Help MTD - Software - Bank or Spreadsheet ?

sidneyyoungblood

My accountant is retiring this year and its the first that I have to submit my files through MTD so getting really stressed .

I only sell around 10 - 20 items a month ( a lot less recently ) so not too sure of the best software to use so currently using

1 - Starling bank app - I have itemised all my figures etc sales / stock etc but the issue is that the payouts from ebay are gross including the postage costs etc .

2 - Freeagent through my mettle bank account , alot more work - it is linked it to my starling bank account but again splitting costs coming in from the postage etc is stressful plus alot more features I am not too sure I need.

3 - Spreadsheet which I have used for the last few years which I find a lot more easier to use which I think I can link through vitaltax to the MTD site ( £20 for the spreadsheet and £35 to vitaltax )

I am hoping to do the MTD myself this year and maybe with help with the end of the year submission from an accountant .

Is it worth biting the bullet and going down the freeagent route or will my spreadsheet be ok ?

LITRG

Hi sidneyyoungblood

We are not able to recommend a particular piece of software, but our guidance that looks at some factors to consider when choosing software may be of assistance:

Choosing Making Tax Digital software | Low Incomes Tax Reform Group

I hope this is of some help. This is part of our guidance hub on Making Tax Digital:

Making tax digital for income tax | Low Incomes Tax Reform Group

Best wishes

silvercar

are you over the threshold for MTD for this year?

DRS1

I have no answer to the question but two thoughts

1 Isn't freeagent free if you have the right sort of bank account? Might make me think about using it instead of something you have to pay for.

2 Can you actually use your current spreadsheet with vitaltax? I think some places want you to use their specially designed spreadsheets so the right boxes are magically linked to the right other boxes.

UKTaxHelper

On the gross ebay payout issue: for MTD you don't actually need to split postage out of each transaction as you go, you record total sales income and claim postage/ebay fees as a business expense, so the "splitting" stress is more about bookkeeping tidiness than an MTD requirement itself. VitalTax is bridging software, it doesn't care what your spreadsheet looks like as long as the final totals for each income/expense category are in cells you can map to the right boxes, so your existing spreadsheet should work fine, you're not locked into a specially designed template. Given you're only doing 10-20 items a month, honestly the spreadsheet plus a £55 total bridging cost sounds a lot more proportionate than FreeAgent's extra features, which are built more for VAT-registered or higher volume traders.

TaxSortedUK

Following on from silvercar's question - worth checking your actual numbers before picking software. MTD for Income Tax only applies once your gross self-employment/property turnover (before expenses) is over the threshold - £50k for this 2026/27 tax year, dropping to £30k from April 2027 and £20k from April 2028. Doing 10-20 items a month, if your total turnover is under £50k you may not be in scope for MTD yet at all, so worth checking your last Self Assessment turnover figure before spending on new software.

sidneyyoungblood

https://forums.moneysavingexpert.com/discussion/comment/82078732#Comment_82078732

Thanks for the advice , decided to go down the vitaltax route as the freeagent software is a bit overkill and complicated for my needs … One thing , if I sell items mostly on ebay but transfer the funds into my bank account once the buyer has received the item would I be classed accrual or cash basis - it is one of the first questions when I log into the hrmc site?

TaxSortedUK

On the cash versus accruals question: since the 2024/25 tax year cash basis is the default for sole traders, so unless you tick the box to opt out HMRC treats you as being on it. On cash basis you record income on the date the money actually lands in your account and expenses when you actually pay them, which sounds like how you are already tracking your ebay payouts, so it should suit you. Accruals (traditional accounting) is the alternative, where you record a sale when it is made rather than when the cash arrives, but for a small ebay trader that is usually more hassle than it is worth, which is partly why cash basis is now the default. So in your case you would normally just leave it on cash basis and record each payout when it hits your bank.

sidneyyoungblood

https://forums.moneysavingexpert.com/discussion/comment/82083337#Comment_82083337

thanks , when I sell an item on ebay on my spreadsheet I mark it on the date the payment was made on ebay rather than when it lands into my bank account as it takes a while to clear then I always wait for the buyer to receive the item and happy with it as it saves refunding.. This is or the vast majority of my sales with only a few going direct into my bank account or through my site. Would this still be cash basis ?

uknick

https://forums.moneysavingexpert.com/discussion/comment/82083364#Comment_82083364

That's accruals accounting; when the payment shows on eBay is comparable to a sale's invoice date. Cash basis is as described; when cash goes out or cash comes in.

The issue of timing is usually only an issue at a cut off date, such as your year end. But, I'm not sure how eBay report your sales to HMRC. I assume it is as you do at present, when they receive the payment on your behalf. This could mean there is a disconnect between what you report to HMRC and what they report.

UKTaxHelper

On the reporting mismatch, the platform report runs on the calendar year rather than the tax year, so it never lines up with your return anyway. It's gross too, before eBay's fees come off. HMRC know that, it's a prompt for them to look rather than a figure they expect to match.