Making Tax Digital for self-employed dog walkers

MTD for Income Tax Self Assessment requires sole traders and landlords above an income threshold to keep digital records of their business income and expenses, and to send quarterly updates to HMRC using compatible software instead of a single annual return.

It replaces the shoebox of receipts and the once-a-year scramble with a running digital record.

HMRC is phasing MTD for Income Tax in by qualifying income, starting with the highest earners and stepping down over several years until it reaches a £20,000 threshold. Plenty of full-time dog walkers will be in scope at that point.

Thresholds and dates have moved before, so check the current position on GOV.UK's Making Tax Digital for Income Tax pages rather than relying on any summary, including this one.

In practice you need each item of business income and expenditure recorded digitally, close to when it happens, in a form software can read and submit. A handwritten cash book doesn't qualify; a spreadsheet only goes so far before it becomes fragile.

For a dog walker that means every walk, boarding stay, invoice and payment captured with a date, a client and an amount.

• Income from each walk, pack walk, puppy visit and boarding stay
• Which client it belonged to and when it happened
• Invoices raised and when they were paid
• Business expenses kept alongside, ready for your quarterly update

Every walk and boarding stay is logged with a date, dog, client and price. Every invoice and payment is recorded and time-stamped, and the audit log captures changes with the account that made them.

That gives you a continuous digital record of business income rather than a reconstruction in April — the foundation MTD is built on.

PawLoop doesn't submit to HMRC and isn't HMRC-recognised MTD software. The plan is to connect to Xero, which is, so your paid walks flow through as categorised sales against the right contact and your quarterly updates are filed from there.

The Xero integration is in build and not live yet. It's planned for the Solo and Team plans.

The walkers who find MTD painless are the ones already recording income as it happens.

• Stop reconstructing months from memory — log walks as you do them
• Invoice from the actual bookings rather than a separate spreadsheet
• Keep business banking separate from personal spending
• Check your qualifying income against the current HMRC threshold on GOV.UK
• Talk to an accountant about which submission software you'll use