Making Tax Digital

[auserna]

Can anyone help to clarify the new requirements HMRC are instigating regarding MTD?

I attending one of the webinars but came away feeling completely confused, incompetent and frustrated.

Thank you!

More information needed. What type of business? Turnover? What bit don’t you understand, the deadlines for transferring, what digital accountancy portals to use?

Sorry, I didn't realise it made a difference: sole trader, tutoring, turnover c.£30k. Income is a mixture of freelance and PAYE.

I know the transfers need to happen over the next few years depending on your turnover, but I'm not clear what the requirements are or how to know which software to use.

Why have they made it so much more complicated? Previously they seemed to be making it easier to complete a tax return (such as not having to break down expenses).

I

Dates here

From April 2026: turnover over £50,000
From April 2027: turnover over £30,000
From April 2028: turnover over £20,000

Do you have a separate business bank account? Some offer a free link to the digital accountancy software. It’s worth checking rather than paying more for an annual subscription.

Yes, I know what the dates are.

I want to know what HMRC actually want me to do by those dates.

No, I don't have a business account. That may be worth looking into.

Is the £30k just your sole trader turnover or does it include paye as well?

You need to enter all your transactions into compatible software and upload returns once per quarter to HMRC from the dates up thread.

There is plenty of free software available for this, google is your friend. I would have a look at a few as you may prefer one, or you may have specific needs - DH is self employed, and uses CIS and the ‘Clearbooks’ accommodates this well.

DH doesn’t need to start until 2027, but I have been using the software this year so I get used to it - obviously not uploading anything, just getting familiar with entering the data and comparing the output to my usual records in excel.

That's everything.

Only the sole trade turnover is qualifying income for MTD. Is that over £20k?

Thank you - that's really helpful.

Why do they suddenly want information four times a year FFS? That's four times as much tedious admin.

They said something about submitting it early so you wouldn't be penalised if you make errors, so that's my intention.

It could be. It fluctuates, so I'd like to be prepared and to know what I'm doing in case it does meet/exceed the threshold.

It's worth mentioning you can also use excel with an API add-on.

Often cheaper than software and for simple businesses, potentially more straightforward

Thanks.

API?

You have to ‘keep records digitally’. This can be on a spreadsheet, as long as you have to use bridging software to transfer the data, ie you can’t enter them manually.

The point is H M Revenue & Customs want people to record things digitally. The uploading part is something the people caught by MTD have to do but H M Revenue & Customs won’t yet be looking at the data. currently it’s the recording that’s critical.

But it’s a great opportunity to make things easier more efficient for yourself by using the advances in technology. (I do not work for HMRC!)

https://123sheets.com/self-employed.aspx

It's a plug in to excel that enables you to submit. There's plenty out there, just Google spreadsheet for MTD.

I have clients using this on the trial at the minute and it's fairly straightforward

Thank you!

In reality it should cut down on the tedious admin by making people record transactions more or less in real time and having all the calculations just being done automatically in the background either on a spreadsheet with the plugin or by the online software.

You're more optimistic than I am about this, but I hope you're right!

I think the introduction will be such a car crash at the 50k level that the 30k and 20k levels will be abandoned

Thank you for saying that this isn't inclusive of PAYE, I presume pension (which will be state only) will be counted as PAYE for the purposes of this and only income earned above pension will be counted in the £50/£30/£20k income? What will happen if some years my income (excluding pension) is above £20k and some years below? I'm an author and income is absolutely IMPOSSIBLE to predict in advance.

Do you have to do this for income from property or is it just self employment?

@hideawayforever property counts. I’m nowhere near the threshold on my rented property so I’m just carrying on as I am!

how much does the IFP need to be?

It is only your self employed income that counts. If you are below the thresholds mentioned in the threads then you don’t need to do MTD, until your income qualifies.