From 6 April 2024 income tax returns are changing under MTD for ITSA, an extension of the government’s plans to digitalise the UK’s tax system.
At Harold Sharp we have already been through the first phase of MTD with our VAT registered clients. That’s why we’re confident of the benefits of MTD for Landlords and sole traders and why we see this move as an opportunity, not just a compliance obligation.
What is MTD for ITSA?
MTD for ITSA will affect individuals with sole trade business income and landlords with gross annual income in excess of £10,000.
Unless exempt, you will be required to keep and maintain digital records and use MTD compatible software to manage, track and send updates to HMRC.
Here’s a round-up of how MTD for ITSA will change how you manage your tax obligations with HMRC:
|Before April 2024:
1 annual submission
Paper filings by 31st Oct
Online filings by 31st Jan
Fine to keep paper records
|After April 2024:
4 quarterly submissions per business
1 annual End of Period Statement per business by 31 Jan
1 annual ‘Final Declaration’ submission per individual by 31 Jan
Filing via MTD-compliant software
In the meantime, we know that the requirements for digital records and quarterly submission via MTD compliant software will remain in place. So why not start reaping the benefits of digitalisation now?
What are the benefits of early adoption?
If you currently manage your finances yourself, now is the time to get your processes in ship shape. As a start point, we recommend using separate bank accounts for your property and each of your sole trader businesses. This helps to keep a clear distinction between personal and property/sole trader income (and means you won’t be wasting time reviewing irrelevant transactions).
At Harold Sharp we’re working with various compliant softwares to help you bring your finances into one place, making it easy to search, filter and categorise income and expenses. Plus, you’ll get a real-time view of your finances. Additional benefits include:
- Easier visibility to help manage your financial health
- Access to real-time records from anytime and anywhere
- Ability to manage multiple financial admin tasks from one platform thanks to digital invoicing and receipt capture
- Review profits on a quarterly basis and budget for future liabilities
- Quarterly updates are less time consuming as you are submitting less information at one time – information that has been automatically compiled using your digital records
- More time to prepare for bills, as you’ll receive an estimate of income tax due based on the reported income each quarter
Get started, today
We have two separate offerings to get you started on your digital journey (one for Landlords and one for sole traders). Each offering has been designed to help you get more from the data you input so that you can better serve your portfolio or business going forward, plus you’ll be MTD compliant when the time comes. For more information, contact our digital advisory team on 0161 905 1616 or email us on firstname.lastname@example.org.