Sole trader making tax digital - Sage issues/spreadsheet

Thecreative

Hi all, just after a bit of advice.

I'm a sole trader having to move to digital tax, my accounts aren't too complex its mainly car, fuel and work bills, a credit card, some monthly outgoings like business insurance then payment after invoicing clients.

I've just tried Sage's free offering however its obvious they are only offering it free in the hope of people paying for the elements which would make it easier.

I have linked my business account & credit card however its saying any payments coming in will be counted in my turnover, however with getting paid by some clients 3 months on means these have already been covered in last years accounts - how do I get around this?

In addition I have business insurance but there doesn't seem to be an exact category for this.

Further to that where would I add meals when I'm working away as the only option seems to be travel expenses.

Finally, I'm also looking at just using a simple spreadsheet and 'boarding' I think the term is, can anyone shed light & explain if that's viable?

Many Thanks

sherlock228

why are your accounts on the accruals basis?
The default for a sole trader is the cash basis
Cash basis: Overview - GOV.UK

UKTaxHelper

Sherlock is right that cash basis is the default, and it also directly fixes your bank feed problem. On cash basis you record income when the money actually lands and expenses when you actually pay them, so a client paying you three months late simply counts in the year the payment arrives, not the year you raised the invoice. If Sage or your bank feed is trying to match payments to invoices raised the year before, that is an accruals basis behaviour, and switching the settings to cash basis should make the turnover figure follow the bank feed rather than fight it.

On the business insurance category, if there is no exact line for it, that is a software categorisation gap rather than a tax problem. General business insurance, public liability, professional indemnity, is a straightforward allowable expense either way, so if Sage does not have a labelled bucket for it, use the nearest general "insurance" or "other business expenses" category and keep the invoice, since HMRC cares about the figure and the evidence, not which software tile it sat in.

On meals when working away, this is the one to be careful with, because the rule is narrower than "travel expenses" implies. A meal is only allowable if it is genuinely incidental to a business journey outside your normal working pattern, not simply something you bought while working. If you have a regular base you work from and occasionally travel to a client site or job, meals bought on those trips are usually fine as subsistence, filed under travel. If you are working from a fixed location most days and just grabbing lunch, that is ordinary personal subsistence and is not allowable, because everyone has to eat regardless of whether they are self employed.

For the Making Tax Digital submission itself, a spreadsheet is entirely viable, that is what "bridging software" is for. You keep your own spreadsheet with income and expenses categorised under the required headings, and a separate piece of bridging software reads the spreadsheet and submits the quarterly figures to HMRC in the required digital format. You are not required to use full accounting software like Sage, you are required to keep digital records and submit through compatible software, and a spreadsheet plus a bridging tool satisfies that.

The_stingemeister

https://forums.moneysavingexpert.com/discussion/comment/82077252#Comment_82077252

What is bridging software? Is it software you download that is linked to your existing spreadsheet, and fills in it's self? I'm not due for MTD til next year, but want to get prepared.

uknick

https://forums.moneysavingexpert.com/discussion/comment/82080823#Comment_82080823

I suggest you start here;

Choose the right software for Making Tax Digital for Income Tax - GOV.UK

Thecreative

Thanks everyone - just in case it helps other mytaxdigital.co.uk provides free software to enter your incomings/outgoings, adds them up for you and also sorts the bridging software to link to HMRC