Making Tax Digital for Sole Traders
Making Tax Digital for Sole Traders
With the UK government recently announcing a new flagship programme to make it easier for businesses and individuals such as sole traders to get their tax right, we are here to help with any questions you might have.
Here at SCS Financial Management, this month’s blog looks at what at the governments new programme means for sole traders and how it changes the way tax is recorded. For any finance services in Reigate, call us for more information, 01737 373707.
Call our team on 01737 373707
What Is MTD?
Making Tax Digital for Income Tax Self-Assessment, is a new legislation that will come into effect on 6th April 2024. If you’re currently a sole trader, you might already use HMRC’s online services to complete certain tasks. This could be submitting digital tax returns.
MTD requires you to use software for your accounting too. It will end the need to submit annual tax returns altogether.
What Are the Benefits?
As a sole trader, the MTD will make it much easier to keep on top of your tax obligations. The software will give you benefits beyond simplifying basic accounting tasks. One of the benefits it will bring is, the ability to keep digital records and submit tax returns digitally. This reduces human error.
The compatible software also provides you with more awareness of how much tax you owe. You can avoid setting aside more money than you need to and vice versa. The new software really does help you as a sole trader, so be rest assured this new introduction is for the better.
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When Should It Be Introduced?
The Governments most recent update on the MTD confirmed that it will be introduced 6th April 2024. This is for sole traders and landlords with a gross income of over £10,000, with general partnerships not required to join until 12 months later.
Any business in existence immediately before 6th April 2023 will have to follow the new legislation. Regardless of their accounting period end, when it comes into force.
These details are correct at the time of publishing. However, It is important to remember this could change at any point and the information could differ.
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Am I Sole Trader?
If you run your own business as an individual and work for yourself, you are a sole trader. This means you are entitled to keep all your profits after tax. If you make more than the trading allowance of £1,000, you will need to pay taxes and national insurance.
If this is the case, you must register with HMRC to use the self-assessment tax system. Following this, you must file an annual Self-Assessment tax return. Making Tax Digital for Income Tax will replace this system for any sole traders who fall into this bracket.
Find Out More
For enquires about tax or any other financial questions we are more than happy to help, contact the team at SCS Financial Management in Reigate. Call us on 01737 373707 for more information.
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