Digital Filing Declaring Additional Income

As everything goes digital, the UK tax system needs to change. To implement this, the government has mapped out the Making Tax Digital Plan and is set to adhere to it. Business VAT has been submitted through digital platforms for some time, and changes on the HMRC website bring all services together.

Reasons

The inevitable transition will soon reach all the self-employed with income over £10,000. Admittedly, digital filing, as outlined in the plans by quarterly tax submissions, will “tidy up” the tax system and minimise the “errors or omissions” so easy to make when self-employed individuals submit their tax only once a year. Sloppiness and poor record keeping, typical of small businesses, have reputably contributed to unpaid tax, which will be eliminated with the simple automated system, thus bringing government income.

How will it work?

Everyone already has an HMRC tax account on which their income is recorded and calculated annually for tax liability. The old system of annual tax submission is undergoing a significant overhaul; as per the new plans, self-employed people will have an obligation to file or record their income on the HMRC platform quarterly.

Who will it serve?

The idea is to introduce more transparency and, at the same time, give business owners insight into their financial position at any point in time. Far too often, small and medium businesses rely on speculation rather than data. Digital filing and other applications aim to speed up business decisions and the credit control process.

Who else will have to register to file SA tax returns?

Digital filing will not only concern the self-employed or small business owners. Research shows that more and more of us have multiple income streams of over £10,000 on average. It comes from renting properties, Airbnb, trading, and sellers’ platforms. To crack down on undeclared income, the government has already placed responsibility on digital platforms to report the seller’s earnings, appealing at the same time to individuals to register to file SA tax returns.

Currently, the following allowances* apply:

• Personal Allowance: £12,570

• Income from Trading, Shares and Stocks: £1,000

• Rental Property Income: up to £1,000

• Cash Gift Income up to £3,000

Other currently applicable allowances:

Independent of the above, various allowances may apply when, for example, selling property and assets or drawing benefits from the company. Those may depend on individual circumstances.

Always contact an accounting professional if in doubt.

Dates to put in your diary and take immediate steps to adhere to the requirements:

April 2026—As part of Making Tax Digital, all traders earning more than £50,000 will be required to submit quarterly financial information related to their business.

The financial information submitted will count towards the Self-assessment tax submission, which will still be done once a year.

The road is already mapped out for the businesses with lower turnovers.

Thus, April 2027 will mandate the self-employed with £30,000 plus turnovers.

And the self-employed earning £20,000 plus will follow.