Making Tax Digital - Sole Trader and Rental Income

Thanks for reaching out with your question regarding Making Tax Digital (MTD) for Income Tax for individuals with both sole trader and rental income in QuickBooks Online(QBO), Maw. I'll explain how this works and address the subscription requirements.

Under Making Tax Digital (MTD) for Income Tax, HMRC treats income from sole traders and rental income as distinct business entities. As a result, you are to submit separate quarterly reports to HMRC for each source of income: one report for your sole trader business and another for your rental income.

Because each business entity requires its own accounting records and company file, you cannot submit both income streams under a single QuickBooks subscription. Therefore, you will need two QuickBooks subscriptions one for your sole trader business and one for your rental income to prepare and submit the required MTD reports correctly.

QuickBooks helps you prepare the digital records and reports required for MTD. However, the actual submission of quarterly updates and final declarations is done through HMRC’s digital portal or compatible software interfaces. QuickBooks itself doesn't submit reports directly to HMRC.

For more details about MTD for income tax in QuickBooks, refer to this guide: Making Tax Digital for Income Tax: a useful guide.

Lastly, you can browse this resource for guidance on preparing your Self-Assessment tax return: Self Assessment for Income Tax: Checklist for QuickBooks.

Please let us know if you have any other questions about managing MTD for Income Tax with both sole trader and rental income in QuickBooks. We're here to provide the help you need to ensure all your queries are addressed accordingly.