What HMRC’s Making Tax Digital means for sole trader builders
Sole trader builders earning £50k+ must now follow HMRC’s Making Tax Digital for Income Tax rules. Learn how to make sure your business is ready.
Making Tax Digital (MTD) is here, and if you’re a sole trader builder, it's now essential to make sure you’re set up properly.
Builders with turnover above £50,000 now need to keep digital records and send quarterly updates to HMRC using compatible software.
If that’s you, this checklist will help you get everything in place — without overcomplicating it.
Step 1: Check if you’re in scope
Start with your latest figures. You’ll need to use Making Tax Digital if:
- You’re a sole trader
- You complete a Self Assessment tax return
- Your turnover is above £50,000
HMRC will use your most recent return to decide when you need to start and should have been in touch ahead of the 6 April 2026 deadline - the date at which yourdigital records should start. If you’re close to or above the threshold, assume this applies to you and act now. Visit the government's Making Tax Digital for Income Tax website for further information.
Step 2: Know what you’ll need to do differently
The biggest change is how often you report your income. You’ll need to:
- Keep digital records of income and expenses
- Send quarterly updates to HMRC
- Submit your final return through software
You’ll be keeping things up to date throughout the year and it should make filling in your annual HMRC Self Assessment much easier.
Step 3: Get your record-keeping in order
If you’re still:
- Using paper records
- Saving receipts in a folder
- Updating everything once a year
You’ll need to move to a more regular digital approach. That could be:
- Logging expenses on your phone
- Keeping invoices up to date as you go
- Setting aside time each week or month
The aim is simple: keep on top of things as you go, not all at once.
Step 4: Choose software that works for builders
You’ll need HMRC-recognised software — but not all tools are built with builders in mind. Look for software that:
- Is easy to use on site (mobile-friendly)
- Tracks income and expenses clearly
- Works with your accountant (if you use one)
Free and low-cost options
Some tools are free or low cost, including bridging software that links spreadsheets to HMRC. This can work short term, but many builders prefer full software that handles everything in one place.
Take a look at HMRC's video on how to choose the right software for your business below:
Step 5: Make sure it covers CIS
If you:
- Pay subcontractors
- Work under the Construction Industry Scheme (CIS)
Check your software can handle both CIS and Making Tax Digital. Getting this wrong can create extra admin later - it’s worth checking upfront.
Step 6: Get registered (it’s now simpler)
HMRC has made it easier to sign up. You can now:
- Register in advance
- Sign up without having chosen your software yet
This means you can get the admin done now and finalise your setup afterwards.
Step 7: Don’t leave it until the last minute
With the deadline approaching, leaving this until the final few months will only add pressure. Getting set up now means:
- No last-minute rush
- Time to test your system
- Fewer surprises when it goes live
A bit of time spent now will save you hassle later.
Step 8: Speak to your accountant (if you have one)
If you use an accountant:
- Check they’re ready for MTD
- Ask what software they recommend
- Agree how quarterly updates will work
Make sure you’re both clear on who’s doing what.
Step 9: Avoid common mistakes
Watch out for:
- Choosing software that doesn’t support CIS
- Paying for features you don’t need
- Assuming your accountant will handle everything
- Leaving decisions too late
Keep it simple and choose a setup that fits how you actually run your business. If you've missed the deadline, don't panic, but do sign up as soon as possible to avoid penalties. Sign up for MTD for income tax online here.
Final check: are you ready?
Make sure you can answer yes to these:
- I know if MTD applies to me
- I’ve chosen (or shortlisted) software
- My records are digital and up to date
- I understand how quarterly updates will work
If not, now’s the time to sort it.
Want the full picture?
This checklist covers what to do. For a full breakdown of what Making Tax Digital means for builders, read our guide.
How to complete your HMRC Self Assessment for builders
Step-by-step advice for builders completing their HMRC Self Assessment. Includes new information about Making Tax Digital for sole traders.
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