Good intentions...

It's that time of year when people set themselves resolutions for improving their lives. 

HMRC appear to have made some resolutions too – but one of theirs has been to push back Making Tax Digital (MTD) for sole traders and landlords to April 2026.

There have been other changes in the structure too, initially it will only be a requirement for sole trader or landlords whose income is above £50K per annum– a big change as the original plan was to roll it out for anyone with annual income up to £10K. 

However, don't rest on your laurels as the next phase intends to include sole traders and landlords who earn between £30-50K per annum, which is currently set to roll out by April 2027 and there'll almost certainly be a third phase to include lower income earners.

If you're a sole trader or have a couple of rental properties in addition to a full-time job this will affect you.

Get organised now

While MTD means doing a quarterly return – you won't be making quarterly payments. It just means you'll need to get into the habit and keep your records electronically.

If you have rental properties that are managed by an agency, you'll already get an income and expenditure statement – and that's probably all you need. All the details will be included in that, you will just need to find software you are comfortable with to record them. 

If not, you will likely have bank statements and receipts to be organised and these can again be linked digitally to any of a number of cloud accounting software providers.

If you're using a spreadsheet, that's allowed, but you will need to use bridging software to link it to HMRC's system, but your accountant should be able to guide you through this process.

Why bother?

Given that this is now the fifth delay, you could be forgiven for thinking you can put the whole issue on the back-burner. But it's not just about what HMRC do or don't want. It's about using electronic means to give you better information so you keep tabs on what's actually going on, instead of your records being a mass of random bits of paper in a plastic bag.

Better information equals better decisions.

It's an excellent way to know whether it's time to expand your business, sell a property, invest in something else – as long as you don't know the numbers, these decisions will all be based on uninformed guesses.

Never mind Making Tax Digital – it's all about making your business digital and more efficient. So, if you only make one New Year's Resolution – make it getting your business digital.