This guest post was originally written by Benjamin Dyer of Powered Now and first published on Powered Now. It is republished here with permission to help our readers stay ahead of key financial changes affecting UK trades businesses.

This post is part of our Running a Successful Construction Business series. For practical guidance on financial control and business growth, read our full UK business guide.

Table of Contents

• Introduction
• Making Tax Digital for Income Tax (MTD IT): A Simple Guide
• What Is Changing?
• Who Will Be Affected?
• What You Need to Do
• HMRC Letters and Preparation
• Less Regulation from Company and LLP Size Changes
• Other Key Updates
• Powered Now: Your Partner in Navigating These Changes

Introduction

The tax landscape for UK tradespeople is changing. If your 2023/24 Self-Assessment Tax Return shows income near or above £50,000, expect communication from HMRC in 2025. From Making Tax Digital for Income Tax (MTD IT) to reduced regulation, these changes are designed to modernise how businesses report income and manage compliance.

Making Tax Digital for Income Tax (MTD IT): A Simple Guide

MTD IT is the next step after MTD for VAT, aiming to reduce tax errors through digital record-keeping. Instead of filing one annual Self-Assessment return, qualifying individuals must submit quarterly updates, plus a year-end declaration.

What Is Changing?

Self-employed individuals and landlords will be required to:

• Send digital quarterly summaries of income and expenses
• Submit a final declaration to confirm accuracy and adjustments

Who Will Be Affected?

• From April 2026: Those with total income over £50,000
• From April 2027: Income over £30,000
• By 2029: Income over £20,000 expected to be included
• Partnerships will be included at a later date

What You Need to Do

To stay compliant, tradespeople should:

• Keep digital records of income and expenses
• Submit quarterly summaries by the deadlines: August 7th, November 7th, February 7th, and May 7th
• File a final year-end declaration

If you need help preparing quotes, estimates, or financial overviews, our professional estimating services ensure you’re pricing accurately and maintaining proper financial records.

HMRC Letters and Preparation

Expect letters from HMRC in March or April 2025 if your income approaches or exceeds £50,000. These letters will advise whether you are required to comply with MTD IT. Remember: registration is not automatic—you must actively sign up.

Less Regulation from Company and LLP Size Changes

From 6 April 2025, thresholds that define small company or LLP status will be raised, which may mean:

• Exemptions from audit requirements
• Simplified filing and reporting obligations
• Transitional measures for the 2025/26 tax year

Other Key Updates

• HMRC drops RTI hours reporting: Reduces admin for employers
• Employment Allowance increased: From April 2025, rises to £10,500
• NIC threshold change: £100,000 limit removed—more businesses will qualify
• New reporting requirements: Applies to sole traders starting/ceasing trade and directors of close companies

Powered Now: Your Partner in Navigating These Changes

The team at Powered Now is building tools to help small businesses comply with MTD IT without extra software costs. They offer accessible solutions to help you stay on top of quarterly tax filing without added stress.

Disclaimer

The information provided in this article is for general guidance only and should not be considered professional tax advice. Always consult a qualified accountant or tax advisor for personalised support.

Originally published on Powered Now. Republished with permission.