What is Making Tax Digital Income Tax Self Assessment all about?

Making Tax Digital Income Tax Self Assessment is a government initiative to come into effect in April 2024. For Sole Traders and Landlords with an income of £10,000 and over.

Making Tax digital is a key part of the government's plans to make it easier for individuals and businesses to get their tax right and keep on top of their affairs.

HMRC’s ambition is to become one of the most digitally advanced tax administrations in the world. Making Tax Digital is making fundamental changes to the way the tax system works - transforming Tax administration so that it is:

• More effective
• More efficient
• Easier for taxpayers to get their tax right

Making Tax Digital for Income Tax is a new way of reporting income to HMRC. You’ll use software compatible with Making Tax Digital to keep digital records and send Income Tax updates instead of sending a Self Assessment tax return.

To use Making Tax Digital for Income Tax, you’ll need to:

• get software that is compatible with Making Tax Digital for Income Tax
• use software to keep digital records
• send quarterly updates for business income and expenses
• submit your end of period statement
• submit a final declaration

How to keep digital records using software

You must use compatible software to keep digital records of all your business income and expenses from your self-employment or property business. You’ll use this software to keep records and send updates.

You should maintain your records using the software:

• as close to the date of the transaction as possible
• before you submit the quarterly update for that period

Can I do it all myself or do I need a bookkeeper?

The software companies would have you believe that everything is just the click of a button. Of course they would, they want to sell their software.

However, would you know the difference between capital expenses and a revenue expense? Are you confident with assets, depreciation, accruals and allowances. Expenses you are allowed and disallowed? VAT?

It maybe that you can upload the receipts via your phone camera app and match up the bank transactions with the receipts but would like our help checking the transactions are allocated to the correct accounts.

We have a number of ways in which we can support you and will go through our services
with you.

Would your time be better spent on your business, with your clients or family? Do you have enough to do already with admin, quotes, invoicing etc.

We are currently researching and trialling a number of the rapidly becoming available MTD ITSA compatible software packages, best suitable for your business and budget.

Landlords

You can get free award winning software 'Free Agent Landlord' specifically for landlords and property businesses with a business bank account from Natwest, Mettle, Royal Bank of Scotland or Ulster Bank NI. Or paid subscription if you don't have a bank account with any of the above.

We will be migrating our existing clients to MTD ITSA in good time, to allow us to integrate the new work flows and systems and assist clients in this change, well in advance of the deadline. We are unable to leave it until April 2024 as we will be incredibly busy submitting SA Tax returns for 2023/24 during April to July, to enable us to submit the first quarter figures as required when MTD ITSA begins. We anticipate an increase in demand in early 2024 when the sole traders that do not currently use bookkeeping services realise that they would prefer to use bookkeeping services for the new MTD ITSA regulations in April 2024.

Please do not hesitate to contact us with any questions.

Kind regards

Deborah Halliday FIAB
Director
www.theaccountsladies.co.uk