If you’re a sole trader in construction, there’s a big tax change coming — and many business owners still haven’t heard much about it.
It’s called Making Tax Digital for Income Tax Self Assessment (MTD for ITSA).
And while the name sounds complicated, the idea behind it is actually quite simple:
HMRC wants businesses to keep digital records and report their income more regularly.
For many builders, electricians, plumbers, and subcontractors, this will completely change how tax reporting works.
When Is It Happening?
MTD for Self Assessment starts:
- April 2026 — for sole traders and landlords earning over £50,000
- April 2027 — for those earning over £30,000
HMRC has also suggested the threshold may reduce further in future.
So even if it doesn’t affect you immediately, it probably will eventually.
What Will Change?
At the moment, most sole traders complete:
✅ One tax return each year
Under MTD, you’ll need to:
✅ Keep digital accounting records
✅ Use HMRC-compatible software
✅ Send updates to HMRC every quarter
✅ Submit a final declaration at year-end
So instead of dealing with tax once a year, it becomes an ongoing process throughout the year.
What Does This Mean for Construction Businesses?
For many construction business owners, this is less about technology… and more about habits.
A lot of trades businesses still rely on:
- spreadsheets
- paper receipts
- bank statements
- catching up bookkeeping months later
That approach will become much harder under MTD.
The businesses that adapt early will find the transition far easier.
The Good News? It Could Actually Improve Your Business
Most construction business owners only properly look at their numbers once a year — usually when the tax return is due.
That often means:
- surprise tax bills
- cashflow pressure
- uncertainty about profit
- making decisions without clear figures
MTD encourages more regular visibility over your numbers.
Done properly, that can actually help you:
✅ understand profit better
✅ prepare for tax earlier
✅ improve cashflow
✅ make more confident decisions
For many businesses, this could be a positive shift — with the right support.
What Should You Be Doing Now?
You do not need to panic.
But you also shouldn’t ignore it until the last minute.
Now is the time to:
- move onto cloud accounting software if you haven’t already
- improve bookkeeping habits
- get regular visibility over your numbers
- make sure your accountant is actually preparing you
Because the reality is this:
If your accountant hasn’t mentioned MTD yet… they probably should have.
How We’re Helping Our Clients Prepare
We’re already working behind the scenes with our construction clients to make this transition simple.
That includes:
✅ setting up easy-to-use systems
✅ helping clients move digital gradually
✅ handling submissions
✅ improving financial visibility overall
The goal isn’t just compliance.
It’s helping construction business owners feel more in control of their business financially.
Final Thoughts
Making Tax Digital is coming whether businesses feel ready or not.
But with the right systems and support, it doesn’t need to be stressful.
In fact, it could be the push many construction businesses need to finally get clearer visibility over their numbers.
And that’s usually where better decisions — and better profits — begin.
If you’d like help understanding how MTD will affect your business, feel free to get in touch.