Making Tax Digital for sole traders and landlords

What you need to know to be ready for digital tax

VAT registered businesses have been grappling with Making Tax Digital (MTD) since 2019. The next roll-out will be the introduction of MTD for income tax which is scheduled to start in April 2024. This means sole traders and landlords with gross income in excess of £10,000 a year will need to keep their accounting records in a digital format.

What even is Making Tax Digital?

MTD is a government initiative that requires business owners and individuals to keep digital accounting records and file their taxes via an HMRC approved digital software.

What MTD means for Sole Traders and Landlords

By April 2024, any individuals using Self Assessment will need to have switched to using MTD for Income Tax for their income tax accounting and reporting.

This includes Landlords earning an income of £10,000 from their property or properties.

If you’re a Landlord and a Sole Trader, the income from your business will be combined with the income from your property or properties to determine whether you need to register to use MTD for income tax.

How does this affect me?

There’s no doubt that MTD is set to be the biggest change to taxation in a generation. With all the confusion out there, our highlights of what MTD means for you are:

Digital records

Making Tax Digital means you will now
need to store digital records in compatible software like Xero.

Multiple returns per year

Xero is ready for the change and has created a new feature to file VAT returns, with HMRC providing the dates and Xero providing the info.

A seamless experience

If you’re using MTD ready software, everything will be right at your fingertips and available at the push of the button. We like the sound of that!

Getting set up with MTD-friendly software is the key

By April 2024, any individuals using Self Assessment will need to have switched to using MTD for Income Tax for their income tax accounting and reporting.

This includes Landlords earning an income of £10,000 from their property or properties.

If you’re a Landlord and a Sole Trader, the income from your business will be combined with the income from your property or properties to determine whether you need to register to use MTD for income tax.

We'll be here to help

Getting set up with a good digital accounting software will prepare you for needing to file six tax returns per year.

There are 6.2 million landlords in the UK who will all be transitioning to MTD within the next year, and you can do this, too.

How can Tyrrell Accountants help you get there?

Software

We'll just provide the software for you, but you'll run it going forward. 

Software PLUS

We get you the software, and you'll run it, but you'll get additional support and oversight. 

Full Service

If you're uncomfortable using the software, we'll do everything for you. 

The plan

Landlords: Get in touch to get set up on Hammock.

Sole Traders: Stay tuned for your solution.

We’ll help you get set up on the best recommended software for you

Go digital and be confidently compliant before April 2024

We were comfortable with the systems we were using and a little apprehensive about moving across to new software in order to comply with Making Tax Digital. Tyrrell Accountants supported us throughout the whole process which made for a smooth, straight forward transition. Digitalisation and the move to Xero has improved the accounting function of the business and a change that we are glad we made.

- Andy Wright – Director, Impington Roofing Services Ltd

Here are the software options we recommend

This will be most helpful for landlords

If you don’t have a dedicated business account, this is for you

Probably most relevant for larger businesses

If you’re a small sole trader looking for a low-cost solution

Current information about Making Tax Digital

Making Tax Digital Update – Income Tax

Making Tax Digital Update – Income Tax

Making Tax Digital (MTD) for VAT has been with us since April 2019, with the extension to all VAT registered businesses from April 2022. The next roll-out will be the introduction of MTD for income...

Tax Newsletter Updates for October

Tax Newsletter Updates for October

CAPITAL ALLOWANCES ON PLANT IN RESIDENTIAL PROPERTY The capital allowance legislation specifically denies tax relief for plant and machinery installed in a dwelling house. However, plant and...