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UK tax guide

Making Tax Digital and VAT for UK tradespeople

UK tradespeople need to separate three questions: whether MTD for Income Tax applies, whether VAT registration is required, and whether the chosen software keeps the right records and submissions.

Last reviewed: 10 September 2026. This article uses official provider or government sources and does not claim hands-on testing.

Recommendation: Start with HMRC's current rules, then choose compatible software that can create and keep digital records and support the relevant submissions. Use an accountant or tax adviser where your structure, income, VAT scheme or circumstances make the rules difficult to apply.[1][2][3]

Making Tax Digital for Income Tax

HMRC's collection says that from 6 April 2026 sole traders and landlords must use Making Tax Digital for Income Tax if their qualifying income from self-employment and property is over £50,000. The collection also says the software must create, store and correct digital records, send quarterly updates and support the tax return and payment process.[1]

HMRC states that from September 2026 it will start signing up people who need to use the service for the 2026 to 2027 tax year and whose records show qualifying income over £50,000 in the 2024 to 2025 tax year. Check the current HMRC collection for later phases, exemptions and changes before acting.[1]

VAT registration

GOV.UK says registration is required when taxable turnover for the last 12 months goes over £90,000, or when taxable turnover is expected to go over £90,000 in the next 30 days. Voluntary registration is possible below the threshold, while exempt or out-of-scope-only supplies can fall outside the requirement.[2]

VAT records and invoices

GOV.UK says VAT-registered businesses should be signed up for Making Tax Digital for VAT and must charge VAT unless supplies are exempt. It also states that invoices must include the VAT number and show VAT separately, with the transaction recorded in the VAT account and VAT return.[3]

What software needs to do

  • Keep the digital records required for the relevant tax process.
  • Separate operational job data from accounting records and confirm what integrates.
  • Show VAT-inclusive and VAT-exclusive figures clearly where both are used.
  • Retain source invoices, expense records, adjustments and evidence for the required period.
  • Make it possible to correct errors and export records if the business changes adviser or platform.

Practical checks for a trade business

  1. Confirm whether the business is a sole trader, partnership or company and which rules apply.
  2. Measure qualifying income and taxable turnover using the relevant HMRC definitions, not a rough sales total.
  3. Check whether the accounting software is compatible with the required HMRC service.
  4. Test the path from quote and invoice to VAT record and bank reconciliation.
  5. Ask an adviser about VAT schemes, CIS, subcontractors, mixed supplies and unusual transactions.

TradeJobGuide verdict

MTD and VAT are compliance workflows, not just software features. The safest approach is to confirm the HMRC rule first, use compatible accounting software for the tax records and connect job-management software only where the integration is understood. Thresholds, dates and software compatibility can change, so review the primary sources before making a filing or purchase decision.[1][2][3]

Frequently asked questions

When does MTD for Income Tax apply?

For the first phase described by HMRC, from 6 April 2026 where qualifying income is over £50,000 and the other conditions apply.[1]

When must a business register for VAT?

When taxable turnover for the last 12 months goes over £90,000 or is expected to go over £90,000 in the next 30 days, subject to the published rules.[2]

Sources and checked dates
  1. HMRC Making Tax Digital for Income Tax collection (10 September 2026)
  2. GOV.UK VAT registration thresholds (10 September 2026)
  3. GOV.UK charging, reclaiming and recording VAT (10 September 2026)

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