With MTD for Income Tax applying to unincorporated businesses and landlords from 6th April 2024, taxpayers must comply with certain requirements. On 1st July 2022 draft notices were published that provide information on these requirements.
The first draft notice is that functional compatible software must comply with the condition set out under reg. 3;
once a digital record has been entered into a software program that forms part of the functional compatible software, any transfer, recapture or modification of the digital record within the functional compatible software must happen digitally and not manually.
To find software that is MTD-compatible you can look on the Gov.uk website to help find record-keeping software and bridging software.
The next draft notice is to help specify the information that needs to be provided in a quarterly update, as it depends on the type of business, this is set out under reg. 8. These notices recognise 5 business types.
Business with trade profits
Businesses with property income
Any business with a turnover below the VAT registration threshold of £85,000, only needs to provide the total of all income and expenses.
Depending on the type of business, the information required in the EOPS will differ, this is set out under reg. 12. The totals for each category in the quarterly updates need to be proved in the EOPS, alongside any additional information on the business type.
It is essential that any business or landlords are prepared for the April 2024 start date, and have their software ready to generate quarterly statements and EOPS.