Owner-Managed Businesses

Making Tax Digital (MTD) for unincorporated businesses

Produced by Tolley
  • 05 Jan 2022 14:50

The following Owner-Managed Businesses guidance note Produced by Tolley provides comprehensive and up to date tax information covering:

  • Making Tax Digital (MTD) for unincorporated businesses
  • What is Making Tax Digital (MTD)?
  • Digital start date
  • Low income exemption
  • Digital records and quarterly updates for MTD
  • Digital record keeping and relevant software
  • Quarterly updates
  • End of period statements under MTD
  • Other documents and articles on MTD

Making Tax Digital (MTD) for unincorporated businesses

Self-employed businesses and landlords with annual business or property turnover above £10,000 will need to follow the rules for Making Tax Digital (MTD) for income tax from 6 April 2024. Voluntary sign-up to MTD is also available now for UK residents who have returns and payments that are up to date and are either a sole trader with income from one or more businesses or a landlord that rents out UK property. Further details can be found at ‘Sign up as an individual for Making Tax Digital for Income Tax’.

The relevant legislation introducing MTD was included in Finance (No 2) Act 2017, s 60 which introduced TMA 1970, Sch A1. Further regulations were also issued in September 2021 which are The Income Tax (Digital Requirements) Regulations 2021, SI 2021/1076.

Alongside the introduction of MTD, there will be a new late filing penalty regime. For more details, see Simon’s Taxes A4.558.

What is Making Tax Digital (MTD)?

In summary, MTD requires the sole trader or landlord with income greater than £10,000 to keep digital records of business income and expenses which are then sent to HMRC as quarterly updates.

At the end of the tax year, the taxpayer will finalise their business income and submit an end of period statement. Included in this statement will be any accounting adjustments required such as closing stock amounts, any reliefs and tax adjustment, and also a confirmation statement that the information is correct and complete. The deadline for the end

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