Making Tax Digital for Income Tax (MTD For ITSA) is set to transform how electricians manage their tax obligations from April 2026. If you're a self-employed electrician earning over £50,000, this isn't just another government initiative you can ignore—it's a fundamental change to how you'll report your income and expenses to HMRC.
This comprehensive guide breaks down everything electricians need to know about Making Tax Digital for electricians, from understanding if you're affected to choosing the right software and avoiding penalties.
Key Insights on Making Tax Digital for Electricians
Check your qualifying income: If over £50,000 based on your 2024-25 return, you're in MTD from April 2026
Choose software early: Give yourself time to learn and set up before the April 2026 deadline
Record transactions promptly: Don't leave everything until quarter-end
First-year relief: No quarterly update penalties in 2026-27, but late payment penalties still apply
Quarterly updates are cumulative: Each includes records from the start of the tax year
Annual return still required: By 31 January following the tax year, through MTD software
Keep physical records: Store receipts and invoices for at least 5 years
Consider professional help: Especially if you're not confident with technology or have complex affairs
What Is Making Tax Digitalfor Income Tax?
Making Tax Digital for Income Tax is HMRC's initiative to digitalise the tax system. MTD for Income Tax requires self-employed electricians to keep digital records of their business income and expenses, submit quarterly updates and a final tax return to HMRC using compatible software. Gone are the days of shoebox receipts and annual tax returns alone.
The goal is to reduce errors, make tax administration more efficient, and give you a clearer picture of your tax liability throughout the year.
Am I Affected? MTD Thresholds for Electricians
Whether MTD affects you depends on your gross qualifying income—your total gross income from self-employment and any property rental income if any, before deducting expenses. If your income exceeds certain HMRC thresholds, joining MTD for electricians becomes mandatory, meaning you must keep digital records, submit quarterly updates, and file your annual tax return using compatible software.
Calculating Qualifying Income for Making Tax Digital for Electricians
What counts as a Qualifying Income? | What Doesn't Count as Qualifying Income? |
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Example: If you invoiced £65,000 in electrical work during 2024-25, even after deducting £20,000 in expenses, your qualifying income for MTD purpose is £65,000—putting you in the first wave from April 2026.
Digital Record-Keeping Requirements under MTD for Electricians
What Records Must Be Digital?
Every electrical job requires you to record digitally under MTD for electricians:
Income records:
Job invoices and amounts
Date payment received
Customer details
VAT (if registered)
Expense records:
Materials and equipment purchases
Vehicle costs (fuel, insurance, repairs)
Tools and testing equipment
Professional insurance
Training and certifications
Office costs
Travel expenses
Choosing MTD Software for Electricians
To comply with HMRC requirements, you’ll need to use HMRC-recognised software. This software must be capable of creating and securely storing digital records, submitting quarterly updates to HMRC, and filing your annual tax return. MTD software for electricians should also allow you to report any additional income sources where applicable.
Types of MTD Software for Electricians
All-in-one software:
Creates records, sends quarterly updates, and submits returns
Best for: Electricians who want a complete solution
Bridging software:
Connects to your existing spreadsheets
Best for: Those comfortable with spreadsheets who want to minimise change
Allows you to keep familiar record-keeping methods
Specialised software:
Designed for tradespeople
Often includes job management features
May integrate with invoicing and scheduling
Features Electricians Should Look For
Receipt scanning: Photograph receipts from electrical wholesalers
Mileage tracking: Automatic recording of journeys to job sites
Bank feed integration: Auto-import transactions from your business account
Job costing: Track profitability per electrical project
Mobile app: Record expenses on-site
VAT support: If you're VAT registered
Quarterly Updates: What Electricians Need to Know?
Under MTD for electicians, you must submit four quarterly updates each year, and HMRC gives you two reporting options for this; standard and calendar quarter option. You can use standard tax-year quarters or calendar quarters, and the choice does not affect the submission deadlines—only how your reporting periods are aligned with your records.
Calendar update periods are particularly useful if your bookkeeping is already organised on a calendar-month or calendar-year basis, while standard quarters align with the UK tax year. Whichever option you choose, each quarterly update submission is cumulative. For example, your third update includes all records from 6 April to 5 January, (from 1 April to 31 December in case of calendar quarter) not just the most recent quarter.
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 |
What's Included in Updates?
Each quarterly update contains:
Total income by category
Total expenses by category
Digital records created since the start of the tax year
Important: HMRC receives category totals, not individual transaction details.
The Annual Tax Return Under Making Tax Digital for Electricians
You'll still submit an annual tax return Under MTD for electricians by 31 January following the tax year, but:
It must be submitted through MTD software
You'll add other income sources (dividends, savings, PAYE, pensions etc.)
You'll make final adjustments and calculations
You’ll claim any allowance and relief if any
Common Scenarios In Making Tax Digital for Electricians
Multiple Income Streams
Scenario: You're employed part-time at an electrical contractor (PAYE) and run your own business on the side earning £55,000.
Impact: Your self-employment income exceeds £50,000, so you're in Making Tax Digital for electricians from 2026. Your PAYE income doesn't count toward the threshold but must be declared on your final return.
Subcontracting Under CIS
Scenario: You work as a CIS subcontractor for electrical contractors.
Impact: CIS income is self-employment income and counts toward your MTD threshold. Record your gross income before CIS deductions and record the CIS deductions as separate items.
Starting Mid-Year
Scenario: You started your electrical business in October 2024.
Impact: HMRC will annualise your income. If you earned £30,000 in 6 months, they'll calculate qualifying income as £60,000—putting you in MTD for electricians from 2026.
Exemptions: When MTD Doesn't Apply to Electricians?
You may be exempt from MTD for income tax if you:
Digital Exclusion
Cannot reasonably use digital technology due to age, disability, remoteness, or religious beliefs
Must apply to HMRC for exemption
Income Below Threshold
Qualifying income £20,000 or below
No need to apply—automatic
Temporary Exemptions (Until April 2027)
Non-UK resident electricians
Claiming averaging relief
Receiving trust income
Note: Even if exempt, you must still submit Self-Assessment tax returns.
Penalties Under Making Tax Digital for Electricians
Late Submission Penalties (From 2027-28 onwards)
Under MTD for electricians , HMRC uses a penalty points system for late submissions. Points are tracked separately for annual returns and quarterly updates, and penalties apply once a points threshold is reached.
Annual Filers (Final Declaration / Annual Tax Return) | Quarterly Filers (Quarterly Updates) |
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Each time your annual tax return is submitted late, 1 penalty point is added to your record.
Example: First late return → 1 point (no penalty) Second late return → 2 points → £200 penalty Third late return → another £200 penalty | Each late quarterly update also adds 1 penalty point, but the threshold is higher.
Example: First late quarterly update → 1 point Fourth late quarterly update → 4 points → £200 penalty Fifth late quarterly update → another £200 penalty |
How Penalty Points Are Reset
Penalty points do not remain permanently. They reset to zero only when both of the following conditions are met:
Condition 1: Sustained On-Time Compliance
Annual obligations: All required submissions must be filed on time for 24 consecutive months
Quarterly obligations: All quarterly updates must be submitted on time for 12 consecutive months
Condition 2: Complete Catch-Up
All submissions due in the previous 24 months must have been filed with HMRC, even if they were originally late
Key Changes in MTD for Income Tax for Electricians 2026
Good News:
First-Year Penalty Relief
For electricians joining MTD in 2026-27, no penalties will be charged for late quarterly updates during your first year. This "soft landing" gives you time to adjust. However:
Late payment penalties still apply
Late annual tax return penalties still apply
You must still submit quarterly updates (just without immediate penalties)
First-year grace:
During this first year of Making Tax Digital for electricians, taxpayers will have an additional 15 days to pay any outstanding tax.This means that instead of penalties starting after 15 days, you will have up to 30 days from the payment due date to settle the balance without incurring a late payment penalty.
Late Payment Penalties
More stringent than current rules:
Conclusion
Making Tax Digital for electricians represents a significant change in how you'll manage your tax obligations. While the shift to quarterly digital reporting may seem daunting, it offers real benefits: better visibility of your tax liability throughout the year, reduced year-end stress, and potentially fewer errors.
The key to a smooth transition is preparation. Start now by reviewing your current record-keeping, exploring software options, and understanding the quarterly submission requirements. With first-year penalty relief for quarterly updates, you'll have breathing room to adjust without immediate financial consequences.
Remember, this isn't optional for electricians earning over the thresholds—it's a legal requirement. But with the right software and processes in place, MTD can actually simplify your tax administration and give you more time to focus on your electrical business.
Frequently Asked Questions
Not until April 2027 at the earliest. You'll join when the threshold drops to £30,000, based on your 2025-26 tax return. However, you can volunteer earlier to get familiar with the system.
Yes, but you'll need bridging software to connect your spreadsheets to HMRC. The spreadsheet becomes your digital record and bridging software handles submissions.
Add it when you remember. Your next quarterly update includes all corrections from earlier in the year. After your fourth update, you can still correct it before your annual return.
Preparation involves reviewing current records, choosing compatible software, understanding quarterly deadlines, and optionally consulting accountants for electricians for expert guidance.
No penalty points during your first year (2026-27), but you must still submit all updates before you can submit your annual return. Get them in as soon as possible.
