Making Tax Digital for Web and Graphic Designers —
Deposits, Retainers & Stock Assets Explained
Project Deposits Count When You're Paid, Not When You Deliver
Design work is often billed as 50% deposit upfront, 50% on delivery, or in project milestones. Under the cash basis, which most sole traders use, each payment counts as income on the date you receive it — so a deposit taken in March for a website delivered in June is reported in the March quarter, and the final payment in the June quarter. This timing matters more than it seems, since a run of deposits taken late in one quarter can shift your reported income between periods in a way that doesn't match when the actual work happened.
Retainers, One-Off Projects, and Marketplace Platforms
Many designers run a mix of ongoing monthly retainer clients (predictable, recurring income) and one-off project work, sometimes sourced through platforms like Upwork or 99designs that take a commission before paying out. As with any platform work, your qualifying income is the gross project value before the platform's cut, not your net payout — the platform fee is claimed back separately as a business expense.
Records for Projects, Retainers and Platforms
Web and graphic designers sell projects, retainers, templates and sometimes marketplace work. The records should show the source of each invoice.
- Record project deposits and balances separately, with the client and date.
- Record retainers and maintenance fees as recurring income.
- Record platform income, such as template sales, gross of the platform fee.
- Keep design software, hosting and plugin subscriptions.
- Keep equipment and co-working receipts.
Common MTD Mistakes for Web and Graphic Designers
- Recording the project at delivery. A deposit counts when it arrives.
- Forgetting recurring fees. Maintenance and hosting income counts.
- Netting off platform fees. Record gross income and the fee as a cost.
- Missing overseas clients. Convert into pounds and keep the rate used.
- Expensing a laptop in one go. Computers are usually capital items.
A Sample Quarter: What the Update Looks Like
A sample quarter for a designer with project work and a small recurring base.
| Q2: 6 July to 5 October 2026 | Amount |
|---|---|
| Project invoices | £9,800 |
| Retainers and maintenance | £3,600 |
| Template and marketplace sales | £1,100 |
| Total income | £14,500 |
| Design software and hosting | £760 |
| Co-working desk | £840 |
| Equipment and fonts | £520 |
| Platform fees and accountancy | £410 |
| Total expenses | £2,530 |
| Profit for the quarter | £11,970 |
Recurring fees make a quarter more predictable. Project deposits are the part that moves it.
Worked Example
Monthly retainer income: £21,600
Direct one-off project work: £8,400
Upwork projects (gross, before platform fee): £4,800
Total qualifying income: £34,800 — above the £30,000 Phase 2 threshold. Sienna joins MTD from April 2027. Upwork's service fee is claimed back as a business expense against her profit, but her qualifying income is the gross project value before that fee, not her actual payout.
What You Can Claim
- Software subscriptions — Adobe Creative Cloud, Figma, website hosting and builder tools
- Stock assets — fonts, stock photography, icon libraries
- Platform fees — the commission taken by Upwork, Fiverr, or 99designs
- Equipment — laptop, monitor, graphics tablet, usually claimed via the Annual Investment Allowance
- Home office costs proportionate to business use
- Professional indemnity insurance
- Portfolio and marketing costs — your own website, advertising
Best MTD Software for Web & Graphic Designers
Software links are affiliate, help fund CheckMyMTD. Recommendations based on ease of use for self-employed income tracking.
Frequently Asked Questions
When does a 50% deposit count as income?
Under the cash basis, which is the default for most sole traders, it counts as income on the date you receive it, not the date you deliver the finished project. A deposit taken in one quarter and the balance paid the next means each payment is reported in its own quarter.
Is my qualifying income what Upwork or Fiverr pays me, or the full project price?
It's the full gross project value before the platform deducts its commission. The platform's fee is claimed back separately as a business expense, reducing your taxable profit but not your gross qualifying income.
Do I combine retainer income and one-off project income?
Yes, all self-employment income combines into one qualifying income figure, whether it comes from ongoing monthly retainers or one-off project work.
Can I claim my Adobe Creative Cloud subscription?
Yes, software subscriptions used directly for client design work are a normal allowable business expense.
I do some design work alongside a full-time employed job. Does that change anything?
Your self-employment income needs its own Self Assessment reporting once it's above £1,000 a year, but your employed PAYE income is handled separately and doesn't combine with your self-employment income for the MTD threshold.