Making Tax Digital: what changed for sole trader electricians in April

If you are a sole trader and your turnover went past fifty thousand pounds, the way you report tax changed on 6 April 2026. Not the amount you pay. The way you report it.

HMRC reckons more than 860,000 sole traders and landlords are in this

first wave. A fair number of them are still filing as though nothing

happened, because the change is easy to miss when nobody sends you a

letter.

Here is the part that catches most people out, so it is going first.

The threshold is turnover, not profit

Making Tax Digital for Income Tax applies from April 2026 to sole traders

and landlords with qualifying gross income above fifty thousand pounds.

Gross income. Not profit. Not what landed in your bank after materials,

van, fuel and tools.

An electrician turning over fifty-eight thousand with thirty-four

thousand profit is inside the rules. The relevant figure is the

fifty-eight, not the thirty-four. That distinction is why a lot of people

have looked at their tax return, seen a modest profit and concluded the

change is not about them.

If you run more than one self-employed activity, the income is generally

combined. Property income counts too. So no single stream needs to reach

the threshold for you to be caught by the total.

HMRC used 2024/25 self assessment returns to work out who is in the first

wave. If they wrote to you, that is your answer. If they did not, that is

not a get-out. The responsibility to check sits with you.

What actually changes

The annual return is replaced by a rhythm. Four quarterly updates during

the year summarising income and expenses, then a final declaration after

the year end.

The quarterly updates are described as light touch, and they are. They are

summaries rather than full returns. What they are not is optional, and

what they require is that your records exist in a digital form throughout

the year rather than being assembled in January from a carrier bag.

That is the real change. Not the filing. The record keeping.

Spreadsheets on their own are no longer enough unless they are connected

through approved bridging software. The records have to be digital and

they have to be maintained as you go.

For most electricians this is less of a jump than it sounds, because the

information already exists. Invoices are already raised somewhere,

purchase invoices already arrive, hours are already recorded in some form.

The question is whether all of it lands in the same place and whether it

is legible three months later.

The final declaration still goes in by 31 January as before. The

difference is that the software already holds most of it, so the January

scramble is smaller.

Penalties, and the bit of slack you get

HMRC operates a points-based system for MTD. Each missed quarterly

submission earns a point, and once you reach the threshold a two hundred

pound penalty follows. Further late filings attract further penalties.

There is a twelve month grace period on quarterly updates for those

joining in April 2026, which softens the first year. Penalties for a late

final return apply immediately, with no grace.

So the shape of it is this. You get some room to find your feet on the

quarterly rhythm. You do not get room on the annual deadline you already

had.

If you have not sorted this yet

Check your qualifying income first, using gross figures rather than

profit, and combining across activities.

Then look at where your records actually live. If invoices are in one

place, purchase invoices are in a box, and hours are on a pad in the van,

the quarterly update is going to be a monthly headache four times a year.

Choose software that is recognised for MTD. HMRC lists compatible

options, and free tools exist for straightforward cases.

If you are close to the threshold rather than over it, look ahead. The

threshold drops to thirty thousand from April 2027 and twenty thousand

from April 2028. Most working sole traders in this trade will be inside

the rules by then. Setting things up once is cheaper than setting them up

three times.

The part nobody says out loud

Quarterly reporting is being sold as a compliance burden, and for the

filing itself that is fair enough.

But there is a second effect that is worth naming. If you are summarising

income and expenses four times a year rather than once, you find out how

the business is doing four times a year rather than once. Most sole trader

electricians currently discover their annual result some months after the

year has ended, at which point nothing can be done about it.

Being forced to look more often is an odd way to get there. It is still

better than not looking.

Frequently asked questions

Who has to use Making Tax Digital for Income Tax?

From 6 April 2026, sole traders and landlords with qualifying gross income

above fifty thousand pounds. The threshold drops to thirty thousand from

April 2027 and twenty thousand from April 2028.

Is the threshold based on profit or turnover?

Gross income, before expenses. This is the most common misunderstanding.

A business with fifty-eight thousand turnover and thirty-four thousand

profit is measured on the fifty-eight.

What do the quarterly updates involve?

Summaries of income and expenses submitted through recognised software,

four times a year, followed by a final declaration after the year end.

Can I keep using spreadsheets?

Only where they connect to HMRC through approved bridging software.

Spreadsheets on their own no longer meet the digital record requirement.

What if HMRC has not contacted me?

Not receiving a letter does not remove the obligation. Check your

qualifying income yourself, using gross figures across all relevant

activities.

Are there penalties for missing a quarterly update?

Yes, under a points-based system, with a two hundred pound penalty once

the points threshold is reached. Those joining in April 2026 have a twelve

month grace period on quarterly updates, but not on the final return.

This article is general information and is not tax advice. Check current

thresholds and dates on gov.uk or with your accountant. The content on this page may have been created or reviewed with the help of AI.