MTD for an Employee with more than £10,000 untaxed income
Making Tax Digital for Business is a Government initiative also known as MTD. This is a legal requirement implemented and monitored by HMRC – Her Majesty’s Revenue and Customs.
Now that we know the meaning of understanding Making Tax Digital – MTD in Part 1 to 5, this is Part 6 of the series which explains MTD for Employees with more than £10,000 untaxed income.
- Keep records digital
- Submit the return at least every 3 months
- Final submission 10 months after year-end or 31 January whichever is sooner.
- Pay your tax by 31 January after the year-end (can be paid early)
Date MTD compliance starts
You must follow the rules for your next accounting period that starts on or after 6 April 2023, if your taxable turnover from your self-employed business or income from the property is above £10,000.
Who will need to comply with MTD?
- Sole traders
- Partnership & each partner
- Limited companies
- Limited Liability Partnerships
- Individuals with over £10,000 as a second income.
Example: MTD for an Employee with more than £10,000 untaxed income
Michelle is in full-time employment as a teacher. Tax is deducted from her wages by her employer. She also has income from private tuition and from a flat, she rents out. Her private tuition and rental income add up to more than £10,000 pa. She’s required to tell HMRC by sending a Self-Assessment tax return.
- Michelle struggles to find time to keep records of her income and expenses and there are some gaps
- Tax does not feel simple to her as each income stream is treated separately
- She wants to be sure she is doing things right so contacts HMRC
- She worries about how much tax she will owe and is unsure how much to set aside
- She finds submitting a return time-consuming and is frustrated as HMRC already holds some of this information
MTD compliance for Michelle
As her secondary income is greater than £10,000 pa, Michelle should record her income and expenses digitally and update HMRC quarterly as a minimum.
- She chooses to use a third-party App on her smartphone to help her incorporate record-keeping into her routine
- Geeta asks her Accountant to check the information who will send HMRC information monthly from the software
- HMRC already has information about her teacher’s salary so this is pre-populated into her tax account
- Her tax account shows her up-to-date tax position, including how much tax would be due each quarter on her secondary income
- She chooses to make regular payments to HMRC by direct debit to make budgeting easier
- She can also use “Ask Ruth”, HMRC’s 24hr virtual assistant, to find the right guidance on any queries or seek help from an HMRC adviser through webchat
For more detailed information, please download the full report from this link.
Our contact details are:
Sterling Finance UK Limited
Website : www.sterlingfinance.net
Email : firstname.lastname@example.org
Tel : 0161 339 4989