The government are introducing new rules for reporting your tax affairs which have big implications for record keeping, small businesses and the self-employed.
From April 2024, individuals with income from sole trading or property over £10,000 per year will be required to keep electronic records and file quarterly end of period statements (EOPs) to HMRC. Using this information, a final declaration will be submitted at the end of the tax year. The current system of payments on account and balancing payment by 31st January after the end of the tax year is expected to remain the same.
All businesses which were in existence immediately before 6 April 2023 are required to join MTD for from 6 April 2024 if qualifying income is above £10,000, regardless of their accounting period end.
What does it mean for me?
Making Tax Digital will make it easier for individuals and businesses to keep on top of their tax affairs and be more productive.
To use Making Tax Digital for Income Tax, you’ll need to get software that is compatible with Making Tax Digital and use this software to keep digital records for your business income and expenses from self-employment or property business.
You should use the software to keep records and send updates as close to the date of the transaction as possible and before you submit the quarterly update for that period.
Andrew from Arcus said;
“By investing in a cloud based accounting system such as Xero (which is approved by HMRC) our clients are much more able to keep on top of their sales and costs. With our training and support, many clients agree that the move to digital accounting and reporting brings real benefits in the long term.”
If you’re a UK resident already registered for Self Assessment with payments that are up to date you can sign up now. You can also sign up now if you are a sole trader with income from one business, or a landlord who rents out UK property. Alternatively, you can authorise an agent to act for you and they will be able to sign you up.
Once authorised, an agent can sign up your business and use software to create, view, edit and send your data to HMRC. Your agent can also keep and maintain digital records on your behalf.