Q: I’m self-employed and I earn around £52,000 – £55,000 per year. My record keeping is partly traditional and paper-based. I’ve been reading recently about the upcoming requirements for digital record keeping. What should I be doing about this now as we move into 2024?
A: You’re correct to say that there is a shift underway, driven by HMRC, to require all businesses, and self-employed people to keep digital records. It’s called Making Tax Digital. This initiative has been running for some years now, but it’s been gradually phased in, step by step. The Government has pushed back the date that someone such as yourself would need to comply. Self-employed individuals (and also landlords) with an income of more than £50,000 will be required from April 2026 to keep digital records and provide quarterly updates on their income and expenditure to HMRC through MTD-compatible software.
So, you’ve got some time yet. But, having said that, there are a number of benefits of moving to be fully digital sooner. By keeping digital records (including invoices, expenses, receipts and other information) you get an up-to-date picture about how your business is doing – how much is coming in and out right now, rather than doing it historically.
In fact, going digital can help unlock the full potential of your business, empowering your decisions, helping your business grow and become more efficient too. Digital financial records can become a catalyst for informed decision-making, propelling your profits and efficiency. So, it’s well worth considering making the move to digital before it’s compulsory.