Landlords, sole traders and the self-employed in Yorkshire are being urged to prepare for ‘the death of the traditional tax return’ in April.
Azets, an accountancy and business advisory group with three offices in Yorkshire, is warning that those with gross income above £50,000 per year will have to comply with a new Making Tax Digital (MTD) regime.
Under the HMRC shake-up, qualifying individuals and businesses will be required to keep digital records, use MTD-compatible software and submit updates every quarter, as well as a final declaration.
The overhaul – the most significant since the introduction of self-assessment in 1997 – will bring the tax system closer to real-time and affect 864,000 individuals and landlords nationwide from April 6 of this year, with numbers predicted to rise to 2.9m within three years.
Fraser Campbell, UK head of Accounting and Business Advisor Services (ABAS) at Azets, said: “MTD truly signifies the death of the traditional income tax return.
“It represents a major change with the introduction of digital reporting obligations for hundreds of thousands of landlords, sole traders and the self-employed from April onwards in Yorkshire.
“It is crucial that they put plans in place to deal with this shift to ensure a smooth and compliant transition to the new regime as the April deadline is fast approaching.
“While this will mean changes in processes and software that is compliant with MTD, the switch will bring advantages too with access to near real-time digital information about taxes for thousands of people for the first time.
“It will place accurate financial information into the hands of you or your tax adviser more regularly to assist with visibility over business performance, forward tax planning and forecasting as well as a smoother year-end process.”
Azets became the first accountancy firm in the UK to submit a MTD quarterly update for a landlord last June when it worked collaboratively with HMRC and the global small business platform Xero during a testing phase of the new system prior to a public beta programme.
Top tips for landlords, sole traders and the self-employed for the new MTD regime include:
Check qualifying income now to see if you fall under the new reporting obligations.
Bear in mind the threshold will drop in subsequent years so start preparations if you are likely to qualify for MTD in 2027 or 2028.
Ensure that your – or your accountant’s – software is HMRC approved so it is compatible with MTD. Start using software now for a smooth transition in April
There may be MTD exemptions – check on the HMRC website or seek expert advice
Azets, which is one of the UK’s Top 10 accountancy and advisory firms, is leading the sector in preparing clients for a smooth and compliant MTD transition through technology as well advice, training and workshops.
Azets has more than 1,000 advisers and the largest cohort of MTD beta clients and has been able to take learnings from its testing programme and subsequent Beta introduction.
Fraser said: “We have focused on a proactive, strategic and technology-led approach with Xero’s best-in-class software to deliver cost-effective solutions to ensure our clients are ideally placed for the introduction of MTD in April.
“Preparation, planning ahead and taking advice at the right time are key for compliance and maximising any benefits from our ever-evolving tax landscape.”
According to HMRC, nearly two million VAT-registered businesses have been required to use MTD software for recordkeeping and returns since April 2022.
Landlords, sole traders and the self-employed with the qualifying income of over £50,000 for the 2024-25 tax year will fall into scope for MTD from 6 April.
Under a phased roll-out, from April 2027 those with a qualifying income of £30,000 will fall into scope. From April 2028, those with qualifying income over £20,000 will be included.
Azets has offices in Leeds, Bradford and York where it employs 335 people.
Image provided by Azets
