Making Tax Digital · Sole traders
Handypeople and property maintenance: mixed hardware receipts, van stock, and MTD
ONLY£15A MONTHUnderstand mixed hardware receipts, van stock, customer recharges, equipment costs and quarterly Making Tax Digital records for handypeople.
A single hardware receipt can include a customer’s replacement latch, fixings for van stock, a new drill and paint for your own kitchen. The supplier name alone cannot tell you how much of that purchase belongs in the business accounts.
Making Tax Digital is easier when you make the split while the job is still familiar. A brief note and the original receipt can prevent both missed deductions and private spending being claimed by mistake.
When Making Tax Digital applies
Making Tax Digital for Income Tax changes how qualifying sole traders and landlords keep records and report income. Under HMRC’s timetable, the starting points are:
- From 6 April 2026, if qualifying income exceeded £50,000 in 2024–25.
- From 6 April 2027, if qualifying income exceeded £30,000 in 2025–26.
- From 6 April 2028, if qualifying income exceeded £20,000 in 2026–27.
Qualifying income generally means gross self-employment and property income combined, before expenses. Salary, pension income and dividends do not count towards this particular test. Check HMRC’s qualifying income guidance, including the treatment of VAT and shorter accounting periods where relevant.
The test uses the relevant earlier tax year; passing a figure during a busy month does not mean you join that day. Exemptions can apply. These rules concern your individual business and property income, rather than a limited company’s Corporation Tax reporting.
Split mixed hardware receipts by purpose
Keep itemised receipts from Screwfix, Toolstation, B&Q and other suppliers. Mark which purchases belong to customer jobs, general business stock, equipment or private use. There is no need to invent a separate customer job for every box of screws held for future work.
Section 34 of the Income Tax (Trading and Other Income) Act 2005 supplies the business purpose test. Paying through a business card does not make the private items deductible, while using a personal card does not automatically prevent a genuine business claim if properly recorded.
Worked example: one merchant visit
Pat uses the cash basis and is not VAT registered. An itemised receipt shows the following purchases, with all business items used wholly for the existing trade.
| Item | Amount | Treatment in this example |
|---|---|---|
| Customer replacement latch | £25 | Business materials |
| Fixings for general van stock | £35 | Business materials |
| New cordless drill | £140 | Eligible equipment expense |
| Paint for Pat’s private kitchen | £40 | Private expenditure |
| Total paid | £240 | £200 business deduction |
Pat records £200 of eligible costs and excludes £40. The drill deduction assumes an eligible cash-basis purchase paid outright; traditional accounting or a finance arrangement could require different treatment.
If the latch is later returned, Pat records the supplier credit. The original receipt should not remain as an unreduced expense simply because the customer job has already been closed.
Van stock and customer recharges
Materials bought in your own name and supplied to a customer normally appear on both sides of the accounts: the customer’s payment is income and your purchase is an expense. Supplying at cost does not remove the transaction from turnover.
If a customer instead buys and pays for their own materials directly, your income may be only the labour charge. Keep that arrangement clear in the quote and final invoice. Do not use “disbursement” as a general label for every hardware reimbursement; HMRC’s VAT disbursement guidance has specific conditions where VAT is relevant.
Under the cash basis, eligible stock purchases generally follow payment timing. Traditional accounting can require a year-end stock adjustment. A quick stock review remains useful commercially because it prevents buying materials already in the van.
Tools, repairs and protective equipment
Most eligible business equipment is deducted when paid for under the cash basis. Traditional accounting normally uses capital allowances for lasting equipment purchases rather than deducting accounting depreciation.
Keep tool servicing, replacement batteries and repairs identifiable. A monthly finance payment needs the agreement: ordinary loan capital is not another deduction on top of the asset purchase. If a tool has private use, consider the appropriate business allocation.
Suitable protective gloves, eye protection and safety footwear may be allowable. Ordinary clothes are generally excluded even if worn on every job. HMRC’s clothing guidance explains the categories.
Insurance, business phone use and relevant training for the existing business may also belong in the accounts. Keep the supporting invoice and exclude private elements rather than relying on a broad category name.
Travel, waste and different customer contracts
For an eligible vehicle, choose a consistent mileage or actual-cost method, taking account of previous claims. Mileage covers the relevant purchase and running costs, so fuel and repairs must not be added again. Record qualifying journeys and assess home-to-work travel on the actual pattern.
Keep commercial disposal receipts and check relevant waste transport requirements for your activities. Work for a private householder can also have a different CIS position from construction work for a contractor. Assess the actual operation and contract, rather than assuming every maintenance task is either inside or outside CIS.
If CIS is deducted from your earnings, keep the payment statement and record gross income and tax withheld separately. The deduction is not a business expense. If you pay other workers, employment status and possible contractor obligations also need consideration.
Close the payment loop
Match customer receipts to invoices, including small cash jobs. Banking cash already recorded is not another sale. A card settlement may need splitting into gross earnings and processor fees, using the provider’s statement.
Ordinary customer advances generally count when received under the cash basis, so keep a separate record of work still owed. Avona AI can support categorisation, while your brief receipt notes explain mixed purchases and customer reimbursements.
A manageable quarterly routine
For a business using standard tax-year periods, the 2026–27 quarterly update deadlines are 7 August 2026, 7 November 2026, 7 February 2027 and 7 May 2027. Updates are cumulative: each covers the tax year so far. Calendar update periods are also available, with the same deadlines.
Keep digital income and expense records, reconcile them regularly and send the required totals through compatible software. The Income Tax (Digital Obligations) Regulations 2026 underpin the requirements; HMRC’s digital record-keeping notice explains the applicable directions. A bank feed needs supporting detail wherever a payment conceals fees, private purchases or several transactions.
Normally, record the transaction date, amount and relevant category, retaining supporting invoices or receipts. HMRC’s digital records guidance explains permitted simplifications and digital links where more than one software product is used.
Quarterly updates do not replace the annual tax return. The 2026–27 return is due by 31 January 2028, and normal tax payment dates continue. HMRC is not applying late quarterly update penalties for 2026–27, but digital records and updates are still required. That first-year approach does not waive other filing or payment obligations.
Make each receipt easier to deal with once
Clear splits and complete customer payments make reporting more manageable between jobs. Explore Avona.app at £15/month, or Avona Concierge, managed by chartered accountants, starting from £60/month, for ongoing support with your accounts and tax reporting.