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If you're a barber or hairstylist running your own chair, booth, or shop in the UK, Making Tax Digital for Income Tax (MTD For ITSA) is about to change how you report your earnings to HMRC. Starting from April 2026, many self-employed barbers will need to keep digital records, submit quarterly updates and a final tax return to HMRC.
This guide breaks down everything you need to know about MTD for barbers, including who needs to sign up, when you need to start, what software you'll need, and how to stay compliant without the stress.
What is Making Tax Digital for Barbers?
Making Tax Digital for Income Tax is HMRC's initiative to modernise the tax system by requiring self-employed individuals and landlords to:
Keep digital records of income and expenses
Send quarterly updates to HMRC every three months
Submit an annual tax return through compatible software
For barbers working as sole traders, this means moving away from shoeboxes full of receipts and manual record-keeping to digital systems that integrate with HMRC's online platform.
Does MTD Apply to Your Barbering Business?
Not every barber needs to join MTD immediately. Whether you're affected depends on your qualifying income – the total gross income from your self-employment and property income if there is any, before expenses.
Income Thresholds for Barbers
HMRC determines your MTD obligations based on your gross qualifying income from two tax years prior to the year you are required to join. This means by the time your obligation begins, HMRC already has a confirmed figure from a completed Self-Assessment return.
Example: If your barbershop earned £55,000 in gross income during the 2024-25 tax year, you'll need to start using MTD from 6 April 2026 since your gross income exceeds the threshold for that tax year.
What Counts as Qualifying Income Under MTD for Barbers?
Qualifying income is the combined gross turnover from your self-employment and property before any expenses or deductions. It is not your profit HMRC looks at the total income coming in, not what remains after costs.
Qualifying Income includes:
Gross income from self-employment (your barbering business turnover before any expenses)
Gross income from UK property
Gross income from overseas property, if you are a UK tax resident and the property is subject to UK Income Tax
All sources are combined into a single total. It is your gross turnover that counts — not your profit after expenses.
Qualifying Income does not include:
PAYE employment income (if you also work as an employee)
Dividend income
Pension income
Savings interest
Capital gains
Working Out Your Qualifying Income For Barbers
Your qualifying income is calculated before you deduct expenses like:
Rent for your chair or shop space
Equipment and supplies (scissors, clippers, razors)
Product costs
Utilities and insurance
Marketing and advertising
For Example: Even if you made £60,000 in sales but had £40,000 in expenses (leaving £20,000 profit), your qualifying income is still £60,000 for MTD purposes.
Check your eligibility in seconds; use the RentalBux MTD Calculator to calculate your qualifying income and see if you’re within the MTD threshold.
Who is Exempt from MTD for Barbers?
Some barbers may be exempt from MTD for barbers, either permanently or temporarily.
You're automatically exempt if you:
• Don't have a National Insurance number • Have qualifying income of £20,000 or less • Submit tax returns as a personal representative or trustee
You can apply for an exemption if you're digitally excluded, meaning:
• You cannot reasonably access or use digital software • You have no internet access • You have a disability that prevents digital record-keeping • You're in a remote area with no connectivity
Certain circumstances may give you temporary exemption until April 2027, including:
• Being a non-UK resident • Claiming averaging relief • Receiving income from trusts or estates • Being eligible for split-year treatment
If you think you qualify for an exemption, check HMRC's guidance or speak with your accountant before assuming you're exempt.
What Barbers Need to Do for Making Tax Digital for ITSA?
Get HMRC - Recognised MTD Software
You’ll need to use HMRC-recognised software to comply with Making Tax Digital for barbers. This software allows you to create and store digital records of your income and expenses, send quarterly updates to HMRC, and submit your annual tax return through a single, compliant system.
MTD Software Options for Barbers:
Full-feature accounting software that creates digital records and submits to HMRC
Bridging software that connects your existing spreadsheets to HMRC
Barbershop-specific features to look for:
Bank feed integration (automatic transaction import)
Receipt scanning via mobile app
Expense categorisation
Mileage tracking (for mobile barbers)
Multiple income source support (if you rent chairs)
Create Digital Records Under MTD for Barbers
You must keep digital records of:
Record Requirements for Making Tax Digital for Barbers:
Under Making Tax Digital for Barbers, it's essential to keep accurate records for each transaction. This includes noting the amount of each transaction, the date the transaction occurred, and the category of the transaction, such as whether it's income or an expense. Properly categorizing these details helps ensure your records are in compliance with MTD requirements.
Note
Simplified Record-Keeping Option: If your annual turnover is below £90,000, you can use simplified categorisation, recording transactions simply as income or expense without detailed categories.
Send Quarterly Updates For MTD Compliance
After setting up your software, you'll send quarterly updates to HMRC showing your income and expenses for each three-month period. HMRC allows two different ways to structure these updates: standard tax-year quarters and calendar-month quarters.
The standard quarterly option follows the UK tax year and runs from 6 April. Alternatively, you can choose calendar-month quarters, which run from the first to the last day of the month. This option is often preferred by barbers and other self-employed workers who already manage their finances monthly, use monthly bank statements, or rely on bookkeeping software that reports by calendar month.
Update | Standard Quarter Period | Calendar Quarter Period | Submission Deadline |
|---|---|---|---|
Q1 | 6 April – 5 July | 1 April – 30 June | 7 August |
Q2 | 6 July – 5 October | 1 July – 30 September | 7 November |
Q3 | 6 October – 5 January | 1 October – 31 December | 7 February |
Q4 | 6 January – 5 April | 1 January – 31 March | 7 May |
Whichever option you choose to comply Making Tax Digital for barbers, the submission deadlines stay the same, and each quarterly submission shows cumulative totals from the start of the tax year. You must choose one method and use it consistently for the entire tax year.
Submit Your Annual Tax Return
By 31 January following the end of the tax year, you'll need to complete your final declaration through your MTD-compatible software. This is where you:
Make any final adjustments to your income and expenses
Claim any allowances or reliefs you are entitled to, such as capital allowances on equipment like barber chairs, clippers or salon fittings
Add any other income sources not covered in your quarterly updates, such as employment income, dividends, savings interest or pension income
Submit your final declaration through your MTD software this replaces the traditional Self Assessment return and cannot be submitted through HMRC's standard online portal
Penalties for Non-Compliance: What Barbers Need to Know
MTD introduces a points-based penalty system for late submissions. There is good news for barbers joining in April 2026 — no penalty points will be issued for missed quarterly update deadlines during the 2026-27 tax year, giving you time to adjust to the new regime. From 2027-28 onwards, the full penalty system applies.
Late Submission Penalties
You receive one penalty point for each missed deadline, whether that is a quarterly update or your final declaration. Once you accumulate 4 points, a £200 penalty is triggered. Every subsequent missed deadline after that carries a further £200 charge. You can only receive one point per deadline, even if you have more than one business.
If you remain below the 4-point threshold, points are automatically removed 24 months after the missed deadline. Once you reach the threshold however, automatic removal stops. To clear all your points at that stage you must meet two conditions: submit all quarterly updates and your final declaration on time for 12 consecutive months, and clear any outstanding submissions from the previous 24 months.
Late Payment Penalties
Late payment penalties are separate from the points system and apply to each late payment individually. They apply to balancing payments and amounts due following amendments or assessments but not to payments on account.
How long do you have before penalties apply?
In your first year under MTD, you have 30 days from the payment due date to either pay in full or contact HMRC to agree a payment plan. After your first year, this window reduces to 15 days.
Penalty rates
2026-27 | 2027-28 onwards | |
|---|---|---|
Up to 15 days late | No penalty | No penalty |
16–30 days late | 3% of tax owed at day 15 | 4% of tax owed at day 15 |
31+ days late | 3% at day 15 + 3% at day 30, then 10% per year charged daily from day 31 | 4% at day 15 + 4% at day 30, then 10% per year charged daily from day 31 |
Note: In your first year, no penalty applies at the 16–30 day stage regardless of the rate above.
Cannot pay on time?
Contact HMRC as early as possible. If a payment plan is agreed and maintained, penalties are paused from the date you make contact.
Practical Tips for Barbers Transitioning to MTD
Even if you're not mandated until 2027 or 2028, early preparation helps:
