Making Tax Digital

Changes for the Self-Employed

Tax for the self-employed is changing – in the very near future businesses with a turnover (not profit) of more than £10000 will be required to report their income and expenditure quarterly and provide an end of period statement(EOPS).

For businesses and individuals who also have property income of above £10000 a separate quarterly report will be required.

This means for even the simplest of businesses will need to supply five reports per year to HMRC.

Turnover examples

• Pat is a self employed individual has a turnover of £45,000. Pat will have to register for
MTD for ITSA and follow the required processes including a new year-end process

• Mark is employed and also runs a weekend business which has a turnover of £9,000.
Mark will not have to register under MTD and will continue to submit his self-assessment return as he does now. If he decides to register for MTD then he will have
to follow all the requirements for MTD plus include his employment income at the end
of the year.

• Janie owns a property which is rented out for £11,000 a year. Janie will have to register
for MTD and follow all the regulations

• Peter and Paul jointly own a property which is rented out for £12,000 a year. We do not
yet know how this will be split as the information on joint ownership (and income from
partnerships) is still being developed. It is likely that they will not have to register as
their individual income would be split and be below £10,000 each (but watch this
space!) Note: there might be a different treatment for married couples

• Jeremy has a turnover from a part time business of £9,000 a year and income from
property of £9,000. He will need to register as his total income from both sources is
over £10,000 and submit separate returns even though each one itself is below the

The following link sets out in detail the changes:

What do you need to do

Small business owners will need to be well organised to fulfil the new requirements – you will be required to have record keeping arrangements in place which will need to be reviewed at least on a quarterly basis.

Clear Methods is well placed to organise this for you. We have simple affordable solutions which will ensure you do not fall foul of the new legislation and keep you fully informed about your financial position.

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