Making Tax Digital · Sole traders
Fencing contractors: timber posts, post-mix, and mobile van record keeping under MTD
ONLY£15A MONTHUnderstand fencing materials, equipment, waste charges, CIS and mixed trade receipts when keeping Making Tax Digital records.
Posts, panels and post-mix can account for a large share of a fencing invoice. If you focus only on what remains after the merchant is paid, it is easy to underestimate the turnover HMRC uses for Making Tax Digital.
Good records show the full customer charge, the material costs and the other expenses of the job. They also help you see whether disposal charges, extra fixings or an additional hire day have reduced the margin you expected.
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.
Record materials and sales separately
Timber posts, panels, rails, wire, concrete and fixings bought in your own name for a customer job are normally business purchases. The customer’s payment for those materials forms part of your income, even if you pass them on at cost.
Keep merchant invoices, delivery charges and credit notes. If you return unused panels, record the refund or account credit. Where the customer buys materials directly, your own income may instead be only the installation fee; the contract and invoices should make that distinction clear.
HMRC’s materials guidance explains the expense categories. Under the cash basis, eligible material costs generally follow payment timing. Traditional accounting can require stock and work-in-progress adjustments, so leftover materials may affect the accounts differently.
Equipment hire, tools and protective clothing
Auger hire, nail guns, compressors and suitable cutting equipment can support the business. Keep hire invoices and distinguish refundable deposits from charges. An extension to a hire period is an additional cost only where it is actually incurred under the arrangement.
Most eligible equipment purchases are deducted when paid for under the cash basis. Traditional accounting normally uses capital allowances for lasting equipment. Do not claim depreciation as an extra tax expense or treat ordinary loan capital repayments as a second equipment deduction.
Section 34 of the Income Tax (Trading and Other Income) Act 2005 supplies the business purpose test. Keep personal garden projects separate from customer purchases.
Suitable protective gloves, safety footwear and specialist chainsaw protective clothing may qualify. Ordinary work clothes generally do not, even if worn only on jobs. HMRC’s clothing guidance explains the distinction. The tax treatment does not replace the separate need for suitable training and safe working arrangements.
Waste disposal and the van
Old fencing, concrete and other job waste can generate transport and disposal costs. Keep receipts for commercial disposal services and check the rules applying to what you carry. In England, waste carrier registration may be required; other UK nations have separate systems.
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 the same fuel, insurance and repairs cannot be added again.
Keep qualifying journey records, including travel between jobs and material collections. Home-to-work travel needs assessing on the actual working pattern rather than assuming every journey in the van is deductible.
Worked example: a domestic fencing job
Ollie is not VAT registered and uses the cash basis. A private householder pays £2,400 for a completed job. Ollie has paid the following costs, all wholly for the business.
| Item | Amount |
|---|---|
| Customer income | £2,400 |
| Posts, panels and post-mix | £1,100 |
| Auger hire | £120 |
| Commercial disposal charge | £80 |
| Contribution before other costs | £1,100 |
The income is £2,400, not the £1,100 contribution. If the merchant later credits £90 for returned materials, that credit also needs recording so the material cost is not overstated.
The example excludes travel, insurance and any other costs. It is a job contribution calculation, not Ollie’s final taxable profit or tax bill.
Check CIS when the customer is a contractor
Fencing work can fall within the Construction Industry Scheme depending on the operation and contract. Private householders are not normally CIS contractors. Work for a building contractor, or paying your own subcontractors for construction work, can create separate obligations. HMRC’s CIS overview explains the roles.
If CIS tax is deducted from your payment, record gross income and the deduction separately. It is tax already paid, not a business expense. Retain the payment and deduction statement and check the treatment of actual direct material costs in the deduction calculation.
If you pay subcontractors, consider employment status, verification and monthly CIS returns. Quarterly MTD updates do not replace those returns. VAT also needs its own review where relevant, including the construction reverse charge conditions.
Review the job before moving on
Match the customer receipt to the quote and variations, check unused materials and reconcile hire deposits. Avona AI can support categorisation, while a short job reference explains the purpose of a merchant payment. Ordinary advance payments generally count when received under the cash basis, so keep future commitments visible in a separate job budget.
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.
Keep the paperwork close to the work
Complete customer receipts and clear material costs make reporting easier between jobs. Avona.app costs £15/month. Avona Concierge, managed by chartered accountants, starts from £60/month for ongoing help with your trade accounts.