Understanding HMRC's Making Tax Digital for Self-Assessment

Making Tax Digital for Corporation Tax (MTD for CT) - https://lnkd.in/e7Rb9cbc How Rothstone Accountants Prepare Businesses for the Next Wave of HMRC Digitalisation A Digital Deadline That’s Hard to Ignore For years, HMRC has been pushing businesses towards digitalisation under its Making Tax Digital (MTD) programme. First came VAT, then income tax self-assessment (for sole traders/landlords), and now—looming on the horizon—is Making Tax Digital for Corporation Tax (MTD for CT). While the full rollout is still being phased in, it’s no longer a question of if—it’s a question of when. Companies will soon need to maintain digital records and submit corporation tax data via MTD-compatible software. For SMEs already grappling with compliance burdens, payroll pressures, and cashflow issues, this may feel like one change too many. But with the right preparation—and the right accountant—MTD for CT can become more than just a compliance headache. At Rothstone Accountants, we see it as an opportunity for better insight, automation, and smarter tax planning. What Exactly Is MTD for Corporation Tax? The basics: Businesses will need to keep digital records of all income, expenses, and adjustments relevant to corporation tax. They’ll submit quarterly digital updates to HMRC (similar to MTD for VAT). A final digital annual CT return will replace today’s CT600 process. 📊 Table 1: Comparing Old vs New Corporation Tax Filing Step Current System MTD for CT (Future) Record keeping Manual spreadsheets or accounting software Must be fully digital, no manual “bridging” allowed Reporting Annual CT600 Quarterly digital updates + annual return Submission method HMRC portal or software MTD-compliant software only Deadlines 12 months after year-end Quarterly + year-end digital return Why it matters: More admin: Quarterly reporting means more frequent submissions. Less margin for error: HMRC will have real-time visibility into company finances. Higher risk of penalties: Late or inaccurate filings will trigger fines. How Will This Impact Businesses? Compliance Burden IncreasesInstead of one annual submission, companies will have to engage in continuous reporting. Small businesses used to handing HMRC their books once a year will find this especially disruptive. Cashflow Transparency for HMRCQuarterly updates mean HMRC sees your profitability in near real-time. Businesses may face fewer surprises during investigations—but also less leeway for “fixing” issues at year-end. Technology InvestmentCompanies will need to invest in MTD-compliant software (QuickBooks, Xero, Sage, etc.). For some, that’s an added cost; for others, it’s a welcome upgrade from outdated spreadsheets. Opportunities for EfficiencyThe flipside: digital records improve visibility. Business owners can spot trends earlier—like falling margins or missed expenses. With Rothstone g

Should you authorise your accountant with HMRC? When you start working with a new accountant, one of the onboarding steps will be asking to be authorised with HMRC. It sounds formal, but it’s really just permission for your accountant to speak to HMRC on your behalf so you don’t have to spend your life on hold to the tax office. Here’s what you need to know. Why it matters: It lets your accountant view your tax records, file returns and chase HMRC directly for updates. You stay in control - it doesn’t give them access to your bank accounts, money or the ability to agree payment plans with HMRC. How it’s done. There are two main digital routes: - The digital handshake. You log into your Government Gateway and approve them instantly. - The code-in-the-post method. HMRC sends a code to you, which you then give to your accountant to complete the setup. What happens next Once authorised, your accountant will start receiving HMRC notices for the taxes they’re responsible for. For example: - PAYE coding changes are automatically sent to your accountant. - Self Assessment statements and payment reminders are sent to them and to you (if you choose). But here’s the important caveat — HMRC doesn’t always remember to copy your accountant in! So if you ever receive something unexpected from HMRC, always forward it on to your accountant for review. If you have multiple advisers You can authorise different people for different taxes. e.g. your bookkeeper for VAT and your accountant for Corporation Tax. But you can't appoint multiple advisers for each, except... ...under Making Tax Digital for Income Tax, HMRC will allow multiple agents e.g. one for quarterly updates, another for the year-end declaration. Changing accountants No need to tell HMRC to remove your old one. When your new accountant is authorised, it automatically replaces the previous authority. In short: authorising your accountant is a digital handshake that saves you time, cuts stress and keeps the tax machine humming. If you’ve just taken on a new accountant (or a new bookkeeper) make sure the right people are authorised - and forward them any HMRC post you receive, just in case.

What steps to take to prepare for Making Tax Digital (#MTD)   What You Need to Do to stay compliant with MTD, landlords must: Keep Digital Records You must maintain digital records of all property income and allowable expenses. This includes rent received, repairs, insurance, letting fees, mortgage interest, and any other allowance expenses. Use Compatible Software You’ll need to use HM Revenue & Customs-recognised software to record transactions and submit updates. Free and paid options are available, and HMRC provides a list of compatible software on GOV.UK. https://lnkd.in/gW-hz-sV Submit Quarterly Updates Instead of one annual tax return, you’ll send quarterly summaries of your income and expenses to HMRC. These updates help HMRC provide a more accurate estimate of your tax liability throughout the year. These are required to be filed on the 7th of the following months; August, November, February, and May, which gives you only a month and seven days to file for each quarter. It is important to note that the date that payments for income tax have not changed! These will remain to be due on the 31st of January each year, and payments on account will still be due on the 31st of January and July each year going forward too! Finalise Your Tax Return Annually At the end of the tax year, you’ll submit a final declaration to confirm your income and claim any reliefs or allowances, and this will be due on the 31st January. What steps to take to be ready for MTD As landlords prepare for Making Tax Digital (MTD), they have a valuable opportunity to streamline their financial management by using software to efficiently track income and expenditure. At PJCO Chartered Certified Accountants we have partnered with a software provider that specifically caters to landlords, and this provider is Hammock. Hammock is an MTD-ready software that allows landlords to set up an automatic bank feed, manage tenancies and property portfolios, and export detailed reports to allow you to manage your property portfolio more easily. The best part is that it reduces the amount of information that you need to send your accountant to prepare your self-assessment, as we would have the information readily available. With the introduction of MTD, it is crucial to streamline your tax return process to ensure that you have peace of mind, and certainty that your tax affairs are being handled correctly and within the deadlines. If you have any questions about Making Tax Digital, its impacts on you or with planning ahead for the future, please get in touch with our BTL team here at PJCO for a free 15-minute discovery call - https://lnkd.in/dX8-Xaq Full blog written by Roni G.: https://lnkd.in/eD_wHCbS

There is a new way to do your self-employed tax return. Are you ready for 5(!) submissions a year with no HMRC tool? From April 2026 things are changing with the new 'Making Tax Digital' rules. If you fit the criteria will you will have to: • Keep digital records in software • Submit 4x quarterly returns (income and expenditure) • Submit 1x final 'tax return' at the end of the year by 31st January If you already keep digital records in software, this is probably not *that* big a deal. (although it is another deadline / habit change to deal with) But if you don't... it's a very big change to how you deal with your tax affairs. The first batch of people affected are the self-employed and landlords with income over £50,000 logged, in the 24/25 tax return (the one due by end of Jan 2026). Few things: • This is sales/revenue/rental income, *not* profit. • Ignore your job income, the system is only interested in your self-employment/rental income • This threshold for being included in the new system drops to £30,000 (2027) and then £20,000 (2028) in the coming years. To prepare now: • Learn if/when you will be affected • Choose a software system • Learn how to use the system • Think about whether you or an accountant/book-keeper will submit any/some of the returns To wrap things up: Don't leave it to the last minute. Get the software bit sorted - it's coming.

WHY REUSING OLD R&D CLAIM TEMPLATES CAN COST YOUR BUSINESS DEARLY We often come across companies that prepare their own R&D tax relief claims using a template shared years ago by a previous adviser. On the surface, it feels efficient: “We’ve done this before, let’s just follow the same structure.” But here’s the problem: That template reflects your company’s position at that time — not today’s. During this time, the company’s project activities and resources used therein will have changed.  Additionally, the R&D Tax regime has undergone significant change, with HMRC guidance and claim expectations evolving significantly. The rules around eligible cost categories, and how grants or subcontracted work interact with the R&D schemes have also changed. Reusing an old claim structure without expert review can lead to serious issues, including: 🔹 Incorrect cost treatment – Older claim templates may include cost categories that were previously allowable but no longer reflect the changed R&D legislation or how the company currently allocates resources to its R&D projects. For instance, newer eligible categories such as cloud computing and data licence costs could enhance your claim if properly included. Conversely, recent changes to the definitions of allowable contracted-out R&D and overseas activities mean these areas now require more careful assessment to ensure they meet current eligibility criteria. 🔹 Ignoring funding interactions – The interaction between grant funding and R&D tax relief is one of the most misunderstood areas. Using a “copy-and-paste” claim can easily lead to overstating relief or claiming under the wrong scheme, resulting in incorrect claims. 🔹 Increased enquiry risk – Old templates rarely capture the depth of project detail or technical reasoning that HMRC now expects. That lack of precision can trigger a stressful and time-consuming enquiry — sometimes months after you’ve received your credit. 🔹 Potential penalties – Errors made through misunderstanding or outdated information don’t always escape HMRC scrutiny. Incorrect claims can result in repayments, penalties, and reputational damage. 💡 THE VALUE OF GETTING IT RIGHT Working with a specialist R&D adviser is about ensuring your claim truly reflects your company’s current R&D, funding position, and eligibility. As an experienced adviser we will: ✅ Ensure your claim captures qualifying activities and costs. ✅ Identify eligible projects you may have overlooked. ✅ Ensure compliance with the latest HMRC requirements. ✅ Give you confidence and peace of mind if your claim is ever reviewed While reusing an old template may save a few hours, getting expert R&D tax advice can save you much more in time, stress, and potential financial exposure.

HMRC is introducing a major change ...... HMRC is introducing a major change requiring self-employed individuals and landlords with qualifying income to keep digital records and file tax updates online, starting April 2026 for those earning over £50,000, and from April 2027 for those earning over £30,000. The new rules are part of the Making Tax Digital (MTD) initiative, which aims to reduce errors, simplify compliance, and boost productivity through digitalization. Who is Affected Self-employed people and landlords with annual business or property income above £50,000 (from April 2026) and above £30,000 (from April 2027) must use compatible software to keep records and submit quarterly updates to HMRC. Around 780,000 people will need to comply initially, with 970,000 joining later as the threshold lowers. Key Requirements Maintain digital tax records using approved software. Submit quarterly updates and end-of-year Self Assessment through digital systems. Paper tax return deadline: 31 October 2025; online filing deadline: 31 January 2026; payment deadline: 31 January 2026. HMRC’s Objective MTD aims to make tax filing easier, reduce costly errors, and streamline paperwork for UK taxpayers, leveraging digital tools already common in other countries. Deadline Reminders Register for Self Assessment by 5 October if needed. Paper tax returns due by 31 October 2025; online returns by 31 January 2026. Late filings will incur penalties.

How to Stay Compliant with Making Tax Digital (MTD) Making Tax Digital (MTD) is transforming how landlords are required to report their property income. If you are a #buy-to-let landlord, it's essential to understand what MTD means for you and how to stay compliant—especially as the phased rollout begins in April 2026. What Is Making Tax Digital? MTD is HMRC’s initiative to digitise the UK personal tax system. It aims to reduce errors, improve efficiency, and make tax reporting a quarterly process, instead of an annual one. For landlords, this means a shift from annual paper-based tax returns to quarterly digital submissions using HMRC-approved software. Who Needs to sign up for #MTD If you earn more than £50,000 annually from property or self-employment, you’ll be required to follow MTD rules from 6 April 2026. Those earning between £30,000 and £50,000 will be mandated from 6 April 2027. #Landlords below the £30,000 threshold are not yet required to comply, but it is recommended to begin using a HM Revenue & Customs compliant software in advance of being required to register, so that you can get familiar with the new software. One important thing to note though, is that it is the current 2024/25 tax year that will determine if you need to be signing up for MTD in April 2026. Then it will be checked annually with each self-assessment tax return that is completed. If you have any questions about Making Tax Digital, its impacts on you or with planning ahead for the future, please get in touch with our #BTL team here at PJCO Chartered Certified Accountants for a free 15-minute discovery call - https://lnkd.in/dX8-Xaq Full blog written by Roni G.: https://lnkd.in/ePegBapN

✅ Advisory Note: Using the Discard Option in ITR Filing – A Compliance Hack Worth Knowing Filing Income Tax Returns (ITR) is something most individuals and businesses do once a year, but in the process, errors happen—especially when deadlines loom large or data is scattered. Fortunately, the Income Tax portal offers a discard option that can help taxpayers avoid unnecessary complications when they realise mistakes before verification. 📌 What is the Discard Option? The discard option allows you to cancel an unverified ITR and refile it afresh as though it’s the original return. This is a powerful compliance tool when used correctly. ✅ When Should You Use It? Use the discard option when: The return has been filed but not e-verified yet. You realise mistakes such as: • Incorrect challan details • Wrong income amounts • Missed deductions or exemptions • Erroneous bank or personal information ⚙ How to Discard an ITR? 1. Login to the Income Tax e-filing portal. 2. Go to ‘Income Tax Return’ section. 3. Select the return you wish to discard. 4. Click on ‘Discard Return’. 5. Confirm the action. 6. File a fresh return with accurate details. Ensure you complete this process before the due date—both the discard and refiling must happen within the stipulated timeline. 🚨 Important Caution Discarding is irreversible – Once you discard, the earlier return is treated as if it was never filed. Deadline is strict – Both discard and fresh filing must be completed before the due date, else penalties may apply. Not for verified returns – If you've already e-verified, you cannot discard the return—you’ll have to file a revised return instead. Large transactions – In cases of tax audit applicability or substantial mismatch in income, consult a professional before discarding. ✅ Best Practices for Accurate Filing 1. Use pre-filled ITR forms – Auto-filled data from Form 26AS and AIS reduces manual errors. 2. Reconcile challan and tax credits – Ensure tax paid reflects correctly before submission. 3. Check deduction claims carefully – For example, section 80C investments, HRA exemptions, or business expenses. 4. Plan early – Avoid last-minute rush to reduce chances of mistakes. 5. Verify before filing – Use ITR validation tools and calculators for cross-verification. 📂 Case Example – Practical Application Scenario: Ms. B, a salaried taxpayer, filed her ITR and entered the wrong bank account for refund. On reviewing post-filing, she realised the mistake but had not e-verified the return yet. Action Taken: She logged into the portal, discarded the unverified ITR, and filed it again with the correct details. She verified the return successfully and avoided further complications. Outcome: No need to file a revised return. Refund processed without delay. Full compliance maintained.

Last month, we announced our investment in OLarry – an AI-powered tax firm that is addressing a number of critical needs at exactly the right time: AI for Tax Automation: Tax planning and preparation often involves hours of manual work. CPAs spend 25% of their time on administrative tasks, and it can take six to eight hours of work to produce a 1040 for a high-net-worth individual. OLarry is using AI to automate document requests, classify and extract data, and enable rapid research – freeing up CPAs and their staff to spend more time with their clients. Growing Demographic: OLarry is building a tax advisory brand where none exists today. The firm serves high-net-worth individuals and businesses whose tax situations are too complicated for DIY tax software but don’t meet the threshold for an ultra-high-net-worth, hourly tax advisory service. Proactive Tax Planning: Instead of hourly billing, OLarry’s annual fee encourages year-round, proactive tax planning by building in access to CPAs outside of tax season – when they have more time and space to think strategically about their clients’ situations. We are proud to support co-founders Eric Rachmel, Corey Heldreth, CPA, Becky Hobbs, and the entire team at OLarry as they work to bring AI-powered, year-round tax planning to even more individuals and businesses. Read more about why we invested in OLarry here: https://lnkd.in/ePJACKud CC: Gardiner Garrard, Sean Banks, Neil Kapur, Lizzie (Guynn) Hartley, Laney Lewis, Paul Todd, Jen Zimmerman

Income Tax Portal Glitches: Challenges, Causes & Constructive Solutions Over the past few days, there has been a hue and cry across the country about the Income Tax portal not functioning smoothly, especially when the due date of 15th September for filing returns was approaching. Thousands of professionals and taxpayers have faced immense difficulties, delays, and anxiety This is not just a matter of inconvenience — it directly affects statutory compliance, professional reputation, and public trust. The Challenge: · Professionals across India encountered slow response times, login issues, and portal crashes while trying to file returns. · With deadlines looming, even minor glitches caused cascading backlogs and heavy stress. · The situation has raised questions on accountability — both of the government authorities and the vendor entrusted with maintaining the portal. There is no denying that the government and the vendor must take proactive steps to ensure the system operates reliably, especially during peak filing periods. The Other Side of the Coin: While it is valid to expect the system to function seamlessly, it is equally important to look inward as a professional community. · A significant portion of the rush happens because many returns are initiated very close to the due date. · Professionals often face this not due to their own delays but because: o  Clients do not provide the required data on time, despite repeated reminders. o  Many clients approach only at the last moment when filing becomes urgent. This creates a bottleneck effect — overwhelming both the professionals and the system simultaneously. Possible Solutions: To resolve this recurring problem, we may consider a two-pronged approach: Government-Level Measures: · Ensure robust portal performance through better infrastructure, stress testing, and vendor accountability. · Introduce early filing incentives — o  Currently, the system only penalises late filers. o  Offering small tax concessions or rebates to SSEs who file much before the due date can: § Distribute the load evenly across months § Reduce last-minute congestion on the portal § Encourage proactive compliance habits Professional-Level Measures: Plan and prepare returns well before deadlines, wherever possible. Educate and sensitise clients about the risks of last-minute filing and portal overload. Consider adopting firm policies for handling habitual late data submitters — as it is not worth taking disproportionate stress and compromising health and work-life balance for such cases. Way Forward: · Government must ensure a resilient platform and offer positive incentives for early compliance. · Professionals must strive to spread their workload more evenly, and · Clients must realise their duty to provide data on time to facilitate smooth filing. If we move in this direction, we can reduce the last-minute chaos, lower stress, and build a more reliable and efficient compliance ecosystem for everyone.