Monthly Archives: March 2024

Making Tax Digital for the Self Employed

Making tax digital for the self employed and landlords (MTD for ITSA) is now looming on the horizon.

The rollout so far is:

2026 – Start of MTD for ITSA for those with an income over £50,000

2027 -Start of MTD for ITSA for those with an income over £30,000

What does it mean?

If your income falls within these requirements and you fulfil the enrolment criteria you will have to :

  • Hold digital records of your income and expenses
  • Submit these records every quarter using HMRC compatible accounting software (or bridging software).
  • Submit a final declaration at the end of the year (this will include other types of income such as savings interest and dividends).
  • Do this for each self employed business you have.
  • Have separate software for each business.

HMRC state that implementing Making Tax Digital for The Self Employed and Landlords should help to reduce the errors in Self-Assesments. This is because quarterly submissions will ensure business owners keep more on top of their administration.

As of next month HMRC are opening up the testing phase to the real world. They are asking agents like myself to sign clients up. I am not pushing any of my self-employed clients to sign up to this. However if you would like to be involved in the testing using your business I’m very happy to help.

I myself will be involved in the next phase of testing using my own business in 2025. Therefore I’ll be ready to help when MTD for ITSA goes live in 2026.

Self Employed – www.barnowl-bookkeeping.co.uk

Using Making Tax Digital for Income Tax – GOV.UK (www.gov.uk)

Barnowl Bookkeeping is located near King’s Lynn in Norfolk within easy reach of Swaffham, Fakenham, Downham Market, Wisbech and the North Norfolk coast.

Self Employed

The Budget – Tax Cuts for the Self Employed

Tax Cuts for the Self Employed have figured in the last two budgets. Let’s look at what the tax cuts mean to the self employed entrepreneur.

National Insurance contributions are the chosen vehicle for tax cuts. In the Autumn Statement the government reduced Class 4 NICs from 9% to 8%. In addition they stopped the requirement to pay class 2 NICs. These changes come into effect in April 2024.

Yesterday Jeremy Hunt went on to further reduce Class 4 to NICs from 8% to 6%.

So what does this mean? Class 2 NICs are the method the government has used for the self employed to have entitlement to state pension, employment and support allowance and other contribution based benefits. When self employed profits passed the threshold of £6,725 Class 2 NICs became payable. Added to this self employed with a profit below this threshold could pay voluntarily to gain access to the benefits.

Fortunately, although Class 2 NICS are no longer, the self employed will still to have access to these benefits.

National Insurance: introduction: What National Insurance is for – GOV.UK (www.gov.uk)

Giving a like for like comparison of the deductions for NICs before and after the Autumn and Spring NIC cuts:

So how much extra money in your pocket : almost £700.

If you make a self employed profit of £30,000

Make sure you’re not paying too much tax! Barnowl Bookkeeping is here to help with self assessment, VAT, CIS and payroll. Located near King’s Lynn near to Wisbech, Downham Market, Swaffham, Fakenham and the North Norfolk Coast. Click the link for more information.

Self Employed – www.barnowl-bookkeeping.co.uk