Making Tax Digital for income tax

Nasir RasheedNexus Tax & Accounting · Milton Keynes · MAAT AATQB
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Four updates a year will not lower your tax bill. The question is whether you should still be a sole trader.

Nasir Rasheed, Director

Making Tax Digital for income tax: Nasir Rasheed, Nexus Tax and Accounting Solutions

Making Tax Digital for income tax: what changes for sole traders and what to decide

Making Tax Digital for income tax replaces one annual return with quarterly updates to HMRC. For sole traders over the threshold it changes the admin. It can also change whether trading as a sole trader still makes sense at all.

Most people hear about MTD and start shopping for software. The owners I speak to have a different problem: a tax bill that grows every year and nobody showing them the numbers on incorporation. Quarterly filing is the deadline that forces that conversation.

Nexus Tax and Accounting Solutions is a Milton Keynes accountancy practice run by Nasir Rasheed MAAT AATQB. It prepares sole traders over the Making Tax Digital for income tax threshold for quarterly reporting, and compares the sole trader and limited company positions on their own figures. One monthly fee, advice included.

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  • Nasir Rasheed MAAT AATQB
  • Established 2024
  • Three new clients a month
  • Milton Keynes · UK-wide remote

What you get with Nexus

01

Quarterly updates filed without you chasing them

Records are kept to a routine, so each update goes in from books that already reconcile.

02

The sole trader and limited company numbers side by side

You see what you would take home either way on your own figures, before you commit to anything.

03

Your tax bill known before it lands

The position is forecast ahead of the payment date, so the money is there and the decision is yours.

What quarterly reporting exposes in a sole trader’s set-up

MTD does not create these problems. It just makes them impossible to leave until January.

  • Tax bill

    “My tax bill has gone up every year with my turnover, and I still only find out the number in January.”

    Nothing was ever set aside in time. Every payment on account became a cash flow event instead of a plan.

  • Incorporate

    “Two people told me I should have gone limited years ago, but nobody ever sat down and showed me the numbers.”

    A year of profit taxed the expensive way while the decision waited for evidence that never arrived.

  • VAT

    “I registered for VAT when I crossed the threshold and I have been on the standard scheme ever since.”

    The scheme was picked by default, not by looking at what the business actually spends money on.

  • Day 90

    What changes once the advice is in the room

    You find out whether MTD applies to you and from when, in writing. You see the sole trader and limited company comparison on your own figures, not a rule of thumb. And you get your tax position before the payment date rather than after it.

Quick check · no email

If your accountant cannot tell you when Making Tax Digital applies to you, what your tax bill will be before it lands, and reply this week, you have the wrong accountant

Three questions about your current accountant. Answer them honestly and the picture is clear.

Question 1 of 3

Could they tell you this week whether Making Tax Digital for income tax applies to you, and from when?

Staying as you are, or incorporating: what each one looks like under MTD

Both are legitimate positions. The right one depends on your profit, your costs and how much you draw.

Staying a sole trader

Quarterly updates to HMRC plus a final declaration each year.

All profit taxed as your income, whether you draw it or not.

Simpler filing overall, with no company accounts to prepare.

Records have to be digital and current four times a year.

Trading as a limited company

Company profits reported through annual accounts and corporation tax.

Pay taken as a planned mix of salary and dividends.

More to file, including a confirmation statement and your own return.

Usually the better position once profits are consistently high.

Eight questions about your own set-up

Answer these before you buy software or change anything.

  • 01

    Do you know whether Making Tax Digital for income tax applies to you yet?

    If the answer is no, that is the first thing to settle.

  • 02

    Are your records kept digitally and updated at least monthly?

    Quarterly updates only work if the books are already current.

  • 03

    Do you know your next tax bill before the payment date?

    If not, every January is a cash flow problem.

  • 04

    Has anyone compared your take-home as a sole trader and as a limited company?

    On your figures, not on a general rule.

  • 05

    If you are VAT registered, was the scheme chosen for your actual costs?

    Most are chosen by default and never looked at again.

  • 06

    Do you set money aside for tax every month?

    A fixed percentage beats a year-end scramble.

  • 07

    Do you know what incorporating would do to your contracts and invoicing?

    Contracts, bank and insurance all need to follow the change.

  • 08

    Do you get a reply from your accountant within a week?

    If not, the rest of this list will stay unanswered.

What Nexus handles for sole traders over the threshold

Three pieces of work, all in one monthly fee.

Quarterly

Digital records and quarterly updates

Bookkeeping kept to a routine and each update filed on time from books that reconcile.

Incorporate

The sole trader versus limited comparison

Formation and handover handled if the numbers say move, and an honest answer if they do not.

Tax

Self assessment and the forecast that comes first

Your return prepared as part of the routine, with the bill flagged before the payment date.

All Services →

Entry 01

Who is actually doing the work

One accountant, named, with a qualification you can check.

FigureMAAT AATQBa member of the Association of Accounting Technicians
Found by
Result
AlsoNexus takes three new clients a month, so you deal with Nasir rather than a rotation of account managers.
Entry 02
Found by
Result

Clients described by type. Names withheld.

What clients say

More verified Google reviews appear here as they land.
Every card links to the review on Google.

What the first ninety days look like

The order matters: the structure decision comes before the software decision.

Before day one

You see the incorporation numbers first

Sole trader and limited company compared on your figures, with a VAT scheme recommendation and a pay plan.

Day 30

Your records are digital and current

Bookkeeping and software get a routine that satisfies the quarterly requirement without you doing it twice.

Day 60

The first update goes in from books that reconcile

Nasir files it, checks it against the year to date and tells you what the year is tracking towards.

Day 90

You know the tax bill before the payment date

The position is forecast ahead, so you set money aside on a plan instead of reacting to a demand.

Who this is not for

Sole traders turning over less than £150,000, where the fee outweighs the benefit.

Businesses in their first year or two that are still finding their shape.

Property-only landlords and cash businesses.

Owners buying on price alone, who want filing done and nothing said.

If you are close to the line and unsure, the incorporation review will tell you either way.

Questions sole traders ask about MTD

What does the monthly fee include?

One monthly fee covers what the business has to file and the advice around it: bookkeeping, VAT returns and a scheme review, payroll where there are staff, year-end figures and your self assessment or corporation tax. Proactive planning is included on a fair-use basis rather than billed by the hour. The fee is scoped after Nasir has reviewed your set-up.

We already have an accountant, is it worth switching?

Only if something is missing. If yours can tell you when Making Tax Digital for income tax applies to you, what your tax bill will be before the payment date, and reply within the week, stay where you are. If not, the incorporation review will show you what that gap is costing you each year.

Do I have to change software for Making Tax Digital for income tax?

Not always. The rules require digital records and compatible software, so the real test is whether what you use now qualifies and whether it is actually kept up to date. If it does the job, we keep it. If it does not, Nasir tells you what to move to and why before anything changes.

What happens with my current accountant?

Nexus handles the handover. Professional clearance is requested, your records are collected and the previous firm is dealt with, so you are not chasing them yourself. There is no separate charge for it. You tell them you are moving, and your first-year timetable is set while the rest runs in the background.

Does Making Tax Digital for income tax mean I pay tax quarterly?

No. The quarterly updates are reports of income and expenses, not payments. Your tax is still worked out after the final declaration at the end of the tax year, and the payment dates do not change because of the updates. What changes is that your records have to be current four times a year instead of once.

Should I go limited because of MTD?

Not on its own. Quarterly reporting is an admin change, but it is a sensible moment to check the structure underneath it. For sole traders turning over £150,000 or more, incorporation is often the obvious move, and the review puts sole trader and limited company side by side on your own figures before you decide.