Are you a Sole Trader or Landlord?

Are you a Sole Trader or Landlord?

Mar 12, 2026 | All Categories, Bookkeeping, Making Tax Digital

MTD ITSA Is Coming! Don’t let your Bookkeeping get prickly.

If you’re a sole trader or landlord in the UK still keeping records on paper, you’re not alone.

Spreadsheets, shoeboxes, envelopes full of receipts. The “safe place” that somehow disappears when you need it most.

For years, this system has worked (mostly).

But with Making Tax Digital for Income Tax (MTD ITSA) approaching, paper records and manual bookkeeping will soon become much harder to manage,and potentially non-compliant with HMRC requirements.

The good news? Moving to digital bookkeeping software is far easier than you might think.

And once it’s set up, most people wonder why they didn’t switch sooner.

What’s changing with MTD ITSA?

Making Tax Digital for Income Tax (MTD ITSA) is part of HMRC’s move towards a fully digital tax system.

It means sole traders and landlords must keep digital records and submit quarterly updates to HMRC using compatible software.

Phase 1-  Starting 6 April 2026

You will need to comply with MTD ITSA if:

🌵 Your qualifying income is over £50,000
🌵 This includes sole trader income, UK property income, and overseas property income
🌵 Eligibility is based on your 2024/25 tax return

 Phase 2 – Starting 6 April 2027

You must join if:

🌵 Your qualifying income is over £30,000
🌵 Eligibility will be based on your 2025/26 tax return

Future phase – expected 2028

A further phase is expected from 6 April 2028 for those earning over £20,000.

This means millions of UK sole traders and landlords will soon need digital bookkeeping systems to remain HMRC compliant.

Why digital Bookkeeping makes life easier

Switching to digital bookkeeping software for sole traders and landlords isn’t just about meeting HMRC’s new requirements.

It actually makes running your business simpler, faster and far less stressful.

Here’s why:

1️. Stay Compliant with HMRC

MTD ITSA requires digital record keeping and quarterly tax updates.

Moving to a digital system now avoids last-minute panic and ensures you are fully compliant with HMRC’s Making Tax Digital rules.

2️. Save Hours on Admin

Digital bookkeeping software can automatically track:

  • Income
    • Expenses
    • Invoices
    • Bank transactions

No more adding things up manually or searching for missing paperwork.

3️. Reduce Costly Errors

Manual bookkeeping increases the risk of mistakes.

Digital accounting software helps with automatic calculations, accurate record keeping and reliable reporting.

4️. See your profit in real time

Instead of waiting until the end of the tax year, you can instantly see:

  • Business profit
    • Business expenses
    • Estimated tax liabilities
    • Cash flow

Giving you complete financial visibility throughout the year.

5️. Avoid unexpected Tax bills

On of the biggest benefits of digital bookkeeping is predictability.

Software can estimate your tax throughout the year so you can plan ahead and avoid January tax shocks.

6️. Store receipts safely

No more lost paperwork.

Simply snap and upload receipts digitally, keeping everything securely stored and easily accessible.

No fading.
No disappearing.
No rummaging required.

The bottom line

Moving to digital bookkeeping for MTD ITSA means:

✔ Less admin
✔ Fewer errors
✔ Better financial visibility
✔ Easier HMRC compliance
✔ Less stress at tax time

How Cactus Bookkeeping can help 🌵

At Cactus Bookkeeping, we help UK sole traders and landlords transition from paper records to simple digital bookkeeping systems that meet HMRC’s Making Tax Digital requirements.

We can:

🌵 Set up the right bookkeeping software for your business
🌵 Show you exactly how it works
🌵 Keep everything simple and stress-free
🌵 Provide ongoing bookkeeping support throughout the year

Prefer not to do it yourself?

No problem, we can handle your bookkeeping completely, keeping everything organised and MTD compliant for you.

No jargon.
No overwhelm.
No sharp edges.

Ready to make the switch?

Let’s turn your bookkeeping from paper chaos into a simple digital system that works.

🌵 Get MTD ITSA ready
🌵 Stay HMRC compliant
🌵 Run your business with confidence

Contact Cactus Bookkeeping today and make your bookkeeping smooth, not prickly.

What is Cloud Accounting

What is Cloud Accounting

Jun 27, 2023 | Bookkeeping, Making Tax Digital

What is Cloud Accounting

computer with screens coming out of the screen

Cloud accounting is the perfect solution to manage the bookkeeping for your business. Cloud accounting is software which you can access from anywhere you have an internet connection. Unlike desktop accounting software there’s no downtime as updates occur on a regular basis. You no longer need to worry about those notifications telling you to update now, when you just don’t have the time! By using cloud accounting your finances are always at your fingertips, which makes great business sense as you’re able to make accurate business decisions in good time.

 Cloud accounting has been around since the early 2000’s but has become increasingly more popular due to the easy accessibility. All information which is stored within your cloud accounting software is encrypted which means it’s safe and secure. Most cloud software will ask for two factor authentication which means only you can access it with your login. 

 What are the benefits?

  • Access your accounts any time of day from anywhere you have an internet connection
  • View your data in real time
  • Live bank feeds
  • Paperless recording of expenses with third party integration
  • Integrate and connect with other apps to enhance your experience
  • Multiple user access
  • Automation to save you time
  • MTD compliant
  • Reports and cash flow forecasting
  • Easy reconciliation

 Unlike using old school methods of bookkeeping such as recording your transactions on a spreadsheet, there is less room for human error. This means the information you see is up to date and accurate. Software has evolved so much over the years I’ve been a bookkeeper, but it’s now advancing rapidly meaning we have to keep up with the latest technology available to us to give our clients the best service possible. 

 We would be lost without cloud technology. The introduction of cloud accounting has made a huge difference to how we run our business. Our processes are much more streamlined and efficient, enabling us to help more clients than ever before with their bookkeeping and payroll. 

 

Book a discovery call

ABOUT SUE

Sue Haynes is the founder of Cactus Bookkeeping and helps business owners
with all aspects of Bookkeeping to save them time so they can concentrate on running their
business. Sue is licensed, regulated and supported by the Institute of Certified Bookkeepers (ICB)

Book a discovery call

 

 

 

Are you a VAT registered business not yet signed up to Making Tax Digital (MTD) – Your deadline is 31st October 2022

Are you a VAT registered business not yet signed up to Making Tax Digital (MTD) – Your deadline is 31st October 2022

Aug 26, 2022 | Making Tax Digital, VAT

Are you a VAT registered business not yet signed up to Making Tax Digital (MTD) – Your deadline is 31st October 2022

Photograph of Sue Haynes bookkeeper

 

There is no getting away from it, Marking Tax Digital (MTD) for VAT is fast approaching. All VAT registered businesses, regardless of whether they are under or over the £85,000 threshold, will no longer be able to use their existing VAT online account to file their quarterly or monthly returns after 31𝙨𝙩 𝙊𝙘𝙩𝙤𝙗𝙚𝙧 2022.

 For businesses that file yearly returns, they will no longer be able to use their existing VAT online account after 15𝙩𝙝 𝙈𝙖𝙮 2023.

 By law, if they have not already done so, all VAT-registered business must now sign up to Making Tax Digital (MTD) and use MTD-compatible software to keep their VAT records and file their VAT returns.

 

Using MTD software to keep digital records and file VAT returns

is not enough, you MUST sign up to MTD for VAT before

you file your next return.

  

Not yet signed up for MTD, check out the steps below to become MTD compliant and avoid possible penalties that may be levied 

  • Chose MTD-compatible software that is right for you and your business. Here at Cactus Bookkeeping we use FreeAgent, QuickBooks, Sage and Xero, however HMRC’s website has a huge list of MTD compliant software which can be found at https://bit.ly/MTDCompatibleSoftware

 It’s important to find software that is right for you and your business and if you are in any doubt about which one is right for you, speak to a bookkeeper or accountant who can offer an unbiased view based on you and your business requirements. 

  • Sign up for MTD at https://bit.ly/SignUpForMTD Remember, just using MTD compliant software is not enough, you must sign up for MTD. 

To sign up for MTD you will need the following:

  • your business email address
  • a Government Gateway ID, if you do not have one, you can create this when you use the service
  • your VAT registration number and latest VAT return

You will also need:

  • your National Insurance number if you are a sole trader
  • your company registration number and Unique Taxpayer Reference if you are a limited company or registered society
  • your Unique Taxpayer Reference and the postcode where you are registered for Self-Assessment if you are a general partnership
  • your Unique Taxpayer Reference, the postcode where you are registered for Self-Assessment and your company’s registration number if you are a limited partnership 
  • Keep digital records for your current and future VAT returns. Nothing has changed in this regard, you need to keep paperwork relating to everything you buy and sell (including zero-rated, reduced and VAT exempt items). Also keeping bank statements, cash books, cheque stubs, paying-in slips and till rolls. 

You must keep some VAT records digitally, unless you are MTD exempt, and these can be found at https://bit.ly/DigitalRecordKeeping

  How to apply for an exemption from using software

 If you are already exempt from filing VAT returns online or if your business is subject to an insolvency procedure, you are automatically exempt.

 You can check if you can apply for an exemption at https://bit.ly/ExemptionfromMTD if it is not reasonable or practical for you to use computers, software of the internet. HMRC will consider each application on a case-by-case basis.

 

 If MTD for VAT is filling you with dread, please get in touch for a chat to see how we can help.

 

 

 

Book a discovery call

ABOUT SUE

Sue Haynes is the founder of Cactus Bookkeeping and helps business owners
with all aspects of Bookkeeping to save them time so they can concentrate on running their
business. Sue is licensed, regulated and supported by the Institute of Certified Bookkeepers (ICB)

Book a discovery call

 

 

 

Making Tax Digital (MTD) for VAT- 1st April 2022 deadline

Making Tax Digital (MTD) for VAT- 1st April 2022 deadline

Mar 3, 2022 | All Categories, Making Tax Digital, VAT

Making Tax Digital (MTD) for VAT- 1st April 2022 deadline

There is no hiding from it, MTD for VAT becomes mandatory for all VAT registered businesses from April 2022, even if you are VAT registered but under the £85,00 VAT threshold.  What does this mean for your business?

 

 

  • You will now be required to file your VAT returns directly from the accounting software you use to record your day-to-day transactions.

 

Accounting software can be specific software such as FreeAgent, QuickBooks, Sage or one of the other 549 compatible software providers listed on HMRC website (https://bit.ly/3HwfQve), or, if you use  spreadsheets to calculate your VAT figures, you will need to use bridging software to report these figures to HMRC.

Records you must keep include:

  • your business name, address, and VAT registration number
  • any VAT accounting schemes you use
  • copies of all invoices/credit notes you issue
  • copies of all invoices/credit notes you received (originals or electronic copies)
  • name, address, and VAT number of any self-billing suppliers
  • import and export records
  • records of any items you cannot reclaim VAT on – e.g., business entertainment
  • records of all zero-rated items, reduced or VAT exempt items you buy or sell
  • a VAT account
  • any adjustments you make to a return

 

If you are not already using software, now is a great time to check into this.  Accounting software would be a positive move forward as you have the ability to download bank transaction into the software and attach your documents to the transactions in your software, this means everything is stored in one place.  The software will then calculate your VAT and link direct to HMRC to file the return.

 

If you bank with NatWest, RBS or Mettle business banking, you can use FreeAgent software for free.

 

Please remember your account transactions are only as accurate as the information entered and the knowledge or the person recording the transactions.  If you are unsure of what is required to comply with MTD or require assistance with choosing software, please get in touch and book a discovery call.

Book a discovery call

ABOUT SUE

Sue Haynes is the founder of Cactus Bookkeeping and helps business owners
with all aspects of Bookkeeping to save them time so they can concentrate on running their
business. Sue is licensed, regulated and supported by the Institute of Certified Bookkeepers (ICB)

Book a discovery call