Sole trader and a landlord: how Making Tax Digital handles both

Text version of this video

1. The short answer

   If you're a sole trader and a landlord, Making Tax Digital for Income Tax covers both. Your self-employment and property income are added together to decide whether you need to use it. Then each business gets its own records and its own quarterly updates, and one tax return covers the year.

2. Both count towards the threshold

   Qualifying income is your total income from self-employment and property, before expenses. HMRC's own example: £25,000 of rent, plus £27,000 of self-employment income, is £52,000. That's over the threshold of £50,000, even though neither is on its own.

3. Separate quarterly updates

   You send quarterly updates every three months for each self-employment and property business you have. So a sole trader with rental property sends one update for the trade, and one for the property, for each period, with the same deadlines.

4. How records are grouped

   Each sole trader business keeps separate records. All your UK properties are treated as one UK property business, so you don't need separate records for each property. Your foreign properties are one foreign property business too, though each foreign property keeps its own records.

5. Software, and the tax return

   Your software needs to support all your income sources. You can use one product, or a separate product for each business, but only one product for each submission. At the end of the year, one tax return covers everything, by 31 January.

6. EasyTaxer is recognised by HMRC for Making Tax Digital for Income Tax. You'll find it at easytaxer.com.