Northamptonshire, England, United Kingdom, November 27, 2023 – Cloud accounting software has changed the financial realm for entrepreneurs, including the self-employed, by simplifying saving and analysing financial data. You must maintain records to prepare your Self-assessment tax return as a self-employed person correctly. Although you don’t have to provide your records with the tax return, you will need them to determine if you made a profit or a loss. You may be required to remit interest and penalties if your calculations are off and you don’t pay enough tax. Additionally, you must be able to produce your records upon request since HMRC may check them to make sure you are paying the correct amount.

The essential records to keep

In the UK, the self-employed must maintain records of:

• Every business expense
• Every revenue and sale
• VAT records if you are a VAT-registered business
• PAYE records if you have employees
• Information on one’s earnings
• Any grants you’ve requested, including government grants.

Ensure your records are accurate and maintain documentation, including stock and purchase receipts, till rolls, sales invoices, bank statements, and bank slips.

Digitalizing taxes and maintaining records

Starting in 2026, Making Tax Digital (MTD) for Income Tax Self Assessment will require self-employed people to track all their business income and expenses and file their tax returns electronically. The effect of MTD is that you will have to digitally update your business records and send the data to HMRC quarterly.

You’ve already made progress if you keep records current using a digital system, which is achievable with the help of digital tax accountants. This will be a significant adjustment if your current setup is manual.

The goal of Making Tax Digital is to streamline the tax code. It should speed up and simplify your business administration, increase precision, enhance data security, and make working with clients and customers easier.

You must adhere to the MTD to comply with income tax regulations from:

• 6 April 2026 if you earn more than £50,000 yearly from a business or rental property.
• 6 April 2027 if you earn more than £30,000 from a business or a property each year.

To comply with the criteria, you’ll need software integrating with MTD for Income Tax. The program has to let you:

• Check the end-of-period statements.
• Make digital copies of each business transaction and store them
• Send updates of your overall revenue and costs quarterly.
• Use your suitable program to make your final declaration.
• You must maintain different records and submit independent entries for each business you operate, such as if you are a builder and a landlord.

You’ll be able to view your average tax bill in your program following the submission of an update. You can send updates or changes more often, for instance, if you want to know how a sizable business expense or receipt will affect your anticipated tax liability.

Final thoughts

More and more independent contractors are adopting cloud accounting software that stores data on distant servers. These enable fast access to your financial records from anywhere, around the clock. It can provide more immediate information regarding your sales, revenue, cash position, and other critical financial metrics.

Contact Info:

Name:  Dexter Stevens

Email:  info@thenumbersmith.co.uk

Organization:  The Numbersmith

Phone: 01604 345865

Website: https://www.thenumbersmith.co.uk/

Address: 10 Cheyne Walk, Northampton, NN1 5PT