How to do Making Tax Digital without expensive software
You need records kept in software and a way to send them to HMRC every quarter. Here is a simple setup for sole traders, SoleLog on your phone plus My Tax Digital to send, step by step, and what it costs.
What Making Tax Digital actually asks for
Once MTD applies to you, HMRC needs two things:
- Digital records of your income and expenses.
- Software that sends your quarterly updates and your tax return to HMRC.
They can be the same product or two products joined by a digital link. HMRC calls the second kind "bridging software": it takes figures you already keep somewhere else and sends them.
Most all-in-one bookkeeping packages charge a monthly subscription for both. If you are a rider, a cleaner or a tradesperson with a few dozen transactions a month, you do not need most of what they do.
The setup: SoleLog + My Tax Digital
- SoleLog keeps your records on your phone: income, expenses, business miles and receipt photos. It works out your tax as you go and, each quarter, prepares the figures and the file.
- My Tax Digital sends them to HMRC. Its website says it is free for Making Tax Digital for Income Tax, HMRC-recognised, and has a bridging mode that imports your figures. Check it on HMRC's list of recognised software before you rely on it, as you would with any product.
SoleLog never connects to HMRC on its own. You see every figure before anything is sent.
Each quarter, step by step
- Log as you go. Add each payment, expense and trip in SoleLog. Take a photo of the receipt. Or import your bank statement and tick what is business (SoleLog Pro).
- When the quarter ends (5 July, 5 October, 5 January, 5 April), open the HMRC tab. SoleLog shows every SA103 box for the quarter, as a running total from 6 April, and the deadline.
- Download the file for My Tax Digital from the same screen. It is laid out like My Tax Digital's SA103 template, with each figure in the cell its importer reads.
- In My Tax Digital, use its bridging option to import the file, check each figure against SoleLog's screen, and send the update before the deadline (7 August, 7 November, 7 February, 7 May).
- After 5 April, SoleLog's year summary has every box for your tax return, the tax to pay and your payments on account. It also gives your accountant a ZIP of every entry and receipt, if you use one.
Not in MTD yet? You can prepare the file anyway and practise, so the first real quarter holds no surprises.
Why a file and not copying the numbers
Under MTD, the figures have to travel from your records to the software that sends them through a digital link. Exporting a file and importing it counts. Typing the numbers in by hand does not. That is why SoleLog gives you a file rather than a list to copy.
What it costs
| Your situation | What you need | Cost |
|---|---|---|
| Not in MTD yet, or exempt (£20,000 or less) | SoleLog free: records, tax estimate, quarter figures on screen | £0 |
| In MTD | SoleLog Pro for the quarterly file, plus My Tax Digital to send | £39.99 a year (or £4.99 a month), plus My Tax Digital, which says it is free |
SoleLog Pro also keeps your data in your account on your phone and computer, keeps receipt photos in the cloud, imports bank statements and emails you before each deadline.
A few honest notes
- SoleLog's figures are estimates from what you log. Check them before you send anything.
- If your affairs are complicated (several businesses, foreign income, partnerships), an accountant is still worth it. SoleLog's export gives them everything in one file.
- Rules change. We keep this guide in line with GOV.UK; the links are below.
Sources
- GOV.UK: Find software that works with Making Tax Digital for Income Tax
- GOV.UK: Send quarterly updates
- My Tax Digital: mytaxdigital.co.uk
This article explains HMRC’s published rules in plain words; it is not tax advice. Rules change: check the GOV.UK pages linked above, and ask an accountant if your situation is unusual.