Mtd 2026 & esa.

[Leew2143]

Hi there,
I’m have a small business that sells expenses items & buy in bulk, so my bank account up & down each month ( sole trader)

Being disabled, this is more of an hobby to keep me as active as I can do try & keep me as active as possible

Now my question is I’m currently on ESA & permitted work.

Now with esa currently I file one tax return a year & profit is worked out over the year.

Would any body have any idea how this would work with the new mtd 2026, sending in 4 times a year,as some months I can be +3k then the next -3Less

But you can only earn £196 per week. But over the whole year it balances it self out.

What I don’t won’t to do is loss my esa if I went over, but obviously you still wouldn’t get the true figure to the end of the year accountants fees etc

 

[Scalloway]

Have you tried this?

Find out if and when you need to use Making Tax Digital for Income Tax

Check if you need to use this service to report your self-employment and property income.

www.gov.uk

 

[Daybooks]

Making Tax Digital for Income Tax Self Assessment is supposedly to help us get our income tax liabilities correct and am not aware of an intention (by HMRC) at least at this stage, to link it to other systems such as the benefit payments systems. I am sure it is part of their overall dream; some may say nightmare as their track record on systems leaves an awful lot to be desired.

On current levels you would not be mandated to join the MTD for ITSA scheme. Therefore presumably as your bookkeeping system and accounting adequately meets your financial reporting needs and statutory obligations you would want to consider the benefits of voluntarily joining. You would have to consider the additional effort and cost if needing compatible software or bridging software to submit four sets of numbers and a final year end set for little if any returned value ( nothing that you couldn’t obtain from current system ) and potentially run the risk of being financially penalised if you submit late.

Assuming your ‘averaging’ was explained on your Form PW1 and is acceptable then you have of course put a spanner in the works to the Utopia HMRC crave. Is the quarterly return above the allowance and if so is it still below based on the year; and when does that year run from? Then of course you have the annual accountant’s fee (strictly speaking not the fee for doing the tax return) - should you use the accruals basis or cash basis for your accounts? Problems, problems. Bless them!