Making Tax Digital · Sole traders
Bathroom fitters: handling sanitaryware supply, skips, and quarterly MTD updates
ONLY£15A MONTHMTD for bathroom fitters: record sanitaryware and materials, manage subcontractor CIS deductions, track deposits and prepare quarterly updates.
A customer sees a finished bathroom. Your bank account sees a deposit, a sanitaryware order, tile deliveries, a skip invoice and payments to other trades before the final balance arrives.
When those transactions are spread across several weeks, a healthy-looking receipt can hide a thin margin. Making Tax Digital for Income Tax makes regular records more important, especially when you supply expensive fittings as well as labour.
The aim is to keep a clear account of the whole job: what the customer pays, what the installation costs, and what you retain before personal tax.
Supplied materials count towards turnover
If you buy a bath, shower enclosure or tiles and supply them as part of your work, the customer’s payment generally forms part of your trading income. You separately claim the allowable cost. Charging the materials at cost does not automatically remove them from turnover.
MTD entry uses qualifying income before expenses. For sole traders, the key tests are more than £50,000 in 2024–25, £30,000 in 2025–26 or £20,000 in 2026–27, giving start dates of 6 April 2026, 2027 or 2028 respectively. Exemptions can apply. See HMRC’s entry rules.
Include other qualifying sole-trader and property income. The rules concern you as an individual; a limited company or partnership should not simply use the same entry test. Crossing £50,000 during the current year does not mean an immediate switch that day.
Worked example: six refits can exceed the first threshold
Suppose a sole-trader fitter who was not VAT registered completed six jobs in 2024–25, each producing £9,000 of receipts. These figures are illustrative.
| Item | Calculation | Annual amount |
|---|---|---|
| Customer income | 6 × £9,000 | £54,000 |
| Sanitaryware and installation materials | 6 × £4,000 | £24,000 |
| Other direct job costs | 6 × £1,000 | £6,000 |
| Amount remaining before general overheads and personal tax | £54,000 − £30,000 | £24,000 |
The MTD qualifying-income figure is £54,000. It is not the £24,000 left before van costs, insurance and other overheads. Assuming continued trading and no exemption, this trader should have started MTD on 6 April 2026. The example applies HMRC’s gross-income test.
Record the costs that belong to each installation
For sole traders, section 34 of the Income Tax (Trading and Other Income) Act 2005 is the starting point: deductible costs must be wholly and exclusively for the trade. HMRC explains the test.
Applied to bathroom installation work, common costs include:
- Baths, basins, toilets, brassware and shower components supplied to customers.
- Tiles, subfloor ply, adhesives, grout and tanking kits.
- Skip hire, waste tipping and relevant permit charges.
- Hired cutting equipment and specialist installation tools.
- Properly invoiced work by electricians, plasterers and other subcontractors.
Keep these linked to a job reference where practical. You can then compare the quote with actual spending and see whether an unplanned floor repair or second skip consumed the margin.
Retain credit notes for returned fittings. A merchant refund should remain connected to the original purchase. Avoid recording both a credit-account invoice and its later bank settlement as two separate expenses.
Use “disbursement” carefully
A skip hired for your installation, a delivery charge on your materials and waste disposal you arrange will normally be costs of your business. Recharging the customer does not automatically make them client disbursements.
A genuine agency payment depends on the contractual facts. For VAT, HMRC requires specific conditions, including that the customer is responsible for the third-party cost and you act on their behalf. Its disbursement guidance explains the distinction.
Keep ordinary supplied materials and job recharges within the normal income-and-expense records. If a customer independently contracts with and pays a supplier, that arrangement is different. Make the position clear when quoting rather than trying to redesign the transaction after payment.
Check CIS when you pay other trades
Working for a private householder does not usually mean the householder deducts Construction Industry Scheme tax from you. But a bathroom installation business that pays construction subcontractors may itself have contractor responsibilities. HMRC’s CIS overview explains the parties covered.
Before paying another trade, establish employment status and whether CIS applies. Where it does, verify the subcontractor and use HMRC’s notified rate: normally 20%, 30% or gross payment at 0%. The deduction is calculated on the appropriate amount after exclusions such as qualifying directly purchased materials and VAT. HMRC explains how to calculate deductions.
A subcontractor payment example
An electrician invoices £1,000: £800 labour and £200 of eligible materials they bought directly. There is no VAT in this example, and verification gives a 20% deduction rate. The CIS deduction is £160, so you pay the electrician £840 and account for £160 to HMRC.
Keep the £1,000 invoice, material evidence, payment and deduction statement connected. The withheld £160 is not a discount or extra profit.
Engage someone appropriately qualified to perform and certify electrical work as required. A budget for “sign-off” alone does not establish that another person can certify an installation retrospectively.
CIS monthly returns remain separate from MTD updates and are generally due by the 19th following the tax month. HMRC’s CIS return guidance sets out the timetable.
Keep deposits, tools and van costs consistent
Under cash basis, ordinary customer advance payments generally count when received, and allowable purchases when paid. Consequently, a deposit and the related materials can fall in different quarters. HMRC’s cash-basis rules explain this timing.
Reusable tools bought outright generally receive an expense deduction under cash basis; traditional accounting generally uses capital allowances. Keep large purchases and finance agreements identifiable. For van costs, choose an appropriate actual-cost or eligible mileage method without claiming the same covered costs twice.
Take a clear photograph of a paper receipt before it fades, and keep the full image with the job information. A bank line from City Plumbing or another merchant confirms a payment, but usually does not explain which fittings, tools or personal items were included.
Turn your job review into your MTD review
The Income Tax (Digital Obligations) Regulations 2026 underpin the system. The quarterly update direction sets out the reporting categories.
For standard 2026–27 periods, updates are due on 7 August 2026, 7 November 2026, 7 February 2027 and 7 May 2027. They are cumulative. The next November update covers 6 April to 5 October. HMRC gives the complete timetable.
Review customer receipts, merchant credits, deposits and subcontractor records together. You still submit the annual 2026–27 return by 31 January 2028. Updates do not introduce quarterly income-tax payments, and 2026–27 quarterly penalty relief does not extend to separate CIS obligations.
Choose a manageable way to keep the records
Clear records show whether a refit was profitable as well as making tax reporting easier. Avona.app costs £15/month, with Avona AI helping to categorise transactions for review. For managed support from chartered accountants, Avona Concierge starts from £60/month.
Explore Avona.app and choose the support that fits your installation workload.