Do you need to use MTD for your plumbing business?
The requirement depends on your qualifying income from self-employment and property combined. This is your total turnover before expenses. If this figure was more than £50,000 in the 2024-25 tax year, you must use MTD ITSA for 2026-27. If it was over £30,000 in 2025-26, the rule starts from 6 April 2027. For 2026-27, the threshold drops to over £20,000, starting from 6 April 2028.
Note that the threshold is tested as MORE than the figure. Exactly £50,000, £30,000 or £20,000 is not over the limit. Income from employment through PAYE, dividends, pensions and one-off land transactions does not count towards this threshold.
How labour and materials fit into the figures
Under MTD, you report totals by income and expense category. For a plumber, this means separating the money you earn from labour and the costs of materials. If you use the cash basis, which is the default method, you record income when you receive payment and expenses when you pay a bill. This makes it easier to match what you actually paid out with what you received.
You do not need to list every single transaction in the quarterly update. HMRC receives the category totals, not the individual line items. However, you must keep digital records of every transaction in your software for at least 5 years after the 31 January submission deadline for that tax year.
CIS deductions if you are a subcontractor
If you work on construction sites as a subcontractor, you may be paid under the Construction Industry Scheme (CIS). In this case, the contractor deducts money from your payments before sending them to you. These deductions are treated as a payment on account towards your tax and National Insurance.
When you use MTD, you still need to account for these deductions. You record the gross amount you earned and the CIS deduction separately. The software helps you track these amounts so they are correctly reflected in your quarterly updates and your final tax return. You must ensure your records show the gross income and the tax deducted by the contractor.
Van and tool costs in your records
Plumbing businesses often have significant equipment costs. You can claim expenses for your van, tools, and other necessary equipment. These are recorded as expenses in your digital records. If you use the van for both business and personal use, you must only claim the business portion.
You can use simplified expenses for some costs, such as mileage, instead of actual costs. However, for MTD, you must keep digital records of the transactions. Whether you use simplified expenses or actual costs, the totals must be accurate and stored in compatible software.
What each quarterly update contains
You must send four updates a year. Each update is a summary of your income and expenses for that period, cumulative from 6 April. It is not a tax return. The categories used are the same as those in Self Assessment.
You must send an update even if you had no income or expenses in the period. 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.
| Period ending | Submission deadline |
|---|---|
| 5 July | 7 August |
| 5 October | 7 November |
| 5 January | 7 February |
| 5 April | 7 May |
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 missing deadlines
From 2026-27, there are no penalty points for missing a quarterly update deadline. However, you must still send the updates and keep digital records. Penalty points still apply to the tax return deadline.
From 2027-28, you get one penalty point for each missed submission deadline. If you reach 4 points, you get a £200 penalty. Each further missed deadline adds another £200 penalty. Points are removed automatically after 24 months if you are below the threshold.