Making Tax Digital for mobile mechanics

Do you need to use Making Tax Digital?

The requirement depends on your qualifying income from the previous tax year. Qualifying income is your total turnover from self-employment before you deduct any expenses. If this figure was more than 50,000 pounds in 2024-25, you must use MTD ITSA for the 2026-27 tax year.

The threshold is tested as more than the figure. Exactly 50,000 pounds is not over the threshold. If your income was 20,000 pounds or less, you are automatically and permanently exempt.

If you have other income sources, such as property rental, you must add self-employment income and property income together before testing the threshold. Employment income through PAYE, dividends and pensions are not counted towards this total.

What counts as qualifying income for a mobile mechanic?

For a sole trader mechanic, qualifying income is the total amount you charged for labour, parts and callout fees before expenses. It is based on the tax return you submitted for the previous year.

If you are registered for VAT, your qualifying income is your VAT-exclusive turnover. Do not include VAT in the figure you use to test the threshold.

If your business ceased trading before 6 April 2026, you do not need to use MTD ITSA. However, you must still file your 2025-26 tax return. If it ceased on or after 6 April 2026, you still need to use MTD ITSA and send a quarterly update covering the period up to the date it stopped.

Quarterly updates for parts, callouts and mileage

Under Making Tax Digital, you send four updates a year instead of just one annual return. Each update is a summary of your income and expenses for that period, not a full tax return.

For a mobile mechanic, this means recording every job as you go. You need to log income from labour and parts, as well as expenses like vehicle fuel, mileage and tool purchases. HMRC receives the category totals, not the individual transaction details.

You can use the simplified expenses method for vehicle costs if you prefer. This allows you to claim a flat rate per mile instead of tracking actual fuel and maintenance costs. Whichever method you choose, you must keep digital records of the transactions that support your claims.

• Log income from every job, including labour, parts and callout fees.
• Record expenses such as fuel, vehicle maintenance, tools and insurance.
• Keep digital records of all receipts and invoices.
• Send a summary of these totals to HMRC every quarter.

Quarterly update deadlines

You must send an update for every quarter, even if you had no income or expenses in that period. The deadlines are fixed dates, not dependent on when you finish your work.

You can send an update from the end of the period up to the deadline. You can also send it up to 10 days before the period ends if you expect no further transactions. Once you send the first update, you cannot change your accounting period.

After each update, you can see an estimate of your tax bill in your software or in HMRC online services. The final tax return is submitted after the tax year ends, and any tax owed is paid by 31 January.

Penalties for missed deadlines

HMRC uses a points-based system for late submissions. You get one penalty point for each missed quarterly update deadline or tax return deadline. If you reach 4 points, you face a 200 pound penalty. Each further missed deadline adds another 200 pound penalty.

For the 2026-27 tax year, there are no penalty points for missing a quarterly update deadline. However, you must still keep digital records and send the updates. Penalty points still apply to the tax return deadline.

If you are below the penalty threshold, points are removed automatically 24 months after the missed deadline. If you are at the threshold, you must send on-time updates and returns for 12 months to remove them.

Signing up and software

You must be registered for Self Assessment and have submitted a tax return in the last two years. From September 2026, HMRC will sign up anyone who needs to use MTD ITSA for 2026-27 and has not done so themselves.

HMRC does not provide software. You must use compatible software that can create and store digital records and send quarterly updates. You can use more than one product, but you must digitally link the records between them.

TradeKit is MTD ready - recognised by HMRC (reference D4K6ZS). TradeKit helps you keep digital records of your jobs, parts and expenses, and sends your quarterly updates to HMRC. It also handles your tax return, CIS deductions and VAT in one app.