HMRC Making Tax Digital

[Freakzilla]

Hey Guys,

Has anyone set this up yet? If so what software are you using? I've looked at it and I haven't got a clue. I sell on ebay, etsy and TikTok Shop

Thanks

 

[Paul Kelly ICHYB]

Welcome.

Are you using any accounting software?

If not, how do you do your accounts?

Also, are you a limited company or self employed? If SE, are you VAT registered and/or was your turnover last year over or under £50k?

 

[Freakzilla]

Welcome.

Are you using any accounting software?

If not, how do you do your accounts?

Also, are you a limited company or self employed? If SE, are you VAT registered and/or was your turnover last year over or under £50k?

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

 

[MyAccountantOnline]

Hey Guys,

Has anyone set this up yet? If so what software are you using? I've looked at it and I haven't got a clue. I sell on ebay, etsy and TikTok Shop

Thanks

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

 

[MyAccountantOnline]

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

I think you'll find a lot of MTD software will give you the option to import data - it's a huge time saver. It means transactions dont have to be entered manually into the software.

 

[Paul Kelly ICHYB]

There are 'bridges' you can use that connect your/a spreadsheet.

 

[Newchodge]

Turnover for last tax year was over £50k

VAT turnover is not assessed on the financial year, but on a rolling 12 month basis, so you need to keep an eye on that.

 

[MyAccountantOnline]

VAT turnover is not assessed on the financial year, but on a rolling 12 month basis, so you need to keep an eye on that.

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.

 

[Freakzilla]

VAT turnover is not assessed on the financial year, but on a rolling 12 month basis, so you need to keep an eye on that.

Thanks, I'm well aware of that.

 

[Freakzilla]

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.

Does every transaction on a marketplace have to be reported for MDT, or can you just give totals for the three months? Thanks

 

[MyAccountantOnline]

Does every transaction on a marketplace have to be reported for MDT, or can you just give totals for the three months? Thanks

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.

 

[Freakzilla]

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.

Thanks so as long as I enrol before 6th April, I don't have to do anything with it immediately, as I have until 7th August to make my first submission? That gives me time to try get my head around it, different software, etc.

 

[MyAccountantOnline]

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.

 

[Freakzilla]

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'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

 

[WaveJumper]

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

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.

www.gov.uk

 

[MyAccountantOnline]

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

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.