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Article By Coconut

Making Tax Digital for Income Tax – you’ve heard of it, right? You know how it will impact you, when it’s being introduced and how it will change things? You may even have received a letter from HMRC telling you about it. None of that rings any bells?

Well, although the clock is ticking and the first phase of the introduction of MTD for Income Tax isn’t too far off now, there’s still more than enough time to get ready. And the sooner you do that, the better placed you’ll be to limit the impact of the significant changes that MTD for Income Tax will bring. So, what six steps should you take?  

1) Find out when MTD for Income Tax will affect you

• Sole traders/landlords with a gross trading/rental income of £50,000+ must comply with MTD for Income Tax requirements from 6 April 2026.

• Gross trading/rental income means all trading/rental income before any tax expenses (ie associated costs) are deducted.

• Sole traders and landlords with a gross trading/rental income of £30,000-£50,000 will be next affected, from 6 April 2027. Then those with a gross trading/rental income of £20,000-£30,000 must comply from 6 April 2028.

• Those with annual gross trading/property income of £20,000 or less are not currently in the scope of MTD and HMRC has not yet announced when they will be.

• If necessary, work out your gross trading/rental income, so that you’re clear about when MTD for Income Tax will affect you.

2) Find out about new MTD for Income Tax recording and reporting requirements

• When you are affected by MTD for Income Tax, you’ll need to keep accurate digital accounting records, which you’ll need to update fully at least every quarter. That means ensuring that all income and tax expenses are recorded in digital records (ie accounting software).

• You will not be able to keep paper accounting records, you will either have to use MTD for Income Tax-compliant accounting software or “bridging software”, which will enable you to report figures to HMRC if you would prefer to use spreadsheets to keep your sole trader or landlord financial records.

• Under MTD, you’ll need to digitally report your income and expenses to HMRC every quarter. If you get MTD-compatible accounting software, this will be very easy, but you’ll need to ensure that your records are accurate and updated regularly.

• After you send your fourth quarterly summary to HMRC via the software, final adjustments can be made and your updated tax bill estimate will be shown. If you receive other taxable income and have other tax expenses, you will need to provide HMRC with summaries of these.

• A final annual declaration can then be made via the MTD-compliant software, confirming that the figures you’ve provided previously are accurate. HMRC will then give you a final tax bill for the year.

3) Learn the quarterly reporting deadlines

Basically, you have a month after the quarterly period end date to send your quarterly update digitally. Corrections and adjustments to previous updates can be made in your next update.

• Quarterly update 1: 6 April to 5 July – Filing deadline: 7 August

• Quarterly update 2: 6 April to 5 October – Filing deadline: 7 November

• Quarterly update 3: 6 April to 5 January – Filing deadline: 7 February

• Quarterly update 4: 6 April to 5 April – Filing deadline: 7 May

4. Choose MTD-compatible accounting software

• To comply with MTD for Income Tax quarterly digital reporting requirements you’re going to need the right accounting software.

• HMRC is not making available its own MTD for Income Tax software, but the HMRC pages of the government’s GOV.UK website provides guidance on choosing MTD-compliant software, as well as some third-party MTD-compliant software options that are already available.

• While some software will be able to report all taxable income sources, others may be suitable for only one (eg rental income). If you need to report different types of taxable income, for example, if you’re a sole trader who also earns income from renting out property, you need to make sure that your software can report all taxable income digitally to HMRC.

• If you’re already using accounting software, find out from your software provider whether it is fully MTD for Income Tax compliant. You should also check with the software provider that your chosen product suits your specific needs.

5) Get used to regularly using your accounting software

• You don’t have to become an accounting software expert, you just need some basic knowledge that enables you to make sure that your income and expenses are regularly entered into your digital records. Accounting software is remarkably easy to use and benefit from.

• It’s really simple and quick to connect your business bank account to your accounting software, so that your income is automatically entered. It’s less straightforward if you use your personal bank account for sole trader or landlord income/expenses (the solution is to open a separate business bank account). Ditto if you accept cash payments or use cash to buy things for your business (using a card for all purchases gets you around this).

• If you’re still using paper records, make the transition now, so you have enough time to learn the ropes, which shouldn’t take very long. Software providers and accountants normally provide onboard training.

• Set aside time, whether each week or fortnight, to fully update your accounting software. Make this a habit. Stay on top of your figures, especially your expenses. Some accounting software allows you to use your phone to snap and store sales receipts for purchases. This will make quarterly reporting much easier.       

6) Talk to an accountant or bookkeeper

• They should be able to advise you on how to limit the impact of MTD for Income Tax. If you use an accountant regularly anyway, they’re likely to ensure that the software they get you to use is fully MTD for Income Tax-compliant. They’re also likely to provide some basic guidance on how to use it. Support from a good accountant or bookkeeper should make MTD compliance much simpler. 

• The whole point of Making Tax Digital is to make your life easier when it comes to managing your tax affairs, not more difficult. If you get the right accounting software solution, it should take care of much of the hard work for you. There really isn’t too much to worry about.  

About Coconut

Coconut is the easy way to sort your finances without the headache.

Built with sole traders in mind, it helps you track income, log expenses, and keep on top of your taxes – without piles of paperwork or confusing spreadsheets. Whether you’re on site or on the move, Coconut makes it simple to know what you’re earning, what you’re owed, and how much tax you need to set aside. Less faff, more graft.

Get started with Coconut today and take a 30 day free trial.

See just how easy it is here!

Remote work isn’t just a passing trend — it’s a fundamental shift in how businesses operate. As more start-ups and entrepreneurs move away from traditional office spaces, virtual offices have emerged as a smart, cost-effective solution. They provide the professional image and infrastructure of a physical location without the high costs.

But staying productive while working from home takes more than just a business address. It requires clear strategies, structured routines, and disciplined habits. In this blog, we share five practical tips to help you stay focused and efficient while leveraging the unique advantages of a virtual office setup.

1. Create a Designated Workspace

Just as a virtual office separates your business identity from your home address, it’s essential to create a clear physical boundary between work and personal life. Set up a dedicated workspace that is quiet, organised, and free from distractions. Even if space is limited, having a specific area to work in can boost your focus and mentally prepare you for the day ahead.

2. Stick to a Structured Routine

Consistency is key when it comes to productivity. Establish clear start and finish times to create healthy boundaries that organise your workday and help you fully disconnect when the day ends. A well-defined routine adds structure to your workflow, making it easier to manage tasks and stay motivated throughout the day.

3. Streamline Your Day with Administrative Support

Everyday administrative tasks can take up more time than you realise, pulling your attention away from core business activities. A virtual office takes care of essential duties like mail handling and call answering, freeing you to focus on what truly matters. At MYCO, our seamless services ensure your calls and correspondence are professionally managed and organised. Plus, with free mail scanning included in all packages, you’ll never miss an important document, giving you peace of mind throughout your workday.

4. Take Strategic Breaks

Long hours at your desk can drain your energy and focus. Taking short, regular breaks, even just a few minutes away from your workspace, can help clear your mind, reduce stress, and boost creativity. These moments of rest keep you refreshed and better equipped to tackle your tasks throughout the day.

5. Stay Connected

Remote work can limit face-to-face interactions, so it’s important to proactively maintain your professional relationships. With MYCO, you can easily book meeting rooms at any of our prestigious locations, perfect for in-person meetings, collaborative sessions, and business gatherings.

As your business grows, staying connected becomes even more important. Access to professional facilities through your virtual office makes it easier to foster strong relationships — no matter where you’re working from.

Final Thoughts

Working from home provides start-ups with valuable flexibility and cost savings, but true success in a remote environment relies on clear routines and dependable professional support. A virtual office bridges this gap by offering credibility along with essential administrative services.

At MYCO, our virtual office solutions are designed to help UK startups establish a professional business presence — wherever they operate from.

Discover our flexible plans today and strengthen your remote operations with confidence.

Article by GoSimpleTax

Being your own boss can bring many rewards. You can earn more money, work where, when and how you want and have far greater flexibility. It can also enable you to escape a job you hate, maybe move to a new location or even earn a living from doing something completely different.

However, becoming a sole trader can bring a range of specific challenges, some you may not have encountered as an employee. So, what challenges can you face as a sole trader and how do you tackle them?  

1. Unpredictable income

This can come as quite a shock when you’ve been used to a regular set monthly salary. Things sometimes aren’t as predictable when you work for yourself. Although there can be good or very good months, there can be bad ones, too.

Solution: You have to “make hay while the sun shines”. Maximising your sole trader earnings when possible can enable you to put away money to pay yourself during lean months. Where income dips are seasonal, try to think of ways to diversify your offer or maybe even start another different business that will give you an income at that time.      

2. Late payment

This remains a big problem for many small businesses. Late payment is thought to affect 52% of UK SMEs and as well as significant cash flow pressure, small-business owners have to waste time chasing money they’re owed for goods or services provided.    

Solution: You don’t have to grant credit to new customers straight away. You could grant it after, say, six months once the privilege is earned. Don’t be too generous with your credit terms. Make sure your invoice details are correct before sending and use online invoicing solutions with payment reminders. Consider affordable small early-payment discounts.

Did you know? By law you can claim interest (8% plus the Bank of England base rate) on late commercial/B2B payments, plus, debt recovery costs.

3. Rising costs

All sole traders have had to deal with significant price rises in recent years, which have had major cash flow consequences, making many businesses much less profitable.

Solution: Try to negotiate better deals with existing suppliers or ask them how you could save money. Alternatively, consider other suppliers, but remain focused on value rather than just price. A cheaper supplier may give you an inferior product or poor customer service. Regularly assess your outgoings and eliminate all waste. If you don’t need it – don’t buy it. Don’t rule out increasing your own prices.    

4. Cash flow pressures

Managing your cash flow must always be a top priority. Run out of cash and it’s game over, unless you can borrow from elsewhere. Successful cash flow management isn’t just about spending less than you earn. It’s also about making sure that you get paid on time, because delays can prove fatal.  

Solution: Keep a constant eye on your cash flow. Don’t spend more than you earn; minimise your costs, while maximising your prices. Don’t be too generous with your credit terms, but seek generous credit terms from your suppliers. Get your invoices sent as soon as possible and chase them when overdue. Remain friendly but firm, but remember – it’s your money.       

5. Workload/long hours

Running a successful sole trader business usually means having to “wear many hats” as you manage all/most aspects of the business, work harder and longer, certainly in the early years when you’re trying to establish your business. This can impact your work-life balance, while working long, hard hours can increase your risk of burn out. 

Solution: Make the most of the time- and effort-saving software/apps. Set sensible working hours and stick to them. Work smarter, not longer. Take breaks, because it can make you more productive. Budget permitting, consider outsourcing some tasks. It will also free up some of your time. Don’t allow yourself to be distracted by your phone, emails or social media. At the end of your working day, switch off and find ways to relax.    

6. Attracting more customers

It can be easy to get caught up in keeping your current customers happy that you don’t devote enough energy to attracting new customers, which is ill advised. Almost inevitably, you’ll lose some, often through no fault of your own. And your business won’t grow unless you attract enough new customers.

Solution: Make marketing a key priority. Develop a marketing plan for your business, detailing your target customers/clients and explaining how you will attract and sell to them, so that you’ll achieve specific marketing goals. Always be selling and marketing. Budget permitting, seek expert advice on how best to market your business.       

7. Safeguarding your health

You need to protect your physical and mental health, which can both suffer if you’re not careful. Running your own business can be tough and all-consuming, but never neglect your health. And don’t allow yourself to become isolated, because it can impact your mental health.

Solution: Start and finish your working day at consistent times. Excessive work hours should be the exception, not the rule. Have set times for breaks and lunch. Eat healthily, don’t skip meals and avoid sugary drinks and too much caffeine. Drink plenty of water. Make time in your day for exercise, even if that means just going for a walk. Be sure to relax, enjoy a hobby and spend quality time with your loved ones. Aim for eight hours of quality sleep each night. Build a support network of mentors, advisors and other business owners. If you’re worried about your mental health – seek support.

8. Tax compliance

Your tax knowledge is likely to be very limited if you’re new to self-employment. Truth is, you don’t need to become a tax expert, you just need to know what you need to know.

Solution: Do some reading so that you at least know some essential tax basics. Seek knowledge from trusted sources (government website GOV.UK is a good place to start). Using good software, for example, tax return-filing software, can also help with tax compliance. Budget permitting, an experienced accountant will help to ensure that your sole trader business is tax compliant.

Did you know? From April 2026, because of “Making Tax Digital for Income Tax”, many sole traders will need to maintain digital records of their income and expenses and report them digitally each quarter to HMRC.

About GoSimpleTax

Income, Expenses and tax submission all in one.

GoSimpleTax will provide you with tips that could save you money on allowances and expenses you might have missed.

The software submits directly to HMRC and is the solution for freelancers, the self-employed, sole traders and anyone with income outside of PAYE to file their self-assessment giving hints and tips on savings along the way.

Get started with GoSimpleTax today, it’s free to try.