Making Tax Digital (MTD)
The way we report tax to HMRC is changing, but don't worry, we've got your back. Here's a simple guide to what Making Tax Digital means for you as a landlord or sole trader, and how you can get ahead of the curve.Making Tax Digital, or MTD for short, is the government’s plan to move tax reporting online.
Instead of filing one big tax return at the end of the year, you’ll need to keep digital records and send quarterly updates to HMRC using approved software (like Taxd!).
Who does it affect?
Initially, MTD for Income Tax Self Assessment (ITSA) will apply to landlords and self-employed individuals with a qualifying income of over £50,000.
This will expand over the coming years to include those earning over £30,000.
What do I actually need to do?
Keep Digital Records
Forget the shoebox of receipts! You’ll need to record all your income and expenses digitally.Send Quarterly Updates
Every three months, you’ll send a summary of your income and expenses to HMRC through your software.
This isn’t about paying tax quarterly – it’s just an update.Submit a Final Declaration
At the end of the tax year, you’ll review everything, make any final adjustments, and submit a final declaration to HMRC,
which confirms your tax liability for the year.
The main goal is to help you stay on top of your finances throughout the year,
so there are no surprises when it comes to your tax bill.