Making Tax Digital for freelancers

What is Making Tax Digital for Income Tax Self Assessment?

Making Tax Digital is a major overhaul of how sole traders and landlords need to report their income to HMRC.

Instead of submitting your tax return once a year, you'll now need to:

• Keep all your business records digitally
• Use MTD-compatible software to send updates to HMRC
• Submit those updates every three months, plus an end-of-year wrap-up

The idea is fewer mistakes, quicker tax processing, and a clearer picture of your bill before the end of the tax year.

In practice, this is going to mean a little more administration for you, not just the mad rush at the end of the tax year, but every three months.

This might actually be a good thing - rather than 12 months of accounting in a single stressful go, a few weeks before the end of January, you'll be keeping on top of your records every couple of months, and will have a better sense of your tax liability as you go - which can helpful to ensure you're not going to be unable to pay.

For those of you who aren't yet using digital software to track your accounts, this might feel like a big step up - and might come with some costs (both time and money), so it's important to get prepared now.