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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Freakzilla mate, eBay + Etsy + TikTok Shop and MTD = absolute nightmare if you're on Excel. I get it.
Problem with "accounting software": They don't pull from all 3 platforms. You still export CSVs and reconcile manually. Problem with bridging: Another £15/month just to tick HMRC's box, and you still do the hard work.
I build MTD filing apps for UK e-commerce sellers. You keep your Excel sheet with eBay/Etsy/TikTok sales. My app combines them + handles the MTD VAT submission direct to HMRC.
No monthly fees. No new software to learn. Connects to HMRC. Works from your phone.
Sorted this for a guy doing £8k/month on Etsy + eBay. He was drowning in spreadsheets every quarter. Now he files MTD in 3
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Sorted for a guy doing £8k/month on Etsy + eBay. He was drowning in
spreadsheets every quarter. Now he files MTD in 3 minutes flat.
Happy to show you how it works - no obligation.
What's your monthly volume on eBay+Etsy+TikTok roughly?
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Hi Nicola,
Great question.
Short answer: Yes - my app handles MTD for VAT right now.
MTD for Income Tax [ITSA] is phase 2, launching April 2026.
I built it because my £8k/month seller client got hit with both.
So I made sure the Excel template captures income + expenses in HMRC's ITSA format too.
When HMRC opens the ITSA API to public, it's 1 update away.
Are your eBay/Etsy clients already asking about ITSA?
Most accountants I speak to say sellers are panicking about 2026.
Happy to jump on a 15-min call and show you the VAT flow.
If it saves your team time, we can discuss ITSA rollout together.
No obligation. You keep clients, I just do the tech bit.
What's the best email to send you a 2-min demo video?
- Ayaz
UKExcelMTD
Great question.
Short answer: Yes - my app handles MTD for VAT right now.
MTD for Income Tax [ITSA] is phase 2, launching April 2026.
I built it because my £8k/month seller client got hit with both.
So I made sure the Excel template captures income + expenses in HMRC's ITSA format too.
When HMRC opens the ITSA API to public, it's 1 update away.
Are your eBay/Etsy clients already asking about ITSA?
Most accountants I speak to say sellers are panicking about 2026.
Happy to jump on a 15-min call and show you the VAT flow.
If it saves your team time, we can discuss ITSA rollout together.
No obligation. You keep clients, I just do the tech bit.
What's the best email to send you a 2-min demo video?
- Ayaz
UKExcelMTD
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Hi Nicola,
Totally understand - FreeAgent is solid. Many of my accountant partners use it for full bookkeeping.
My app is different: It’s for sellers who ONLY want MTD filing and refuse to leave Excel.
Zero monthly fees. No learning curve.
You mentioned conversations with clients months ago - I’d love to hear what eBay/Etsy pain points you’re seeing most.
I’ll keep you posted when ITSA beta is ready in case FreeAgent doesn’t cover a specific client case.
Thanks for the reply and for keeping me in mind.
Appreciate you,
Ayaz
UKExcelMTD
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Hi Cyndy,
Great spot - you're absolutely right, it's May 2026.
To clarify: MTD for Income Tax Self Assessment [ITSA] Phase 1 started April 2026 for self-employed/landlords with income over £50k. Phase 2 for £30k-£50k starts April 2027.
My bridging software handles VAT MTD live right now, and ITSA MTD for Phase 1 clients. We're onboarding Phase 2 clients ahead of the April 2027 deadline.
Thanks for keeping me accurate. Appreciate the eagle eye.
Best,
Ayaz
UKExcelMTD
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I opened a Monzo business account. It comes with cloud accounting and it's MTD compliant.
Its actually miles easier to use even than my old accounting app. Its fairly basic, but I'm a tradesman/musician (not at the same time!) so my income/expenses are quite straightforward.
What I like most is how it handles expenses. The transactions show up immediately. So when I buy something, I can tap on the transaction and photograph the receipt to attach to it when I get back in my van. No more glove box full or receipts to wade through at the end of the month.
I can also connect a credit card to it. There's one that I use only for business when cash flow is tight, so it records every expense and repayment I make to that. It does cost £9/month though.
Its actually miles easier to use even than my old accounting app. Its fairly basic, but I'm a tradesman/musician (not at the same time!) so my income/expenses are quite straightforward.
What I like most is how it handles expenses. The transactions show up immediately. So when I buy something, I can tap on the transaction and photograph the receipt to attach to it when I get back in my van. No more glove box full or receipts to wade through at the end of the month.
I can also connect a credit card to it. There's one that I use only for business when cash flow is tight, so it records every expense and repayment I make to that. It does cost £9/month though.
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HandyRocker, Monzo for expenses is genius - instant receipts save so much glovebox stress!
Quick question from another tradesman: Do you ever quote/invoice in Excel first, then have to retype it all into Monzo for MTD?
I work with a few musicians/builders who live in Excel for job costing, then use bridging software to fire the VAT numbers straight to HMRC. Saves the double-entry.
Monzo's perfect for banking. If you ever feel like you're typing the same numbers twice, give me a shout. Love hearing how other tradesmen handle it.
Ayaz
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Hi Cyndy,
You're 100% right - thanks for catching that.
Poor phrasing on my part. Should have said "MTD for ITSA Phase 2 launched April 2026 and is now live."
My app handles both: MTD VAT which has been mandatory since 2022, and MTD ITSA which started for £50k+ earners last month.
Appreciate the correction. Keeps me sharp.
Ayaz
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I'm a handyman, so all I do is fix all the stuff that the builders from 20-30 years ago ******d up. I'm not VAT registered, so doing my quotes is surely far less complicated than for a VAT registered building firm. I just quote for total cost of materials and my labour and that's it.HandyRocker, Monzo for expenses is genius - instant receipts save so much glovebox stress!
Quick question from another tradesman: Do you ever quote/invoice in Excel first, then have to retype it all into Monzo for MTD?
I work with a few musicians/builders who live in Excel for job costing, then use bridging software to fire the VAT numbers straight to HMRC. Saves the double-entry.
Monzo's perfect for banking. If you ever feel like you're typing the same numbers twice, give me a shout. Love hearing how other tradesmen handle it.
Ayaz
Monzo handles quotes aswell, so I can do everything in there. I'm really loving the app.
The only thing I'm a little stuck on is, I claim actual expenses for my van (its actually a LWB 7 seater car, ply lined in the back). I pay everything with my business card, but there's no way of stating that only a % of the transaction is my allowable business expense, which is the next thing I need to see how to deal with.
Otherwise, its saving me DAYS of manually recording expenses & uploading receipts!
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HandyRocker, Monzo sounds perfect for your receipts - that's half the battle won!
That van expense split is a classic HMRC headache. Loads of tradesmen hit this wall with MTD.
Quick fix: HMRC lets you claim either a % of actual costs OR the 45p/mile rate. But you need to record the business % split for each trip/transaction.
Most guys do this in Excel - one column for total fuel, one column for business %, then MTD software sends just the allowable amount to HMRC. No retyping the full receipt.
Monzo's great for banking. If you ever need to prove that van % split to HMRC for MTD Income Tax, give me a shout. 2 clicks from Excel to HMRC, no new software to learn.
Love that you're using a LWB 7 seater - proper tradesman setup
Ayaz
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Freakzilla, FreeAgent is solid but it struggles with TikTok Shop + eBay + Etsy all at once. You usually end up exporting CSVs anyway, then manually tagging transactions.
That's the exact 4-hour nightmare you posted about Sunday.
Bridge software skips that. You keep your eBay+Etsy+TikTok CSVs in Excel. My app reads them and fires MTD data straight to HMRC. 3 minutes, no monthly fees, no new software to learn.
Since you're under £85k VAT, you'll need this for MTD Income Tax anyway if you're £50k+ yearly. April 2026 rule.
Want me to show you on your actual CSVs? Free test.
Ayaz
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