Tax & Expenses

Making Tax Digital for Self Employed Builders — What’s Changing in 2026

Updated July 2026 · 7 min read · BuilderLog Team

From April 2026, sole traders earning over £50,000 must submit quarterly digital records to HMRC instead of one annual return. Here’s what that actually means if you’re a self employed builder.

Who does it affect?

If your gross self employed income exceeds £50,000 in a tax year, you’re in scope from April 2026. The threshold drops to £30,000 from April 2027. Eventually it will cover everyone, but for now it’s the higher earners first.

What do you actually have to do?

Instead of one annual tax return, you submit quarterly updates to HMRC showing your income and expenses for that quarter. You still file a final annual declaration, but the quarterly updates mean HMRC sees your figures throughout the year rather than in one lump.

The quarterly deadlines are roughly: 5 August, 5 November, 5 February, and 5 May — each covering the previous 3 months.

What records do you need to keep?

Digital records of all business income and expenses, categorised correctly. That means: every job invoiced, every cost logged, every mileage claim recorded — digitally, not in a notebook.

Do I need special software?

You need MTD-compatible software to submit the quarterly updates. This doesn’t have to be expensive — and you don’t need it on day one. What you need right now is to be keeping digital records throughout the year so the data exists when submission time comes.

BuilderLog keeps your income, costs and mileage in digital format as you go. At quarter end, your figures are ready to feed into MTD submission software or hand to your accountant.

What happens if I don’t comply?

HMRC will issue penalties for late or missing quarterly updates. The penalty regime is points-based — you accumulate points for each missed deadline, and once you hit the threshold (currently 4 points), you receive a £200 penalty for each subsequent late submission.

What if I earn under £50,000?

You’re not required to comply yet, but you will be eventually. Starting to keep digital records now means you’re ahead of the curve when the threshold drops.

What MTD-compatible software do I need?

HMRC maintains a list of MTD-compatible software on gov.uk. The quarterly submissions must be made through one of these approved tools. Popular options include FreeAgent, Xero, QuickBooks, and several free alternatives.

BuilderLog isn’t MTD submission software itself — it’s a job tracker that keeps your records in digital format throughout the year. At quarter end, your income and expense totals from BuilderLog feed into whichever MTD tool you (or your accountant) use for the actual submission.

What does a quarterly update actually look like?

It’s simpler than most people fear. A quarterly update to HMRC shows:

• Total income received in the quarter
• Total expenses by category in the quarter

That’s it. You’re not filing a full tax return four times a year. You’re giving HMRC a summary of your income and costs for the past 3 months. If you’ve been logging in BuilderLog throughout the quarter, these numbers are already sitting in your tax report.

CIS and MTD

If you’re a CIS subcontractor, MTD doesn’t change how CIS works. Your contractors still deduct 20% (or 30%) from your labour payments. You still report CIS deductions on your annual return. The quarterly updates show your income and expenses — the CIS reconciliation happens at year end as normal.

Penalties

The penalty regime uses a points system:

Submission frequency	Points threshold	Penalty per late submission after threshold
Quarterly	4 points	£200 each

Points expire after 24 months of compliance. So if you miss one quarter, you get 1 point. Miss four and you start paying £200 for each subsequent late submission.