Making Tax Digital (MTD) for Virtual Assistants

What is Making Tax Digital?

Making Tax Digital (MTD) is HMRC’s way of modernising the tax system. For you, it means the end of the “once-a-year” January rush. Instead, you will keep your records digitally and send a quick update to HMRC every three months using an app or software. Think of it as a quarterly “check-in” that keeps your business organized and ensures you always know exactly where you stand with your tax bill.

Does this apply to my VA Business?

This applies to you if you are a Sole Trader. If you have set up as a Limited Company, these specific rules do not apply to you yet.

HMRC looks at your “Qualifying Income”—this is your total turnover (everything you invoice) plus any rental income. Crucially, if you have a part-time job, your PAYE salary does not count towards these limits.

VACT Top Tips & FAQs

“I’m just starting out, do I need expensive software?”

Absolutely not. At the VA Training Academy, we’re all about smart, ethical business. You don’t need to spend a fortune.

• Lloyds Bank Customers: You can use their MTD for Income Tax tool for free (or their Business Finance Assistant for approx. £5/month).

• Starling/NatWest/Mettle: These banks often offer FreeAgent or similar tools for free, which is perfect for keeping overheads low.

“What counts as ‘Digital Bookkeeping’?”

It’s simply moving your records from paper to a screen. Instead of keeping a folder of receipts, you snap a photo on your phone. The software then “reads” the receipt and categorises it for you. It’s a huge time-saver that allows you to focus on being the “Go-To” VA for your clients.

“Can I still use my spreadsheets?”

You can, but you can’t just “type” the numbers into HMRC’s website anymore. Your spreadsheet must be “digitally linked” via bridging software. For most VAs, we recommend moving to a dedicated app, it’s much less “faff” in the long run!

“What about my home office costs?”

Working from home is a staple for VAs. You can still claim these! Your software will help you log either a flat monthly rate or a percentage of your actual bills, ensuring you stay compliant while claiming what you’re entitled to.

Software at a Glance

If you are looking to use Xero – I have a referral code.  Click here to access it.

Your VACT Action Plan

1. Check your turnover: Look at your total invoices from the 2024/25 tax year.

2. Pick your tool: Choose one of the HMRC-recognised apps mentioned above.

3. Get Digital: Start snapping photos of your receipts now so it becomes a habit before the April deadline.

Ready to get organised?

If you need help choosing the right software or want to make sure your VA business is “MTD-ready,” let’s chat. We’re here to make sure you have the freedom and flexibility you crave, without the tax headaches!