Tag Archive for: HMRC

HMRC Could Sign You Up for Making Tax Digital If You Haven’t Done It Yourself

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If you were required to use Making Tax Digital for Income Tax from April 2026 but haven’t signed up, HMRC is taking steps and may sign you up for Making Tax Digital if you haven’t registered already.

Making Tax Digital became a legal requirement from 6 April 2026 for sole traders and landlords with qualifying income over £50,000. The first quarterly update was due by 7 August 2026.

If you missed it, ignoring MTD is not a good option.

What is happening?

HMRC has been contacting sole traders and landlords whose records indicate they should be using Making Tax Digital.

If you haven’t already taken the necessary steps, HMRC is moving forward with bringing eligible taxpayers into MTD. When you receive communication from HMRC regarding MTD, make sure to read it carefully and verify what actions are required of you.

Being integrated into the system doesn’t finalise everything. You still need to verify your details, use compatible software, maintain digital records, and submit quarterly updates. HMRC states that compatible software must be authorised and connected to HMRC before it can be used for Making Tax Digital (MTD) filings.

What if you missed the first MTD deadline?

The first quarterly update deadline was 7 August 2026.

If you were required to use MTD and did not submit your update, you should update your records and submit them rather than waiting for the next deadline.

There is some breathing room in the first year. HMRC has confirmed that no penalty points will be issued for late quarterly updates during the first year of MTD for Income Tax.

However, this does not mean MTD is optional.

You must still comply if you meet the criteria. Penalties for late Self Assessment submissions and tax payments remain in effect. Starting from the second year of MTD for Income Tax, a points-based system will be used for missed quarterly deadlines.

What should you do now?

If you think MTD applies to you, check your position now.

You should make sure you:

  • Are correctly signed up for Making Tax Digital for Income Tax.
  • Have compatible software in place and connected to HMRC.
  • Keep digital records of your self-employment or property income and expenses.
  • Submit any quarterly updates that you have missed.
  • Keep updating your records so you’re ready for your next quarterly submission.

You can access Making Tax Digital for Income Tax through your existing HMRC online account once you are signed up.

What if you haven’t received anything from HMRC?

Don’t assume that means MTD does not apply to you.

For the 2026/27 tax year, MTD applies if you’re registered for Self Assessment, earn income from self-employment or property, and your qualifying income exceeds £50,000. Qualifying income includes your gross earnings from self-employment and property, prior to deducting expenses.

If you meet those requirements, HMRC says you should sign up now.

Get back on track with Rosemary Bookkeeping

If you missed the first MTD deadline, haven’t signed up, or aren’t sure what you should be doing, now is the time to sort it.

The first-year soft landing lets you organise your records and get comfortable with quarterly reporting before penalty points for late updates start to accrue.

Rosemary Bookkeeping can help you understand your MTD obligations, maintain your digital records and keep your bookkeeping organised throughout the year.

Contact your local Rosemary Bookkeeper to get your MTD bookkeeping back on track.

Useful official guidance: Making Tax Digital for Income Tax on GOV.UK and HMRC guidance on signing up for MTD.

Is Your Current Bookkeeping Making Tax Digital Ready?

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Is your current bookkeeping Making Tax Digital ready?

Making Tax Digital is becoming a standard part of business operations. Although not everyone is required to comply immediately, expectations regarding digital records and regular updates are already influencing bookkeeping practices.

If you’re uncertain about whether your current setup is ready, you’re not alone. Many business owners feel they might be falling behind, but often they only need to make a few small adjustments. This simple self-check is designed to help you assess your current situation without any pressure.

Do you keep your records digitally?

MTD mandates that records be maintained in a digital format, including income, expenses, and relevant supporting details.

Ask yourself:

  • Are your records stored digitally rather than only on paper?
  • Can you easily access past transactions when needed?

If you primarily depend on paper or handwritten notes, this is the first area to assess.

Are your records kept up to date during the year?

With MTD (Making Tax Digital), bookkeeping is no longer a task to be done just once a year. It’s important to maintain regular updates.

Consider:

  • Do you update your records weekly or monthly?
  • Are there long gaps where nothing is recorded?

If you usually catch up near deadlines, this may indicate your routine needs support.

Can you clearly separate business and personal spending?

Maintaining clear separation is crucial under MTD. Mixed transactions complicate record reviews and can lead to repeated errors.

Check whether:

  • You use a dedicated business bank account
  • Personal spending regularly appears in your business records

Maintaining clarity simplifies digital reporting significantly.

Are your records accurate, not just complete?

It’s essential to record all transactions, but ensuring their accuracy is equally important.

Ask yourself:

  • Are expenses consistently categorised?
  • Do the figures match the bank statements after reconciliation?

Repeated small errors can become increasingly difficult to correct over time under MTD.

Do you know when MTD will apply to you?

Many people are uncertain about their timelines; here is clarification.

Understanding when Making Tax Digital (MTD) applies allows you to plan ahead with confidence rather than feeling rushed.

Do you feel confident explaining your figures?

A simple test is whether you can explain your numbers when asked. If your records are unclear or confusing, that often indicates the system needs improvement.

Effective bookkeeping should provide clarity, not uncertainty.

What your answers mean

If you answered “yes” to most of these questions, your bookkeeping is likely on the right track. If a few areas raised concerns, it doesn’t mean you are failing; rather, it indicates where small changes could lead to significant improvements.

MTD readiness is not about being perfect; it’s about consistency, clarity, and developing good habits.

How Rosemary Bookkeeping can help

Preparing for Making Tax Digital can be stress-free. Rosemary Bookkeeping assists businesses at every stage, whether you’re almost ready to review your setup or just beginning.

Your local Rosemary Bookkeeper can help you:

  • Assess your current bookkeeping
  • Identify small changes that improve readiness
  • Keep digital records accurate and organised
  • Prepare calmly for future MTD requirements

If you want reassurance or practical support, we are here to help get your bookkeeping Making Tax Digital ready.

Find your nearest Rosemary Bookkeeper today.

Festive Expenses You Can Claim Back

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We have made a list and checked it twice of festive expenses that you may claim back as business expenses.

Christmas time can be a busy and expensive time for many businesses, big or small.

But with the January Self-Assessment Tax Return deadline looming, here are some festive expenses that you might not have thought about reclaiming.

Decking the Halls

You may not know that you can claim back decorations such as Christmas trees, tinsel, and wreaths as tax-deductible business expenses by recording them as office running costs. However, this does not apply to employees working from home, as HMRC considers these items to be for personal enjoyment rather than office-related use.

A Christmas Party

You may be eligible to reclaim expenses for a Christmas party, but this depends on who attended and the cost incurred.

If the event is open to all employees and costs less than £150, it will be entirely taxable, regardless of the number of people in your organisation.

You cannot claim expenses if clients or associates attend an event, as HMRC classifies this as business entertainment for corporation tax and VAT purposes. Additionally, if an event is not open to all employees, it will not be eligible for claims either.

Therefore, when inviting clients or associates to a Christmas event, ensure you allocate sufficient funds to cover their expenses, as you will not be able to claim any tax relief or recover any VAT on these costs.

It’s important to record this in your financial records and add the costs back when calculating your profit for tax purposes. However, this applies only if the cost per person for the Christmas party, including VAT, does not exceed £150. If it does exceed this amount, it will be considered a taxable benefit.

Presents

Since it is Christmas, you may consider buying gifts for your staff or clients.

When giving gifts to clients, you can record these expenses as business costs, as long as they adhere to the appropriate guidelines to avoid any implications of bribery.

You don’t have to pay tax on a benefit for your employee if all of the following apply:

  • It costs you £50 or less to provide
  • Cannot give cash or a cash voucher
  • It is not a reward for their efforts or performance.
  • It is not included in the terms of their contract.

This is known as a ‘trivial benefit’. You don’t need to pay tax or National Insurance, or let HM Revenue and Customs (HMRC) know.

More guidance and information on gifts for staff can be found on the HMRC website.

Need help with your finances?

If managing all of this feels overwhelming, consider handing your bookkeeping over to the professionals by reaching out to your nearest Rosemary Bookkeeping business for expert support, advice, and assistance with all your bookkeeping needs.

Making Tax Digital Checklist for Sole Traders

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If you’re operating your own business as a sole trader, you’re likely familiar with Making Tax Digital (MTD).

While it may still seem somewhat abstract, it’s essential to recognise that it’s on the way, and it’s better to prepare now rather than waiting until the last minute.

Below is our ‘Making Tax Digital Checklist for Sole Traders’, along with some commentary and common oversights that people often miss along the way.

1. Check if you’re affected by Making Tax Digital

  • If your total income from self-employment or property exceeds £50,000 in a year (before expenses), you will need to comply starting from 6 April 2026.
  • If your income is above £30,000, you’ll need to comply from April 2027.
  • If your income exceeds £20,000, the requirement will take effect later, in April 2028.
  • If your income falls below those thresholds, you are not required to switch yet, but you can choose to sign up early.

Quick Tip: Determine your gross income now (before expenses) and identify your tax bracket. Don’t assume you’ll stay under the limit. If you’re close, act as if the rule applies to you now.

2. Choose and set up compatible software

One of the significant changes under MTD is that you must use software recognised by HM Revenue & Customs (HMRC) to maintain digital records and submit updates.

Speaking to your local Rosemary Bookkeeper is the best cause of action here. A free consultation will give you all the information you need to help you decide which software is the best fit for your business.

Quick tip: If you’re still using spreadsheets or paper records, consider making the switch now. You’ll have more time to familiarise yourself before the compliance deadline arrives.

3. Make sure your records are digital and organised

This is more than just bookkeeping online. If you’re in scope (or just out), you must keep your business records in a digital format rather than solely on paper.

Key items to cover:

  • All details regarding business income and expenses must be submitted in digital format.
  • If you currently use cloud accounting software, ensure it is compatible with Making Tax Digital (MTD).
  • If you use both paper and digital formats, you’ll need to transition to a fully digital system for the appropriate records.
  • Prepare your bookkeeping so that it is ready for quarterly submissions once the requirement starts.

Quick Tip: We understand that bookkeeping may not be your favourite task, but handling it early reduces stress later and allows you to identify issues, such as missing invoices or forgotten receipts, when you still have time to address them. Our local Rosemary Bookkeepers are on hand to help! 

4. Sign up (or prepare to sign up) with HMRC

If you meet the obligation threshold, you must sign up for MTD for Income Tax through your software or agent, instead of the old method, directly with HMRC.

Things to check before or during sign-up:

  • Your National Insurance number is available.
  • Your business start date (if applicable) is known.
  • You have the right software and it’s linked to HMRC.
  • If you are using an agent or bookkeeper, ensure they are prepared for MTD. Agents must also be ready.

Quick Tip: At Rosemary Bookkeeping, we are fully equipped to support with Making Tax Digital and are ready to assist you with your bookkeeping needs. We can also offer a hassle-free, end-to-end solution by managing your HRMC gateway too. Speak to your local Rosemary Bookkeeper for more information. 

5. Plan for quarterly updates and the end-of-year final declaration

One of the most significant changes is that instead of submitting one annual tax return for your business income, under MTD for Income Tax, you will instead send quarterly updates of your income and expenses, along with a final declaration after the year ends.

Important deadlines (example) for those in scope:

  • Submit your income and expense summary for the period from April 6 to July 5 by August 7.

  • The deadlines for the other quarters follow a similar pattern: November 7, February 7, and May 7.

  • The final declaration must be submitted by January 31 of the year following the end of the tax year.

Quick Tip: If you view change as a consistent flow instead of a sprint, you’ll be better prepared. This approach also provides a clearer understanding of your tax liability earlier, aiding in cash flow planning. By choosing a Rosemary Bookkeeper- we support you throughout the year so these quarterly updates happen like clock-work. 

6. Review if any exemptions might apply

There are a few limited cases where you might be exempt from this requirement, such as if you are digitally excluded.

Check whether:

  • It is generally considered “not reasonably practicable” for you to use digital records, which is a very rare situation.
  • You currently fall below the required thresholds, so you are not yet subject to the mandate.

Quick Tip: If you believe you have an exemption, you’ll need to apply. But don’t rely on this – it shouldn’t become a procrastination excuse. Our Rosemary Bookkeepers are on hand to offer more advice on what is deemed as an exemption and what isn’t. 

7. Review your bookkeeping processes now and clean up historic records

Although the first mandate is 5 months or more away (depending on your income), it’s wise to get things in shape now.

Questions to ask yourself:

  • Are your invoices issued and stored digitally?
  • Do you scan and store expense receipts digitally?
  • Is your bookkeeping up to date (not months behind)?
  • Do you’ve a software system that you can use confidently?

Quick Tip: If you answer “no” to several of these, then treat them as tasks to clear. You’ll sleep better knowing you’re prepared.

Stop for a moment and reflect: many sole traders will think “it’s not relevant to me yet” – and in a sense, that’s true if your income is below the threshold. But waiting until the last minute is risky. A small oversight in your software choice, in record-keeping, or in understanding the quarterly deadlines could cost you.

Consider this a preparation project, not a panic. If you need assistance, Rosemary Bookkeeping is here to help: we can review your software and processes to ensure you’re ready for Making Tax Digital without any stress.

Find your nearest Rosemary Bookkeeper today.