Make your life easier when it comes to Making Tax Digital
If you’re a sole trader or a landlord Making Tax Digital (MTD) is imminent!
For any individual with sole trade or rental income above £50,000 will be required to comply with the Making Tax Digital requirements from 6th April 2026. The criteria for whether you will fall within the Making Tax Digital for income tax regime will be based on your sole trade and rental property income from the 2024/25 tax return.
Don’t wait until the last minute to get your business in order, it will save you unnecessary stress when the time comes. Get familiar with the requirements and what you’ll need to change in the way you keep your records. You might be surprised. In order to ensure you are ready for this change the below are some steps you can take to be ready come 6th April.
Select an appropriate MTD compatible software. Our recommendation for property landlords is Hammock. If you are a sole trader Sage, Xero and QuickBooks are all compatible with HMRC. It can be daunting to learn new technology, but these systems are fairly intuitive and most accountants can arrange and provide training for you on this software so you know how to connect the bank account to the software, upload scans of receipts and enter transactions.
If you plan to use your own software to submit the quarterly returns, you will need to sign up for HMRC online services if you do not already have an account. From here you can register for MTD for income tax. You can then link the software to your Making Tax Digital account with HMRC so the quarterly submissions can be made.
There are significant advantages to using accounting software.
- It gives you the ability to raise invoices that look professional and take moments to create.
- You can scan your receipts on your smartphone as you get them, so no searching under the car seat to find missing bits of paper. They’re entered and already in your accounts.
- You can attach your bank account to make reconciliation a matter of a few clicks. We always recommend that you keep your business transactions separate from your personal ones, and, to enable you to reconcile your accounts efficiently, this will be an important step, so that you are not pulling personal transactions into your business accounts.
It all makes doing your quarterly returns much easier and take less time, with less anxiety. Start now and you’ll find it an easy process when the new HMRC MTD software goes live. Please don’t hesitate to get in touch with the Cook & Partners team if you have any questions.
