The simple solution for sole trader and landlord.
Coconut is a simple accounting and tax app that makes it easy for sole traders to stay on top of their bookkeeping all year round, and easily share their records and receipts with their accountant through the Coconut Portal.
Coconut software is built specifically for the needs of your smallest clients, simple enough for them to engage with but smart enough to streamline and optimize your practice’s workflows.
Your clients can connect Coconut to 30+ current account and credit card providers so that they can keep all their business records organised. You can run your practice using Coconut for all your self-employed and unincorporated landlord clients, no matter who they choose to bank with.
Coconut provides banking, bookkeeping, invoicing and receipt capture to your clients in one simple tool. We categorise transactions ready for year-end accounts and tax filings in real-time, freeing you up to do the work your clients value most.
AIA Member Benefit
Join the Partner Programme as an AIA Member, you will receive an additional 10% discount on top of our direct offers, complemented by seamless client onboarding and a dedicated Account Manager.
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MTD for ITSA or Making Tax Digital for Income Tax Self Assessment to give it its full title. You remember that? Perhaps you’d prefer not to.
MTD for ITSA was due to be phased in from April 2024 for those with total gross income over £10,000 from self-employment and property in a tax year, with partnerships due to follow in 2025. But then, suddenly, in December 2022, the government announced a two-year delay in the planned introduction schedule, as well as a significant threshold increase up to £50,000 in the first phase and £30,000-£50,000 in the second.
So, why the delay? At the time, HMRC said: “Understanding that self-employed individuals and landlords are currently facing a challenging economic environment, and the transition to Making Tax Digital for Income Tax Self Assessment represents a significant change to taxpayers and HMRC for how self-employment and property income is reported, the government is giving a longer period to prepare for MTD.”
Did you know? MTD for ITSA’s introduction timetable has been delayed four times since it was first announced in 2015 (source: National Audit Office). So far, HMRC has spent some £1.3bn on introducing MTD for VAT and MTD for ITSA, but it expects to raise £3.9bn in additional tax revenue as a result.
MTD for ITSA: how will it change reporting?
For taxpayers and their agents who need a quick reminder…
● Under MTD for ITSA, many sole traders, freelancers and landlords will need to keep digital records using MTD-compatible software (or bridging software that enables them to comply with MTD reporting requirements while using their existing accounting software).
● Each quarter (ie every three months), the compatible software will create summary totals for business/landlord income and categorised expenses. These summaries are known as quarterly updates.
● After submitting an update, you or your agent can see an estimated tax bill within the compatible software. Making any accounting or tax adjustments is not essential before sending an update, but doing so will make the estimated tax bill more accurate.
● After the fourth quarterly update has been submitted, the system will show income and expenses for the whole tax year. Adjustments may then be made, for
example, claiming reliefs and allowances, removing disallowable expenses, adjusting the value of individual transactions, etc. Business/rental income will be finalised in the MTD for ITSA-compatible software, with an updated tax bill estimate given.
● To finalise your Income Tax position, you may need to provide HMRC with information about other personal taxable income (eg savings or dividend income).
● Then, you or your agent must make a final declaration via the MTD for ITSA software, confirming that the information provided is correct and complete and that your Income Tax position for the tax year has been finalised. A final declaration must be made, even if there is no additional taxable personal income to report. If your software does not support submission of additional personal income, you’ll be able to use your HMRC online services account for this.
● You must make your final declaration by 31 January following the end of the relevant tax year (5 April), if you want to avoid a late-submission penalty.
● The information you provide will then be used to work out your final Self Assessment tax bill for that tax year.
MTD for ITSA: revised introduction dates
From 6 April 2026, sole traders, freelancers and landlords with a gross income of more than £50,000 will need to comply with MTD for ITSA requirements or risk a penalty from HMRC. Those with an income of £30,000-£50,000 will need to do so from 6 April 2027. Many others will be able to join voluntarily before those dates, with HMRC believing that MTD will help them to eliminate basic tax-reporting errors and save time on tax admin.
So, what about those earning below the £30,000 income threshold? In 2022, the government said it was planning a review into the needs of such businesses, to consider how MTD for ITSA can be shaped to meet their needs and help them to fulfil their tax obligations. This review is ongoing, but eventual introduction is highly likely. Moreover, according to a report published in November 2023, the government also remains “committed to future introduction of MTD for ITSA to partnerships”, although no date has yet been given, following delay of its scheduled 6 April 2025 introduction.
Accountants, representative organisations and others working with sole traders, freelancers and landlords are being advised to remind them of the need to start to prepare for the introduction of MTD for ITSA in April 2026. This includes getting familiar with the new MTD for ITSA reporting requirements and making sure they have the necessary software.
A formidable new end-to-end accounting and tax solution?
You’ve probably already heard of Coconut. Some of your clients may already use it. Coconut was in fact launched in 2018 by Sam O'Connor and Adam Goodall as a digital current bank account for small businesses, but the ex-PwC fintech entrepreneurs pivoted their brand and Coconut became a bookkeeping/accounting app created with the needs of sole traders and freelancers in mind.
The early summer brought the surprise announcement that Coconut had been bought by GoSimpleTax, the Self Assessment tax return filing software solution. Sam O'Connor said: “The combination of GoSimpleTax and Coconut will create a formidable player in the accounting software space, filling the gap left by the traditional cloud players for a simple solution for self-employed people, landlords and micro businesses.”
Simple and efficient
As Adam Goodhall explained: “Coconut accounting software is a simple and efficient solution for self-employed people, landlords and their accountants and bookkeepers. It helps prepare the figures needed for tax filing, but doesn’t do the submission to HMRC.
Since 2015, GoSimpleTax has been providing tax-filing software for self-employed, property and other types of income taxed under Self Assessment.
“The combination of Coconut’s accounting software and GoSimpleTax’s tax return filing software and expertise will provide Coconut users and accountant partners with an end-to-end bookkeeping to tax return-filing solution, one that’s potentially suited to the needs of millions of UK taxpayers.”
Obvious fit
James Cryne, co-owner of GoSimpleTax, says there is an obvious fit between Coconut and GoSimpleTax. “They’re both remarkably easy to use and they provide many time- and money-saving features. Both have been created with the practical needs of small businesses and their accountants and bookkeepers as a key driver.
“GoSimpleTax continues to grow by attracting large numbers of new users, with many of them sole traders or landlords who also need bookkeeping support. Buying Coconut made perfect sense for GoSimpleTax. The link up provides significant added value for both GoSimpleTax and Coconut users.”
GoSimpleTax is retiring its own invoicing and bookkeeping solutions and users are being encouraged to start using Coconut instead. Cryne adds: “By December 2023, initial integration between GoSimpleTax and Coconut should be achieved, so that the necessary figures will automatically transfer from Coconut into GoSimpleTax, making it even easier for self-employed people, landlords, accountants and bookkeepers to fill out and file Self Assessment tax returns, saving them lots of time and hassle in the process.”
Software for accountants
The team behind GoSimpleTax previously started Keytime, which they built into one of the biggest suppliers of practice software for accountants. They have a lot of experience of providing software to accountants; the Coconut acquisition is a continuation of that.
“Accountants and bookkeepers who use Coconut should check out GoSimpleTax,” Cryne adds. “They can take advantage of a free trial. Partner subscriptions cost less than £60 for the tax year, which offers excellent value. We’ll certainly be encouraging GoSimpleTax users to use Coconut. Using both together makes perfect sense, because it offers a complete end-to-end solution.”
In a nutshell