Do you need to use Making Tax Digital?
The requirement depends on your qualifying income, which is your total turnover from self-employment before expenses. For painters and decorators, this includes all money received for jobs, whether paid directly by clients or through a contractor.
You must use Making Tax Digital for Income Tax if your qualifying income was more than 50,000 pounds in the 2024-25 tax year. The threshold drops to more than 30,000 pounds for 2025-26, and more than 20,000 pounds for 2026-27.
If your income is 20,000 pounds or less, you are permanently exempt. You do not need to sign up, but you must still keep records and file a Self Assessment tax return if you are registered for it.
What counts as qualifying income
Qualifying income is the gross turnover from your painting and decorating business. It is taken from the tax return you submitted for the previous tax year.
If you have other self-employment income or property income, add these together before testing the threshold. However, income from a job through PAYE, dividends, pensions, or a partnership share is not counted towards this threshold.
For most sole trader painters, this means looking at your total invoiced amount for the year before deducting the cost of paint, brushes, labour or travel.
Quarterly updates for painters and decorators
Instead of one annual tax return, you send four quarterly updates to HMRC. Each update is a summary of your income and expenses for that period, not a full tax return.
You record your transactions in compatible software as they happen. The software then calculates the totals for each category, such as 'Paints and materials' or 'Subcontractor costs', and sends these totals to HMRC.
You must send an update even if you had no income or expenses in a quarter. You can send the update from the end of the period up to the deadline, or up to 10 days before the period ends if you expect no further transactions.
| Update Period | Deadline |
|---|---|
| 6 April to 5 July | 7 August |
| 6 July to 5 October | 7 November |
| 6 October to 5 January | 7 February |
| 6 January to 5 April | 7 May |
The final tax return is still submitted after the tax year ends, and any tax owed is paid by 31 January.
Handling materials, labour and CIS
For a painting business, your main expense categories will likely include materials (paint, primer, tape), subcontractor costs (if you hire help), and vehicle or travel expenses.
If you work on construction sites under the Construction Industry Scheme (CIS), you may have tax deducted from your payments. These deductions are recorded as part of your income and tax position. Your software should help you track these so they are correctly reflected in your quarterly updates.
Under the cash basis, which is the default method, you record income when you receive the money and expenses when you pay the bill. This makes it easier to match your bank transactions with your digital records.
Digital records and software
You must keep digital records of your income and expenses. This means using software to create and store these records, rather than just keeping paper receipts or a handwritten ledger.
You need to keep these digital records for at least 5 years after the 31 January submission deadline for the tax year. This is the same retention period as for traditional Self Assessment.
Once a record has been sent to HMRC in a quarterly update, you cannot change it by hand. If you need to correct an error, you must send a new update or use the software's correction process. You cannot simply overwrite a number or copy and paste data between products.
Penalties and deadlines
Penalties for missing quarterly update deadlines are being introduced gradually. For the 2026-27 tax year, you will not get penalty points for missing a quarterly update deadline, but you must still send the updates and keep digital records.
From later years, missing a deadline results in penalty points. Four points trigger a 200 pound penalty, with further penalties for subsequent missed deadlines.
Late payment penalties are separate from submission penalties. If you pay your tax late, you may face interest charges and fixed penalties depending on how late the payment is.