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MTD self employment and rental income

do you need two sets of software?

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I have clients who are self employed in business and also have rental income.  Do they have to buy two sets of software to submit the information to hmrc or can they just use one.  The cost of paying for two will be high in relation to income

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By Paul Crowley
18th Oct 2021 11:00

That is also the nub for at least 50 clients
My understanding is 2 reports. Likely to confuse if the rent is joint with a person not self-employed
Bank feeds would probably get confused

We had a bookkeeper client who tried it on ordinary Sage. the reports were totally confused and useless
It was quicker to start all over

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By johnhemming
18th Oct 2021 11:10

This depends upon whether or not the software provider can handle both sorts of returns.

If you look at currently available software
https://www.gov.uk/guidance/find-software-thats-compatible-with-making-t...

All but one of the providers do both self-employment and property. Two providers offer a free option for both self-employment and property.

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Replying to johnhemming:
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By Hugo Fair
18th Oct 2021 11:27

Off topic I know, John, but do you happen to know what the plan is for all of us who currently are completing a SATR annually - but happen to have neither rental nor self-employment income?

The reason for the SATR is partly the historical 'company director' justification by HMRC, but also because of the lack of tax-deducted-at-source from interest and public company dividends etc.
Logically there's no need for MTD (as HMRC already receive the PAYE details from employers and pension schemes and are notified by banks, etc of the rest) ... but a lot of that data is often still missing (and some of it is incorrect) when the SATR is initially pre-populated during the on-line submission process.

So I presume the SATR is remaining in place - in which case what is the logic for it being "replaced by MTD" for some taxpayers but not for others?

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Replying to Hugo Fair:
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By SXGuy
18th Oct 2021 12:14

Logic? Don't bring logic in to it or heads at hmrc will scratch.

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Replying to Hugo Fair:
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By johnhemming
18th Oct 2021 14:52

I am not entirely certain on this, but I think there will be some web pages into which people can type their data. Hence the option will exist either to use MTD software or some government gateway pages.

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By ireallyshouldknowthisbut
18th Oct 2021 12:40

Spreadsheets are digital.

I imagine there will be plugins

Remember the Q filing is just "showing your have done your homework". The data filed does not form any part of the return for tax purposes its a completely separate file.

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By richard thomas
18th Oct 2021 22:57

Schedule A1 TMA says at paragraph 6:

“In this Part of this Schedule [record keeping and reporting for MTD] “business”—

(a) in relation to a person to whom this Schedule applies … means the activity by virtue of which this Schedule applies to the person (and if more than one, means each of them) …”

The activities mentioned are a trade (including a profession or vocation) and a property business. So if you have both, then it is two of each of the reports. John Hemming has answered in relation to the software. The implication of the law on record-keeping (paragraph 11) is that there must be two sets of records in this situation.

As to Hugo’s OT question, the plan for those who have neither trade nor property business is “business as usual” – filing a return and self-assessment. Reports of the death of the tax return were premature – as soon as George Osborne (who announced it) went, Parliament passed Finance (No 2) Act 2017 which keeps all the old machinery (see Schedule 14) and grafts on some MTD stuff particularly in section 8 TMA. As far as I can see except for the EOPS for the MTD businesses everything else can be done in the normal way.

I think John Hemming is wrong in his post of 14:52. The option will be for those within MTD to file their non-business details through the MTD software (paragraph 9 Schedule A1 and regulation 3(2) of the MTD Regulations).

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Replying to richard thomas:
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By Hugo Fair
19th Oct 2021 00:14

Thanks for confirming that, as I suspected, the SATR is remaining in place for any taxpayer (for whom a notice has been issued) who is neither deriving revenue from a trade (including a profession or vocation) nor a property business.

As you say, reports of the death of the tax return (as with so many of Osborne's soundbites) were both premature and frankly misleading - as with many similar claims made regarding the planned impact of RTI.

But it does throw into sharp relief the sectors in which HMRC are interested in to an almost unnatural degree. It is quite possible they have further targets in mind downstream - but, if so, the lack of a cohesive plan (and technical architecture) is virtually guaranteeing that they won't get to an end-point for all IT returns (let alone CGT etc). It's like trialling e-scooters in existing cycle lanes and using that as the basis for a national infrastructure plan to replace motorways, lorries, etc.

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Replying to richard thomas:
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By johnhemming
19th Oct 2021 08:12

I am going by information imparted orally at a meeting of HMRC and software developers for which there has been no written confirmation.

Hence I am a bit more hesitant when I report this. However, I do understand that there is a proposal to have a web interface into some of the MTD data elements obviously those that don't require digital links.

I have written all of the endpoints, but I think some of my competitors are finding this a bit of a challenge. Hence HMRC have looked at an alternative approach.

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Replying to johnhemming:
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By richard thomas
19th Oct 2021 09:45

John

I think the development you are referring to (and you gave a very helpful link to HMRC's developer pages in another thread) is for MTD taxpayers, while the OP asked about non-MTD taxpayers.

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Replying to richard thomas:
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By johnhemming
19th Oct 2021 09:57

The OP of this thread is entitled "MTD self employment and rental income"

I read that as being related to MTD.

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Replying to johnhemming:
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By Hugo Fair
19th Oct 2021 14:58

Well actually, I'm at fault here (for hijacking the thread to ask a parallel question about the impact on SA for a non-MTD taxpayer on 18th Oct 2021 at 11:27)
... which you kindly answered - before Richard then disagreed with your response (whilst accidently 'converting' me into being the OP)!
So apologies for spreading (unintended) confusion.

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By bernard michael
19th Oct 2021 09:54

At this point in time who knows ?? Whatever the situation is now it'll probably change by 2024 or which year HMRC will eventually pick as the start point

Unless that is you volunteer to be part of the current MTD flock. But why would you do that??

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Replying to bernard michael:
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By johnhemming
19th Oct 2021 10:08

I continue to be of the view that for a tax agent having a single client go through the pilot scheme is a useful way of learning exactly how things work.

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Replying to johnhemming:
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By bernard michael
19th Oct 2021 10:11

johnhemming wrote:

I continue to be of the view that for a tax agent having a single client go through the pilot scheme is a useful way of learning exactly how things work.

Or more likely don't work

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Replying to bernard michael:
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By johnhemming
19th Oct 2021 10:14

I have been able to get it to work.

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