Do you need to use MTD for Income Tax?
MTD ITSA applies to sole traders and landlords with qualifying income above specific thresholds. For plasterers working alone, your qualifying income is the total turnover from your plastering business before you deduct any expenses. This is the figure you reported on your Self Assessment tax return for the previous year.
The threshold is tested as MORE than the figure. If your turnover was exactly 50,000 pounds, you are not over the threshold. You must add self-employment income and property income together before testing the threshold. Employment income through PAYE, dividends and pensions are not counted.
| Income in previous year | MTD ITSA starts from |
|---|---|
| Over 50,000 pounds (2024-25) | 6 April 2026 |
| Over 30,000 pounds (2025-26) | 6 April 2027 |
| Over 20,000 pounds (2026-27) | 6 April 2028 |
What goes in your quarterly updates
You must send four quarterly updates to HMRC each year. These are summaries of your income and expenses by category, cumulative from 6 April. They are not tax returns. HMRC receives the category totals, not the individual transactions from your job sheets or invoices.
For a plasterer, income categories typically include labour charges and materials sold. Expense categories include materials, tools, insurance, vehicle costs and subcontractor payments. If you use CIS subcontractors, their payments are recorded as an expense. If you are a CIS subcontractor yourself, the deductions made from your payments are handled differently and do not reduce your gross income for MTD purposes.
- Income: Labour charges, materials sold, other business income.
- Expenses: Materials, tools, insurance, vehicle costs, subcontractor payments, marketing.
- CIS Deductions: If you are a subcontractor, record the gross amount received. The tax deducted by the contractor is managed through your Self Assessment tax return, not by reducing the income figure in your MTD update.
Quarterly update deadlines
You can send your updates from the end of the period up to the deadline. If you expect no further transactions, you can send them up to 10 days before the period ends. You must send an update even if you had no income or expenses in that period.
The accounting period cannot be changed after you send your first quarterly update. Most software defaults to the tax year period (6 April to 5 April).
| Period ends | Update due by |
|---|---|
| 5 July | 7 August |
| 5 October | 7 November |
| 5 January | 7 February |
| 5 April | 7 May |
Keeping digital records
You must keep digital records of your income and expenses in compatible software. A digital record is created and stored electronically, not written in a notebook and then typed in later. You must keep these records for at least 5 years after the 31 January submission deadline for the tax year.
Once a record has been sent to HMRC in a quarterly update, it must not be moved by hand. You cannot cut and paste or copy and paste data between cells or products. If you use more than one software product, the records must be digitally linked, for example via an API or automated file transfer.
Penalties for missed deadlines
From tax years after 2026-27, missing a quarterly update deadline results in one penalty point. If you reach 4 points, you face a 200 pound penalty, plus 200 pounds for each further missed deadline. In 2026-27, there are no penalty points for missing a quarterly update deadline, but you must still send the updates and keep digital records.
Late payment penalties are separate. If you pay your tax late, you may face a percentage charge plus interest. If you become exempt in 2026-27, you return to current Self Assessment penalties for that year; from April 2027, the new penalties apply to everyone submitting a personal Self Assessment return.