Making Tax Digital for Income Tax (MTD IT): what sole trader Homeopaths should start thinking about now
Making Tax Digital for Income Tax is one of the biggest changes to self-assessment in recent years. For sole trader Homeopaths, it’s a shift affecting how you keep records, how often you report to HMRC, and how much time you spend on admin throughout the year.
Although MTD IT may not apply to everyone just yet, now is the ideal time to start preparing. Those who put good systems in place early will find the transition far less stressful. In practice, this means you’ll no longer rely on a single annual Self-Assessment tax return. Instead, you’ll need to:
- Keep digital records of income and expenses
- Submit quarterly updates to HMRC using compatible software
- Complete an End of Period Statement (EOPS)
- Make a Final Declaration confirming all income
MTD IT doesn’t change how much tax you pay, but it does change how you report it, so up-to-date bookkeeping becomes essential.
Common Mistakes to Avoid
1. Treating bookkeeping as a once-a-year task
Many clients arrive with the habit of updating their records just before the January deadline. Soon this won’t be possible. With quarterly submissions, it’s important to build a simple routine so record-keeping doesn’t become overwhelming.
2. Assuming spreadsheets alone will be enough
Spreadsheets may still be used, but they must be digitally linked to MTD-compatible software. Relying on standalone spreadsheets could lead to non-compliance.
3. Mixing personal and business finances
Imagine a family sock drawer full of unpaired socks! How time-consuming would it be to find your own socks? This analogy is similar to using one bank account for personal and business finances—it makes records messy, increases the risk of errors, and is hugely time-consuming for the business owner, especially when personal transactions are pulled automatically into software.
4. Guessing allowable expense
Clients may not know which expenses to claim or may claim incorrectly. Digital records make errors easier for HMRC to spot.
Examples of Good Practice
Moving to cloud accounting software early
- Software such as QuickBooks Online, Xero, or FreeAgent allows recording of income and expenses in real time, link directly to your bank and are prepared for quarterly reporting. Rebecca helps Homeopaths choose the right software, set systems up correctly, migrate existing records, and ensure compliance with HMRC under MTD IT.
- Keeping records little and often
Spending 10–15 minutes each week reviewing transactions is far easier than trying to reconstruct months of activity at quarter-end. Rebecca provides practical, plain-English training so you know exactly what to do, how often to do it, and how to avoid unnecessary admin.
- Separating business and personal finances
A dedicated bank account makes digital records clearer and saves time. Rebecca helps review your current setup and advises on best practices to work smoothly with bookkeeping software.
- Getting professional support early
Having expert support reduces errors and builds confidence. Rebecca helps to guide you through the transition to MTD IT step by step, building your own skills and confidence for future submissions.
Final Thoughts
MTD IT doesn’t have to be daunting. Rebecca has trained several Homeopaths in compliance and improving their bookkeeping skills. They too advocate starting early and getting the right support. To understand how MTD IT applies to your practice, set up a compliant system, or learn how to keep your bookkeeping simple and stress-free, Rebecca from Red Tag Bookkeeping & Training can help via email info@redtagadmin.co.uk
About Rebecca
After a career in the British Army, Rebecca swapped life in uniform for life in the Highlands, to run an outdoor centre and accommodation business. It was a huge change of pace and one that sparked a whole new direction.
While running that first business, she found herself drawn to creating efficient administrative systems. That interest grew into a skill, and before long, she’d also started a business serving holiday homes, local residents, and businesses across the Cairngorms. Managing the books of both businesses every day gave her a real taste for finance, and in 2020, RedTag Bookkeeping & Admin Services was born.
On discovering XERO cloud accounting software, Rebecca knew she wanted to help other business owners take control of their own accounts and qualified as a bookkeeper with the Association of Accounting Technicians (AAT) and hasn’t looked back since.
Running her bookkeeping business from home helps keep rising costs manageable, and Rebecca admits the constant changes to legislation are a real challenge. Rebecca currently supports self-employed clients through these changes in legislation, such as Making Tax Digital for Income Tax Self Assessment (MTD ITSA) from April 2026. Rebecca has already worked with several Society of Homeopath’s members, taking them through their journey of becoming Making Tax Digital compliant.
Look out for a Making Tax Digital Society workshop with Rebecca later this year!
Material published in this section of the website does not necessarily reflect the opinion of the Society of Homeopaths.
