Making Tax Digital for tilers: thresholds, updates and CIS

Do you need to use MTD?

MTD for Income Tax applies to sole traders and landlords. The requirement depends on your qualifying income from the previous tax year. Qualifying income is your total turnover from self-employment and property before you deduct any expenses.

For tilers, this means adding up all invoices issued for tiling work, plus any rental income if you own property, before subtracting costs like materials, tools or travel. You must test this figure against the threshold.

If your qualifying income is 20,000 pounds or less, you are automatically and permanently exempt from MTD ITSA. Note that the threshold is tested as 'more than' the figure. Exactly 50,000, 30,000 or 20,000 pounds is not over the limit.

What counts as qualifying income

When calculating your qualifying income for MTD, you look at turnover from self-employment and property. You do not include employment income received through PAYE, dividends, State or private pensions, or qualifying care relief.

If you are a partner in a partnership, your share of that partnership income is not counted towards your individual MTD threshold. Partnerships are not yet in scope for MTD ITSA, and no date has been published for when they will be.

Quarterly updates and deadlines

Once you are in scope, you must send four quarterly updates to HMRC each year. These updates are summaries of your income and expenses by category, not a full tax return. They are cumulative, meaning they show totals from 6 April up to the end of the period.

You must send an update even if you had no income and no expenses during that quarter. You can send updates 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.

Handling CIS deductions

Many tilers work under the Construction Industry Scheme (CIS). If you are a subcontractor, your contractor deducts money from your payments. These deductions are treated as income and expenses in your digital records.

You must keep digital records of the gross amount paid and the CIS deduction taken. When you send your quarterly update, these figures are included in the relevant income and expense categories. The final tax position, including any CIS refunds or additional tax owed, is calculated when you submit your annual Self Assessment tax return.

Digital records and software

MTD requires you to keep digital records of income and expenses. You cannot simply keep paper receipts and type them in later; the record must be created and stored in compatible software. This ensures that once data is sent to HMRC, it cannot be altered by hand.

HMRC does not provide software. You must choose a product that can create digital records, work with your chosen accounting period, and send quarterly updates. An all-in-one product can also submit your final tax return. TradeKit is MTD ready - recognised by HMRC (reference D4K6ZS).

• Keep digital records for at least 5 years after the 31 January submission deadline for the tax year.
• Do not move records by hand between software or within spreadsheets once sent. Use digital links like CSV imports or API transfers.
• You can use more than one product, but only one product for each separate submission, and records must be digitally linked.

Penalties for missed deadlines

Penalties are points-based. You get one penalty point for each missed submission deadline, such as a late quarterly update or tax return. The threshold is 4 points. Once you reach 4 points, you pay a 200 pound penalty, and a further 200 pounds for each subsequent missed deadline.

For the 2026-27 tax year, there are no penalty points for missing a quarterly update deadline. However, you still must keep digital records and send the updates. Points still apply to the tax return deadline. From 2027-28, points apply to all missed quarterly updates.