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MTD for Income Tax

The end of the Annual Tax Return

HMRC has outlined it’s plans for MTD for income tax self-assessment, and the changes mean that four million taxpayers will need to submit quarterly returns to HMRC instead of just one annual tax return.  They’ll also need to produce end of period reports for each trade and property business.

This means that a non-VAT registered sole trader will need to undertake multiple submissions for different periods under MTD for income tax.

These businesses will also have to undertake digital record keeping in line with MTD rules.

What is Digital Record Keeping?

Learn how to get ready for MTD

From 2023 things are changing. It's important to get ready now.

What reports are required?

For each trading or property business that you operate,  you’ll have to submit a quarterly report of income and expenses in defined categories. Essentially, this will be a mini set of accounts each quarter.

But it doesn’t stop there. You will also have to submit an end of period statement (EOPS) for each of those businesses. Yep – that’s five reports to HMRC every single year.

The quarterly reports will be due exactly one month from the end of each of the quarter, which gives you less time than the one month and seven days after the end of the quarter for VAT which is currently used for MTD for VAT.

The EPOS and the finalisation statement are both due by 31 January after the tax year end.

All our packages are MTD compliant

You won't need to worry about MTD with us. We'll deal with it all for you as part of the package.

When does this start?

The dates for MTD ITSA were announced in July 2020 and will be as follows:

  • Existing property income: 6 April 2023
  • Existing trading income: first accounting period starting on or after 6 April 2023
  • New property business: 6 April following the start date
  • New trade: start of accounting period in year three

If you have a combined gross income from all trades and letting businesses in excess of £10,000 per year, then you fall within scope of MTD ITSA and will have to file five times per year with HMRC – even if you don’t have any tax to pay.

MTD for Income Tax is a lot of work for Small Businesses

MTD sees the biggest change to the tax filing regime in a generation. We don’t think that you should have to handle it on your own.

So all of our packages include full MTD compliance.

Choose your MTD package now

Let us handle the stress of MTD for you while you run your business.

Frequently Asked Questions

To become compliant with MTD, you need to use government approved software to record your accounts and submit your finances to HMRC. You can refer to HMRC’s software search tool to find out more, or you can use a reliable accountant who already uses MTD compliant software - like Mazuma - to sort it all for you. We know what we’d rather do!
Yes - we use software that is compliant with Making Tax Digital. If you don’t want the stress or worry or setting up a new digital system, contact us today to see how we can ensure that your accounts are compliant with MTD.
If you’re not VAT registered, we would still recommend that you use HMRC compliant digital accountancy software - especially if your business is close to the VAT threshold! It’s better to be prepared for when your business does cross the threshold. It’s also worth noting that for non-VAT registered entities, you’ll soon most likely be required to submit some sort of return up to four times a year instead of once. If it’s going to take up too much of your time, or if it’ll cost you too much money, you can use a reliable accountant - like Mazuma - for just £28 per month plus VAT to sort everything for you. No stress - we’ve got you covered.
Keeping digital records is a core aspect of Making Tax Digital. From now on you will need to keep your records in a digital format, stored on a computer or in the cloud. If you use handwritten invoices or receipts then you'll have to transfer that accounting information into MTD compliant software before you submit your returns (or get your accountant to do it for you!). Keeping digital records doesn’t mean you don’t have to keep original paperwork. Quite the opposite, in fact. Original paperwork still needs to be stored as it could be required by HMRC in the event of a tax or VAT investigation. For most businesses, it means keeping paperwork for at least six years, though for many (VAT MOSS) it is a minimum of 10 years. HMRC will accept digital copies of receipts and invoices, so you could scan documents and store them to save on storage space in the office. But who has time for that? Something we pride ourselves on at Mazuma is digitising records for our clients who don't want to use our app or their own MTD compliant software. If you prefer more traditional methods or are perhaps a little sceptical of a more digital future, you can send us all of your paperwork. We’ll scan and digitise it for you, saving you a lot of admin hassle and keeping you completely compliant with current and future MTD rules.
Yes it’s completely free and in most cases easy to complete.  However, mistakes can be made which could prove costly.   Would you cut your own hair because it’s free?  I thought not!  For only £175 a qualified accountant will complete and submit your tax return leaving you with peace of mind that your tax return has been completed properly.  It will reduce your stress levels and free up some of your time to concentrate on the important things in life.

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