R A Lister Chartered Accountant

28/02/2026

MAKING TAX DIGITAL for INCOME TAX

We have engaged with HMRC since April 2025 in their Testing scheme to check that we can work with the software we are going to be use.

All taxpayers should already have received a letter from HMRC advising them of the requirement to file under MTDfIT but we have only heard from three clients who have received these letters to date, most of them were sent before 31 December 2025 and the final ones were sent out in the last two weeks of February.

The filing of quarterly returns is starting from 1st/6th April 2026 depending on your year end and quarterly returns MUST be filed by the 7th of the month following the filing date:
30 June file by 7 August
30 September file by 7 November
31 December file by 7 February
31 March file by 7 May
5th filing to file any corrections by 31 January following 5th April year end

We have been speaking to clients for the last 12 months and particularly when completing the 2025 Tax Return.

Filing from 1st/6th April 2026 applies to any sole trader who has total rental/Self-assessment income in excess of £50000 that has been declared on their 2025 Tax Return.

From 1st/6th April 2027 this limit is reduced to £30000 so we will be speaking to you in the next 12 months.

If you are falling within the requirement to file as you are above the £50000 under MTDfIT then we need to have a discussion with you before the end of March to agree who is doing what and if you are wanting us to do the filing to set up a timetable as we will not be able to do all filings in the last week and you may fall fowl of the penalties been issued. The onus is on yourselves to supply the information to us in good time.

You need to be registered for MTDfIT as soon as possible

18/02/2025

Well it looks as if Making Tax Digital for Income Tax (MTD for IT) is finally going ahead.

Please refer to our post of December 2022.

This only applies to self employed clients at this time, Partnerships and Limited Companies will be brought in at some later date, maybe!

Anyone who is self employed or receiving Rental Income where the total INCOME from both in the 2025 financial year will be mandated (forced) into MTD for IT with effect from 5 April 2026. They will need to maintain their accounting records in such a way that they can (or in most cases we can) upload accounting information on a quarterly basis (30 June, 30 September, 31 December, 31 March) and that information has to be uploaded by the 7th of the month following the end of the month following the quarter end, just like VAT.

Failure to file on time will result in penalty points been set against you which if you acquire 4 will result in a financial penalty.

Anyone who has a problem please contact us as soon as possible.
If any existing clients who will be mandated could please contact me as we need a volunteer to go on the Beta testing to see how it works, no penalties will accrue during Beta testing.

We will be writing out to all effected clients in the next few weeks and HMRC will be writing out to all taxpayers they think will be mandated in April/May 2025, or possibly earlier, and we will not be charging you for this.

We hope to keep you up to speed with information on this as HMRC let us know.

Call now to connect with business.

30/01/2025

I am proud to say that we filed our last for 2024 at 14:00hrs 28 January 2025, an amazing achievement helped by clients sending their information in on time following my prompting in October.

There really is no excuse for sending information in late.

If you are self employed then your year end was and will be either 31 March 2024 or 5 April 2024 because of the forthcoming Making Tax Digital ( if it ever gets off the ground ) and you should be keeping your records up to date at least every month or more frequently, we have been supplying spreadsheets or you can ask for one to be supplied for your specific business.

Some that were supplied were not completed because the client had difficulty following them and did not call us for advice, do not be afraid to call as it make it easier for both of us.

If you have rental income then, if you are renting through an Agent, when they send you the monthly remittance advice by email please PRINT it off and file it away. One client kept them on his computer and when the hard drive failed he had not taken any backup, a fatal decision, so had to ask for duplicates.

Pension and Employment P60's should be received by July at the latest so there should be no reason why they cannot be sent with all other information by the end of July or earlier.

If the Tax Return can be filed before July then we can amend the July payment as necessary and you have six months to save up for the 31 January payment and it will not be a shock when we tell you early January what your tax bill is at the end of the month.

If you work through a Limited Company then you should have all your record up to date to comply with maintaining the records and if you are VAT Registered then they will be up to date at least every quarter so please send your records in by 4 months after the year end then you can be advised of the forthcoming Corporation Tax liability.

If we all work together then we do not get over stressed and you will know your tax liability well in advance of the payment date and we can all have a peaceful January.

All the best

Richard

30/05/2023

no idea who these are but threatening to block me from my page
probably a set of idiots with nothing better to do

20/12/2022

Good news for all Self Employed business from HMRC on 19 December

Dear customer,
I’m writing to let you know that yesterday the UK Government announced that Making Tax Digital for Income Tax Self Assessment (MTD for ITSA) will now be mandated starting from April‌‌‌ ‌‌2026, rather than from April‌‌‌ ‌‌2024.
The UK Government understands businesses and self-employed individuals are currently facing a challenging economic environment, and that the transition to MTD for ITSA for the self-employed and small landlords represents a significant change for taxpayers, you as agents, and for HMRC.
That means it is right to take the time needed to work together to implement MTD well, maximise the benefits derived from it, and test and learn as we go.
We will continue to work with you to prepare for the transition to MTD for ITSA, including the testing of the service to ensure that it works for taxpayers and you as agents. You can continue supporting your clients now, by helping them keep digital records and preparing them to sign up ahead of mandation.
I know that speculation last week may have caused you concern and frustration, and providing certainty at the earliest opportunity has been a priority for us. I hope that this update gives you further clarity.
The details announced yesterday, which may be of particular interest to you, include:
• from April‌‌‌ ‌‌2026, self-employed individuals and landlords with an income of more than £50,000 will be required (mandated) to keep digital records and provide quarterly updates on their income and expenditure to HMRC through MTD-compatible software
• those with an income of between £30,000 and up to £50,000 will need to do this from April‌‌‌ ‌‌2027
• we anticipate that most taxpayers within the scope of MTD for ITSA will be able to sign up voluntarily before they are mandated to do so
• the UK Government will not extend MTD for ITSA to general partnerships in 2025. The government remains committed to introducing MTD for ITSA to partnerships at a later date, to be confirmed
• the UK Government will review the needs of smaller businesses, and particularly those under the £30,000 threshold before taking further decisions. This will look in detail at how the MTD for ITSA service can be shaped to meet their needs and the best way for them to fulfil their Income Tax obligations. Once that review is complete – and in consultation with businesses, taxpayers, agents, and others – the UK Government will lay out the plans for any further mandation of MTD for ITSA
Thank you for your continued support in preparing your clients for MTD for ITSA.
Yours faithfully

Jim Harra
Chief Executive and First Permanent Secretary – HMRC

05/07/2022

"500 days to go" from 5 July 2022 says one software supplier.

You will have seen the scary advertisements from software suppliers about MTD ITSA wanting you to use their software which “will do everything if you scan invoices in”.

From 5 April 2024 all Sole Traders/Partnerships?/Rental accounts with an income in excess of £10,000 per annum will need to file quarterly information online with HMRC.

Limited Companies do not need to meet this deadline, a date for them to comply will be issued/changed sometime in the future.

For clients who do not have accounting software that will do this we are looking into using Bridging Software and we will require your quarterly excel spreadsheets or sufficient information to create spreadsheet from, so that we can link those sheets into the Bridging software and file it online with HMRC.

Please contact us if you require further information at this time but we will be speaking to clients as we do their work from now on.

23/03/2022

Tips & Advice are busy today HMRC are increasing their interest rates which is why we always advise clients to pay on time if you can and not feed the coffers of HMRC.

Penalty interest rate increases for third time this year
HMRC’s late payment interest rate will rise following another increase in the Bank of England’s base rate. When does this take effect and do you need to take action?

In line with the increase in the Bank of England base rate, late tax payments will be subject to interest at a rate of 3.25% (currently 3%) per annum from 5 April 2022 (or from 28 March for payments that are made in quarterly instalments). Late payment interest accrues even where a time to pay arrangement has been set up.

This is the third time HMRC has increased late payment interest this year, because the rate is set at 2.5% above base rate. Unfortunately, the repayment interest rate remains 0.5%, being the minimum rate that can be applied. HMRC’s Official Rate of Interest, which is used to calculate the income tax charge on the employee benefit of interest free loans, will also remain unchanged at 2% for the 2022/23 tax year.

Unfortunately, the only way to avoid the increased rate is to ensure all outstanding amounts are paid before 5 April. Where you can't do this, try to pay as much as possible to minimise the tax debt liable to the increased rate. In our opinion, the interest rate is likely to rise several times this year, so this makes good sense in any case.

23/03/2022

Another post thanks to Tips & Advice

The link to the Gov.uk forms is at the bottom of the page
HMRC cutting down on the work they do handling post!

HMRC to reject expenses claims by letter from May 2022
Currently, there are a number of ways that employment expenses can be claimed. However, one option is being scrapped from 6 May 2022. What do you need to know?

Employees who are in self-assessment generally claim employment expenses through their tax return. This may in turn lead to an adjustment of the PAYE code for subsequent years, but the claim still needs to be made on the return to ensure the tax deducted reconciles to the eventual liability. For those not in self-assessment, a claim can be made via their personal tax account, by phone, or by completion of a Form P87.

Currently, it's also possible to make a claim in writing, by using a letter to detail the expenses. This often happens where there are multiple years to claim for, or where a family member is helping another with their tax affairs. However, from 6 May this will no longer be possible, and HMRC will reject such claims. Instead, the P87 (which can be downloaded here) must be used. The other options, e.g. claiming via the personal tax account, will remain available.

The P87 form itself has been modified, and it will now be possible to claim for multiple years on a single form.

https://www.gov.uk/guidance/claim-income-tax-relief-for-your-employment-expenses-p87

Find out how to claim tax relief on money you've spent on things like work uniform and clothing, tools, business travel, professional fees and subscriptions.

03/03/2022

Another update from Tips and Advice.

Somehow the here link does not work so I have put in the gov.uk links.

With an ever increasing number of estates getting caught in the inheritance tax (IHT) net each year, knowing what exemptions and allowances exist and how to claim them is crucial. HMRC has just updated its guidance on transferring unused nil rate band. What do you need to know?

The tax-free allowance for IHT (the nil rate band) is currently £325,000 per person. As an individual can leave their estate to a spouse or civil partner free from IHT, it is possible to transfer the deceased’s unused nil rate band to the surviving spouse. This enables a married couple or civil partners to pass up to £650,000 worth of assets free from IHT on the second death. The claim must be made within two years of the second death. HMRC has released guidance on transferring the nil rate band because the process has changed if IHT is due, or full details of the estate need to be reported. Personal representatives can check if this is the case here. If so, the unused nil rate band is transferred by completing Forms IHT400 and IHT402. However, if full details are not needed, i.e. it is an excepted estate, there is a different process, which depends on the date of the second death.

Pre-1 January 2021. For deaths up until 31 December 2021, a claim to transfer the full unused nil rate band can only be made with Form IHT217. If less than the full nil rate band is being transferred, it will no longer qualify as an excepted estate and Forms IHT400 and IHT402 will be required as described above.

Post-1 January 2021. For deaths on or after 1 January 2022, you should claim when you apply for probate.

Further information can be found here.

https://www.gov.uk/guidance/transferring-unused-basic-threshold-for-inheritance-tax

https://www.gov.uk/valuing-estate-of-someone-who-died/check-type-of-estate

Value the estate of someone who's died so that you can get probate: work out if tax is due, check how to report the estate's value, complete the correct form.

13/02/2022

Another morsel from Tax Tips and Advice

Auto-enrolment thresholds frozen again

Each year, the government reviews the level of earnings at which employers must include their employees in statutory pension schemes. What’s the story for 2022/23?

All employers have to comply with auto-enrolment if they have any employees who meet the criteria (referred to as “workers”). There are a number of important thresholds that govern when employees are entitled to join the scheme. Two of the most important are the earnings trigger and the qualifying earnings band lower limit. The earnings trigger is the point at which an employer must auto-enrol an employee into a qualifying scheme. If the employee earns less than the trigger amount, they can request to be enrolled, and the employer must do so. If they earn less than the lower limit, they can request to be enrolled, but the employer has no obligation to make contributions. The lower limit has been frozen at £6,240 for 2022/23. This means that employees who pay no tax or NI may need to be enrolled if they request it.

The earnings trigger has been frozen at £10,000 for 2022/23. Of course, as the minimum wage rates have increased, this is a decrease in the trigger in real terms. As a result, it’s expected that an additional 17,000 workers will need to be auto-enrolled for 2022/23. There are hefty fines for not adhering to the auto-enrolment rules, so you'd be well advised to identify staff that are just below the trigger this year and prepare to bring them into a qualifying pension scheme.

09/02/2022

HMRC has increased the rate of late payment interest for the second time in two months. In light of the reprieve for late filing penalties, do you need to worry?

In line with the recent increase in the Bank of England base rate, late tax payments will be subject to interest at a rate of 3% (currently 2.75%) per annum from 21 February 2022. The increase applies from the earlier date of 14 February for payments that are made in quarterly instalments. This is the second time HMRC has increased late payment interest this year, meanwhile the repayment interest rate, i.e. on money owed to you by HMRC, has remained at 0.5% for over twelve years.

At the start of 2022 HMRC announced that late payment penalties would not be charged on outstanding 2020/21 tax liabilities, providing the tax is settled by 1 April 2022. However, there is a hidden, avoidable cost because late payment interest will accrue from 1 February 2022 until the payment is made. For example, delaying payment of a £10,000 tax liability until 31 March 2022 will cost an extra £45 in late payment interest. The only way to avoid the increase is to pay any outstanding liability by 21 February.

Information supplied by Tax Tips and Advice