PHAM NEWS | MARCH 2026 12 Business Matters


A guide to Making Tax Digital for installers


From April this year, 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.


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’


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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 aff ected, 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


The shift to digital reporting can make life easier for busy installers who are already juggling customers,


paperwork and day- to-day jobs


about income is reported. Tax payments will still normally be made on an annual basis.


major change is on the horizon for self-employed plumbing and heating installers. From


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-


Benjamin Dyer Founder and CEO of Powered Now


VAT registered businesses or sole traders earning above £30,000 annually.


those earning above £20,000 annually.


• From 6th April 2028: All


Main changes For many who still rely on paper fi les, spreadsheets or a glove box full of receipts, MTD IT represents a signifi cant 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 aff ected 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 specifi cally 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 benefi ts. 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 eff ective 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.


Two-thirds of tradespeople chasing late payments


Late payments are becoming an increasing problem for UK tradespeople, according to new research by Direct Line business insurance, with over half (53%) saying they are experiencing more late payments than a year ago. The scale of the problem is


signifi cant, with tradespeople owed an average of £2,023 in late payments. Over two-thirds (68%) of tradespeople are currently chasing at least one late payment from their clients. Many are juggling multiple outstanding debts: almost one in four (23%) are currently chasing four or more late payments simultaneously, with 7% chasing six or more. Over four in 10 tradespeople


(42%) surveyed have been forced


(39%), followed by sending invoices well in advance (29%) and charging late payment fees (26%). Mark Summerville, product


to write off debts of over £500 from invoices that were never paid and a fi fth (20%) have abandoned chasing invoices of over £1,000. The average largest amount written off by tradespeople is £1,646. Tradespeople are now taking action to protect themselves.


Nearly half (46%) of tradies say that they now ask customers for ‘proof of funds’ before starting larger jobs, with a further four in 10 (44%) saying that they are considering doing so. The most common proactive measure is taking half the payment upfront


manager at Direct Line business insurance, comments: “Late payments are often cited by tradespeople as their biggest problem. When a client fails to pay on time after work is completed, it can create a highly stressful situation. Payment delays disrupt both personal and business fi nances, aff ecting the ability to cover bills and manage cash fl ow for future projects. In some cases, tradespeople feel they have no choice but to write off unpaid invoices, which is not only fi nancially damaging but also deeply demoralising.” ◼ phamnews.co.uk/326/17


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 certifi cation 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 benefi ts. The key is fi nding 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 fi rst, 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 fi nances and taking the stress out of tax returns.


Powered Now is an all-in-one job management software designed specifi cally for trade businesses so that they can invoice, quote and schedule jobs and teams – all from one app. Use the online link below to fi nd out more and begin a 14-day free trial. ◼ pham news.co.uk/326/18


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