From April 2026, self-employed plumbers and heating engineers earning over £50,000 must keep digital records for HMRC. Benjamin Dyer, founder and CEO of Powered Now, says with the right tools this change can simplify tax and save valuable time.
A major change is on the horizon for self-employed plumbing and heating installers. From April 2026, Making Tax Digital for Income Tax (MTD IT) will transform the way thousands of tradespeople record and report on their earnings to HMRC.
While the phrase ‘digital tax’ might sound daunting, the reality is far less dramatic. With the correct preparation and tools, the shift to digital reporting can make life easier for busy installers who are already juggling customers, paperwork, and day-to-day jobs.
So, what exactly is changing, who will be affected, and how can you prepare?
MTD IT explained
First set out in 2015, MTD IT is the government’s programme to modernise the current UK tax system. From April 2026, HMRC will require sole traders and self-employed tradespeople to keep digital records and submit updates virtually, each quarter, in addition to a single, annual tax return.
The aim of MTD IT is simple – to reduce errors, improve accuracy, and give both HMRC and those impacted by MTD a clearer picture of income and expenses.
A misconception is that with MTD IT, tax will now be paid quarterly. Instead, the new requirements are about how and when information about income is reported. Tax payments will still normally be made on an annual basis.
Who will be impacted?
Importantly, incoming MTD IT changes will mainly impact non-VAT registered businesses, as VAT-registered traders have already been keeping digital records and submitting returns through MTD for VAT.
Currently, the following thresholds and dates apply:
• From 6th April 2026: All non-VAT registered businesses or sole traders, earning in excess of £50,000 per annum.
• From 6th April 2027: Non-VAT registered businesses or sole traders earning above £30,000 annually.
• From 6th April 2028: All those earning above £20,000 annually.
Main changes
For many who still rely on paper files, spreadsheets or a glove box full of receipts, MTD IT represents a significant shift in working habits. The biggest changes are:
• Going digital
Income and expenses must be recorded digitally using HMRC-recognised software, such as Powered Now. Paper records and handwritten notes will no longer be suitable, and spreadsheets can only be used if they are linked to a compatible MTD IT software.
• Quarterly reporting
Those affected by MTD IT will now need to send quarterly summaries of their income and expenses. Full accounts updates are still required annually; however, these changes do require records to be kept up to date throughout the year.
• Using compatible software
The move to digital doesn’t have to be expensive or complex. A wide range of software is already available, which has been designed specifically to meet MTD IT requirements and to meet the needs of smaller trade businesses.
When to start?
The short answer is now.
Even though not everyone will be impacted in April, early preparations bring clear benefits. Moving slowly towards digital record-keeping allows busy tradespeople to understand what’s changing, choose the right tools, and to avoid a last-minute scramble come April.
One of the most effective ways to prepare for MTD IT is to adopt a ‘little and often’ approach to admin. Recording sales, expenses and supplier invoices as they happen ensures nothing gets lost, and everything remains traceable from the point of sale. Keeping on top of expenses and raising invoices promptly, all through one platform, can save hours of work further down the line.
Keeping personal and business expenditure separate is another key step. Separate bank accounts, cards and statements, which all report into one platform, make digital record-keeping much easier and reduce the risk of errors.
Tools and support
Perhaps the biggest advantage of MTD IT is that it will push businesses towards systems which genuinely save time and resources.
Modern, trade-focused software allows tradespeople to create quotes, invoices and job records all in one place, often directly from a mobile phone. By using an app which combines invoicing, scheduling and certification needs, tradespeople can also avoid juggling multiple, disconnected apps to run their business. Additionally, being able to access records on-site or at home also means less time spent at the desk, and more time on the tools – or enjoying well-deserved downtime.
From experience at Powered Now, where we support thousands of our trades customers daily, those who bring their paperwork and record-keeping into a single digital system quickly feel the benefits. The key is finding an all-in-one setup that suits your business needs, whilst keeping compliance simple.
The future is digital
MTD IT marks a key shift in the way plumbing and heating businesses interact with HMRC. Whilst the move to digital recording may feel like an extra burden at first, it is ultimately designed to reduce errors, improve visibility and make tax simpler in the longer term.
With plenty of notice and the right preparation, installers can turn this change into an opportunity – streamlining admin, gaining better insight into finances and taking the stress out of tax returns.
Powered Now is an all-in-one job management software designed specifically for trade businesses. With an award-winning, UK-based support team, the app allows businesses to invoice, quote and schedule jobs and teams – all from one app.
