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More than 850,000 self-employed workers and landlords will be required to follow the quarterly reporting rules for Making Tax Digital (MTD) for Income Tax when it takes effect. HMRC estimates that around 2.9 million have a qualifying income above £20,000 and will need to join MTD for Income Tax.
Over 850,000 self-employed to be pulled into first phase of MTD
HMRC has confirmed that 864,000 self-employed workers and landlords will be pulled into the quarterly reporting rules for MTD for Income Tax when it comes into force.
The first phase of MTD for Income Tax will begin next April at the start of the 2026/27 tax year. It will require individuals with a qualifying income over £50,000 to file quarterly returns using software with a final year end round out.
When businesses need to start using MTD for Income Tax depends on their qualifying income within a tax year. If their qualifying income is over:
- £50,000 for the 2024/25 tax year, they will need to use it from 6 April 2026
- £30,000 for the 2025/26 tax year, they will need to use it from 6 April 2027
- £20,000 for the 2026/27 tax year, they will need to use it from 6 April 2028.
According to HMRC, around 2.9 million have a qualifying income above £20,000 and will need to join MTD for Income Tax, based on self assessment figures for 2023/24.
HMRC said: 'MTD for Income Tax is a new way for sole traders and landlords to report their income and expenses to HMRC. They will need to keep digital records and every quarter, submit simple summaries of their income and expenses to HMRC using compatible software. This is expected to reduce the tax gap by reducing the scope for error and failure to take reasonable care.'
IN THE NEWS
Scams warning as self assessment taxpayers targeted
HMRC is calling on self assessment taxpayers to remain vigilant to scams that claim to be from the department.
Click here for the full story
Homebuyers warned as HMRC clamps down on Stamp Duty claims
HMRC is warning homebuyers about rogue agents advertising misleading Stamp Duty Land Tax (SDLT) repayment claims.
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Uncertainty over IHT changes affecting property market
Uncertainty over changes to Inheritance Tax (IHT) is adversely affecting the UK property market, experts have warned.
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Companies House confirms identity verification rollout to help combat fraud
Companies House is to roll out compulsory identity verification for company directors and people with significant control (PSCs) to help combat fraud and so-called phoenix companies.
Click here for the full story
Crackdown on late payments launched in plan to back small businesses
The government is set to tackle late payments to businesses with significant legislative reforms.
Click here for the full story
ESSENTIAL TAX DATES FOR SEPTEMBER
1 September
New Advisory Fuel Rates (AFR) for company car users apply from today.
19 September
PAYE, Student loan and CIS deductions are due for the month to 5 September 2025.
30 September
End of CT61 quarterly period.
QUOTE OF THE MONTH
'Hybrid working has become a fixture of modern working life since the pandemic and is valued by employers and their workforce, but it does not suit everyone and, for some firms, a full onsite model may be the best solution for the business.'
Jane Gratton, Director of Public Policy at the British Chambers of Commerce (BCC), commenting on data which showed that UK firms are increasing their requirement for onsite working.
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