Despite a lot of delay this is finally happening and is the biggest shake up of the tax system since self assessment was introduced.
The new system will be brought in in stages.
The first stage will be 5th April 2026 and will affect all clients with self-employed Gross turnover and/or rental income of £50,000 or more.
It excludes partnership income at the moment.
This turnover limit will reduce to £30,000 the following year and then eventually £20,000
The turnover is based on the fiscal years turnover of 24/25 and it is your responsibility to sign up. Although you will receive a letter from HMRC stating you are in the scheme.
I therefore feel the best route forward would be to register all applicable clients once I have submitted your 24/25 returns to ensure you are compliant.
Once you are in the scheme you will be required to submit quarterly returns of your income and expenditure in a digital format, the first one being due in July 25 and then quarterly after, so there isn’t much time to prepare. At the moment we do not have requirements of this format and are expecting spreadsheets to be adequate or ideally software such as Quick Books.
I strongly suggest you get used to completing the self-employed spreadsheet I have provided on a monthly basis so that the new returns will not be too arduous when they come round.
Please use the spreadsheet on a cumulative basis so by the time you have submitted your 4th return you have a year’s information which will then be used to prepare your accounts and final tax return. Please note the returns do not replace the annual tax return.
Please let me know of any queries you have, I will try and answer them to the best of my knowledge.