The government is pushing ahead with its plans for Making Tax Digital (MTD) for Income Tax, which will soon affect self-employed individuals and landlords. From April 2026, if you earn over £50,000 from self-employment or property income, you'll need to follow new rules. And from April 2027, the threshold drops to £30,000, and then to £20,000 from April 2028.

"So what does that mean in practice?"

You'll be expected to submit a summary of your business income and expenses to HMRC every quarter, using MTD compatible software. That's in addition to a final year-end statement and your usual tax return. You can read a more in-depth look at the new rules for MTD for Income Tax in our blog, "4 Critical MTD Facts for Income Tax and the self-employed."

It's a big shift from how many sole traders and landlords currently manage their finances. And it puts the spotlight firmly on the importance of keeping good, up-to-date records.

Why is accurate and timely bookkeeping essential?

Timely bookkeeping will be crucial under MTD for Income Tax because it ensures:

1. Quarterly submissions are likely to be accurate – You'll need to send HMRC a summary of your income and expenses every three months. If your records aren't up to date, the figures you submit may be wrong, which could lead to your tax calculation being incorrect and the potential for you to be paying too much tax.
2. You don't incur penalties from HMRC - If you fail to submit income and expense information on time, you could also receive late filing penalties from HMRC. These penalties can mount up quickly if they are not paid.
3. Less stress and admin burden – Leaving everything to the last minute (i.e. in January!) creates additional pressure you could do without. Quarterly bookkeeping spreads the workload and makes meeting HMRC's deadlines far easier.

However, timely bookkeeping goes further than MTD for Income Tax compliance; it can also boost your business by:

• Better decision-making – With accurate, up-to-date figures, you'll be able to see how your business is performing in real time, rather than guessing or waiting until the year-end.

• Avoiding cash flow surprises – Regular bookkeeping helps you stay on top of who owes you money so that you can chase them promptly. You can also see what's due to go out, so you can plan properly and avoid nasty surprises.

• Tax planning – By knowing your profits as the year progresses, you can plan ahead for tax bills, putting money aside throughout the year, but also giving yourself sufficient time to implement any tax planning measures which would help to reduce your tax bill.

Common bookkeeping mistakes and how to avoid them

Good bookkeeping isn't just about ticking a box to comply with MTD. As we've identified above, it's about ensuring you've the correct information to make informed decisions and run a more profitable business. But if you're a sole trader or landlord, juggling everything yourself, it's easy to slip into bad habits.

Here are the most common bookkeeping mistakes we see at JRMA – and how to steer clear of them:

Losing track of receipts

Receipts stuffed in glove boxes, pockets, or lost entirely. Sound familiar? If you can't prove your expenses, HMRC may disallow them – and you could end up paying more tax than you need to.

How to fix it: Use a digital system to snap and store receipts as you go. Many cloud accounting apps have this built in.

Mixing business and personal finances

It's tempting to use a single bank account for everything, especially when you're just starting out. But it makes bookkeeping more complicated and increases the risk of errors.

How to fix it: Open a separate bank account for your business. It makes life easier when tracking income, claiming expenses and preparing your accounts.

Delaying your bookkeeping

Putting off your bookkeeping until the end of the year can lead to missing data, errors, and a last-minute panic when it's time to submit your tax return.

How to fix it: Set aside regular time each week to update your records. Better still, consider outsourcing it altogether to free up your time and reduce the stress.

Not reconciling your bank statements

If you don't check your books against your bank statements, it's easy to miss payments, duplicate entries, or potentially not spot fraudulent activities.

How to fix it: Use software that automates bank feeds and reconciliations or ask a professional bookkeeper to do this for you.

How JRMA can help

At JRMA, we work with self-employed individuals and landlords across Droitwich and the surrounding area to take the hassle out of day-to-day bookkeeping.

We'll ensure your records are always up to date, your figures are accurate, and your quarterly submissions to HMRC are submitted on time. We use MTD compatible software and can provide training, support, or take care of it all for you.

With JRMA, you're not just staying compliant. You're gaining control, insight, and peace of mind.

Find out more about how our bookkeeping service can help your business.

Get in touch with JRMA today to see how we can support your bookkeeping needs. Let's make your finances work smarter – not harder.