Making Tax Digital: Your Questions Answered

How is the £50,000 threshold calculated?

The £50,000 threshold is the combined income from your self-employed business and any rental properties you have; both at home and abroad – It is not based on profit but gross turnover. E.g:

Self employment Income (before taking off any expenses) £40,000 – total turnover is below £50,000 so no need to register at 06/4/25

Rental income (before taking off expenses) £40,000 – the same rules apply as above, turnover not more than £50,000 so no need to register at 06/4/25

Self employment income of £40,000 and rental income of £10,000 – the total of each is below the £50,000 but combined it is £50,000 and therefore you will have to comply from 06/4/26.

My total income is below £50,000 does that mean I don’t need to do anything?

There is good and bad news on that one! You will not have to register at 06/4/26, (should this be 2025?) but there is a sliding scale so you may need to register a year later.

Combined rental and self employment income of between £30k and £50k – registration date 06/4/27

Combined rental and self employment income of between £20k and £30k – registration date 06/4/28

I like just bundling up all my receipts and taking them to my accountant, can I still just do that?

You absolutely can but rather than once a year you will have to do this more frequently. For example, your accountant might agree for you to drop your records off monthly, to ensure they have time to process them and get the profit summary submitted to HMRC by each quarter’s deadline. The amount of input required by your accountant will be dependent on the fee charged.

I have multiple self-employments. Will I need to upload for each of them each quarter?

In theory yes, but software is likely to be able to submit multiple different self-employments at the same time.

I have multiple properties will I need to submit each of those separately each quarter?

No – you will only need to submit a total for all UK properties combined. If you also have non UKproperty income, you will need to submit a total for those – again, we anticipate that software will be able to submit those combined, without having to make multiple submissions.

What does keeping records in a digital format mean?

In essence it means keeping everything on a computer. A spreadsheet may be sufficient but it will need to be in a set format, which GLX will share with you in advance. The majority of cloud software such as Xero and QuickBooks should also be compliant. We highly recommend you engage with your accountant so you can decide together on a solution that is cost effective and as hassle free as possible for you.

I already have Xero and update it every month, so is there anything I need to do?

Xero have confirmed that all their products will be MTD compliant so the good news is you can continue to keep your records in pretty much the same way. You will need to submit quarterly, so just set calendar reminders to ensure these are filed and you should be sorted. You will need to register for the first quarter and your accountant should be able to help you with that if needed.

Will there be any fines for non-compliance?

HMRC have announced there will be fines for non-compliance and they will operate in a similar way to the penalties for non-submission of current taxes. The easiest way to avoid these is to make calendar notes to remind yourself when you need to file, and to have a robust system in place to allow you to comply with the requirements.

How long do I get to file?

There is a full breakdown in our ‘Introduction to Making Tax Digital’ Blog, but in essence you have just over a month to file from the end of every period.

HMRC have written to me saying I may have to register. Do I need to do anything now?

HMRC have written to you because your combined turnover was more than £45,000 on your 23/24 tax return, the year that really matters is 24/25. As a firm we will be contacting any clients who will have to register once we have filed their 24/25 return. This is another reason to get your tax return completed as early as possible, so you know if you will be required to have everything in place by 06/4/26 or whether you have another year or two.

Even if you are not caught under the new MTD for Income Tax regime, you may find the time saving of keeping records digitally might mean getting a digital system in place before you are mandated to is a good idea.

If you have any other questions about making tax digital, please contact us and we would be delighted to chat through your options with you.