HMRC Making Tax Digital
- Thread starter Freakzilla
- Start date
- Original Poster
- #3
Hey,
I use spreadsheets for everything. Export from ebay, Etsy, etc. Log all my expenditure in them as well.
I'm Sole Trader. Not VAT registered, as turnover is under £90k. Turnover for last tax year was over £50k so I need to do MDT from April this year. I had a look at the Sage MDT software and it seemed all about importing bank accounts.
Thanks
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As an accountant it's something I'm ready for I'll be using FreeAgent for clients who have to comply with MTD for Income tax.
If you have an accountant you'd be best contacting them and considering using software they recommend and use.
If not FreeAgent does seem to have a good solution for MTD but you have a huge amount of choice. HMRC have a list here
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Without going off topic on this too much as I know the question is about MTD for Income Tax - one really common mistake I see as an accountant when people use spreadsheets, is not taking into account fees deducted on ebay sales etc. It's not the amount you get paid which is turnover - it's the gross sale before deduction of fees.
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Every transaction has to be recorded and then the software you use will produce the quarterly totals.
MTD requires a digital link to your records - you cant manually enter quarterly totals like you may do at present when completing your Self Assessment tax return.
My advice to you (and I dont say that as anyone who earns any commissions etc from selling software) is to get some good software that will deal with MTD and start using it now. You may even find it saves time compared to your spreadsheets.
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If you have to comply with MTD you'll need to keep digital records from 6 April and the deadline for your first quarterly update will be as you say 7 August.
I'd get started now. You need time to register, set up and use your software and be confident you can use it properly. You dont want to be rushing trying to do that in the summer.
I'd get started now. You need time to register, set up and use your software and be confident you can use it properly. You dont want to be rushing trying to do that in the summer.
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- Original Poster
- #14
I've just been reading about Three-Line Accounts. It states if your turnover is under £90K you can simply have to provide:
1) Total Turnover
2) Total Allowable Expenses
3) Net Profit
Three-Line Accounts Under MTD - MTD.digital
How three-line accounts work under Making Tax Digital: eligibility, simplified quarterly reporting with just total income and expenses, and who benefits most.
mtd.digital
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Simply all the rules are here at the ned of the day you will need an approved method of reporting your income albeit simple bottom line numbers. As a lover of excel thats great but there comes a time when using "proper" accounting software can make a big difference to controlling one business, especially I may add with the added use of AI which is a feature in many of the offers out there.
Personally I use Xero and wouldn't go back to my spread sheets
www.gov.uk
Personally I use Xero and wouldn't go back to my spread sheets
Making Tax Digital for Income Tax
Find out how to use Making Tax Digital for Income Tax, including step by step guidance for sole traders, landlords, and their agents.
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I've just been reading about Three-Line Accounts. It states if your turnover is under £90K you can simply have to provide:
1) Total Turnover
2) Total Allowable Expenses
3) Net Profit
Three-Line Accounts Under MTD - MTD.digital
How three-line accounts work under Making Tax Digital: eligibility, simplified quarterly reporting with just total income and expenses, and who benefits most.
How do you feel you'd gain from that?
You still have to keep fully digital records of all transactions, income and expenses.
If you use accounting software which is MTD for Income tax compliant it'll produce the full reports automatically. That aspect of MTD isn't going to create additional work for you.
I think its also worth considering that proper categorisation of income and expenses throughout the year will improve accuracy and reduce year-end adjustments.
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