Self-employed businesses and landlords with annual business or property income above £10,000 will need to follow the rules for MTD for Income which start on 6 April 2023.
As a business which is VAT Registered you should already be filing VAT Returns under MTD. MTD for Self-Assessment is in additon to MTD for VAT. Nor is MTD for Self-Assessment optional.
Who is it aimed at?
All self employed people (including those in partnership) and property landlords who receive £10,000 income (before expenses) a year. The £10,000 income limit is based on total income (not per individual business) - if:
You have 3 small self employed businesses which each generate £4,000 of income - MTD applies to you
You have a rental property which generates £10,000 of income a year - MTD applies to you
You have a small employed business with income of £6,000 a year and letting income of £4,000 a year - MTD applies to you.
You have employment income of £25,000 a year and rental income of £9,500 a year - MTD does not apply to you as your rental income is below £10,000 a year
What is MTD?
MTD requires the use of software for your accounting. You will no longer have to file a Self-Assessment Tax Return on 31st January 2024. Instead, you have to file a quartlerly update of your self-employed income and / or rental income to HMRC. This update will show all your income and expenses for the quarter. HMRC will advise you of your estimated income tax liability payable. A single, final decleration of all income for the year has to be filed with HMRC by 31st January 2024. Your payment dates for any tax owing will not change.
When do I have to start filing MTD reports?
If your year end is 5th April - you will have to start reporting under MTD from 6th April 2023.
If your year end is 31st March - you will have to start reporting under MTD from 6th April 2024.
How we can help
We are encouraging all our clients to start using Xero for their book keeping - this being simple to use and compliant with HMRC. If you are a cash based self-employed person, or a property landlord who does not raise sales invoices we can set you up with Xero from £2.50 a month. Contact us for more information.