Self-employed businesses and landlords with annual business or property income above £10,000 will need to follow the rules for MTD for Income Tax from their next accounting period starting on or after 6 April 2023.
Contents
Who can follow the rules
When to follow the rules
Keeping digital records
Signing up
Sending updates using software
Finalising your business income
Submitting a final declaration
To follow the rules for Making Tax Digital for Income Tax, you’ll need to:
keep digital business records
get compatible software
sign up
send business income and expenses updates
finalise your business income
submit a final declaration instead of a Self Assessment tax return
Who can follow the rules
You can follow the rules voluntarily if all of the following apply:
you’re a UK resident
you’re registered for Self Assessment and your returns and payments are up to date
you’re a sole trader with income from one business only or a landlord who rents out UK property (or both)
You cannot sign up if you need to report:
income from any other sources
any taxable payments you make or that you claim tax relief on
When to follow the rules
You can choose to follow the rules voluntarily now.
You must follow the rules for your next accounting period that starts on or after 6 April 2023, if your taxable turnover from your self-employed business or income from property is above £10,000.
Keeping digital records
You’ll need to keep digital records of all your business income and expenses - this includes income from self employment or property.
You should start to keep digital records at the start of the accounting period you are signing up for. You’ll need to do this for the whole of the accounting period.
You’ll use software to keep records and send updates. Contact us for help and advice
Signing up
You can sign up now for your current or next accounting period.
You can sign up your business for Making Tax Digital for Income Tax, or if you’re an agent there is a different way to sign up your client.
Sending updates using software
After your software is authorised you’ll send updates to HMRC every 3 months. Updates are summaries of your business income and expenses. Your software will tell you when and how to send the updates.
Finalising your business income
At the end of your accounting period you need to finalise your business income in a declaration. This is where you confirm that the updates you sent are correct and make any accounting adjustments.
Submitting a final declaration
The final declaration replaces the Self Assessment tax return.
Submit your final declaration after the end of the tax year it applies to. This is where you can tell HMRC about any personal income you have or reliefs you claim.
You must submit your final declaration and pay the tax you owe by 31 January the following tax year.
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