you earn between £30,000 and £50,000, this is your deadline.
Digital records submitted quarterly
Once enrolled, you must submit quarterly updates to HMRC. Standard quarters align with the tax year: Q1 (6 Apr - 5 Jul), Q2 (6 Jul - 5 Oct), Q3 (6 Oct - 5 Jan), Q4 (6 Jan - 5 Apr). Updates are due by the 7th of the month after each quarter ends.
Further threshold reductions
HMRC plans to extend MTD to those earning over £20,000 and potentially lower. Legislation is expected but dates are not yet confirmed.
What Tradespeople Need to Do
If you're a self-employed tradesperson earning above the threshold, here's your preparation checklist. The sooner you start, the less stressful the transition will be.
Register for MTD with HMRC
When mandated for your income level, sign up through your Government Gateway account.
Choose MTD-compatible software
HMRC lists three approved methods for creating digital records: bank feed linking, receipt/invoice scanning, or manual entry. TradeDocket handles receipt scanning.
Keep digital records of all business income and expenses
Every business transaction needs a digital record with date, amount, and category. Snap your receipts as you go.
Submit quarterly updates to HMRC
Your software totals each income and expense category and sends it to HMRC every three months.
File an End of Period Statement (EOPS)
After Q4, confirm your figures for the year and make any accounting adjustments.
Submit a final declaration
This replaces the traditional self-assessment tax return. Include all income sources, claim reliefs and allowances.
Important: Don't wait for the deadline
HMRC recommends signing up early and using compatible software well before the mandatory date. Building the habit of scanning receipts now means less stress when quarterly reporting kicks in.
What Counts as a Business Expense?
As a self-employed tradesperson, you can deduct legitimate business expenses from your income before calculating tax. These map directly to boxes on the SA103 Self Assessment form. TradeDocket automatically categorises your receipts into these categories.
| Category | Examples | SA103 Box |
|---|---|---|
| Cost of goods sold | Building materials, plumbing supplies, electrical cables, fixings, timber, cement, paint | Box 10 |
| Tools & equipment (under £200) | Hand tools, drill bits, saw blades, measuring tape, spirit levels | Box 10 |
| Capital allowances (over £200) | Power tools, cordless drills, table saws, laser levels, vans | Box 21 |
| Vehicle costs | Fuel, insurance, repairs, servicing (business use portion) | Box 16 |
| Travel | Public transport, parking, accommodation for work | Box 16 |
| Premises costs | Workshop rent, rates, repairs, utilities | Box 13/14 |
| Admin & office | Phone, software subscriptions, stationery, postage | Box 18 |
| Professional fees | Accountancy fees, insurance, trade body subscriptions, training courses | Box 19 |
| Safety & PPE | Hard hats, safety boots, gloves, goggles, hi-vis, dust masks | Box 10 |
| Subcontractor costs | CIS payments, labour hire | Box 14 |
TradeDocket auto-categorises your receipts
Every receipt you scan is automatically mapped to the correct HMRC expense category. TradeDocket recognises 35+ UK trade merchants (Screwfix, Toolstation, Travis Perkins, Jewson, Selco, City Plumbing, and more) and categorises items using trade-specific keyword matching.
Every receipt mapped to the right SA103 box
No manual categorisation. No spreadsheets. Just snap and go.
Try TradeDocket FreeHow TradeDocket Helps
TradeDocket is built specifically for UK tradespeople. Here’s how it fits into your workflow:
AI receipt scanning
Snap a photo of any receipt. Azure Document Intelligence extracts merchant, date, amounts, and line items automatically.
Tax-ready categories
Every item is mapped to the correct SA103 expense category. TradeDocket knows Screwfix from Sainsbury's.
Running totals by tax year
See your spending breakdown by category, quarter, and tax year at a glance. Built around the 6 April to 5 April tax year.
Project tracking
Assign receipts to jobs. Track costs per project with budgets. Know exactly what each job is costing you.
CSV export for accountants
One-click export with HMRC categories and SA103 box references. Hand your accountant a clean spreadsheet.
Capital allowance detection
Power tools over £200 are automatically flagged for Annual Investment Allowance claims. Never miss a deduction.
Start Scanning Your Receipts
Get your receipts sorted now. When tax time comes, your data is already organised.
Start Free — No Card RequiredFrequently Asked Questions
Do I need to keep paper receipts if I use TradeDocket?
HMRC accepts digital copies as valid records. However, we recommend keeping originals for at least one year as a precaution. After that, your TradeDocket digital records (stored for 5+ years) satisfy the MTD record-keeping requirement.
What if I earn under £50,000?
MTD for ITSA is mandatory from April 2026 for income over £50,000, and from April 2027 for income over £30,000. Even if you're below the threshold, you can sign up voluntarily — and digital record-keeping is good practice regardless. Getting started early means less stress later.
Can my accountant access my data?
You can export your data as CSV files at any time — organised by HMRC category with SA103 box references. Share the export with your accountant, or on the Pro+Accountant plan, your accountant can access your receipts directly via the partner portal.
Is TradeDocket MTD-compatible software?
TradeDocket is your digital receipt drawer — it keeps your records organised and HMRC-ready with tax-ready categories. HMRC lists receipt and invoice scanning as an approved method for creating digital records (Pillar 1 of MTD). When your accountant needs to file your quarterly update (Pillar 2), your TradeDocket data feeds straight into their workflow via CSV export.
What's the penalty for non-compliance?
HMRC uses a points-based penalty system. You receive a point for each missed quarterly update. Once you reach the threshold (4 points for quarterly obligations), you receive a £200 penalty. Points expire after 24 months of compliance. Late submission of your final declaration carries separate penalties.