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Multiple income sources for Income Tax

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Summary

How to deal with more than one business income source for Making Tax Digital (MTD) for Income Tax in Sage Accounting.

Description

For MTD for Income Tax, HMRC treats each income source as a separate business for reporting.

Common income sources include:

  • Self-employment
  • UK property rental income

Sage follows HMRC rules when submitting Income Tax updates.

Use a separate Sage Accounting company for each income source you want to submit.

Use one company per income source

You can't submit self-employment and UK Property updates from the same Sage Accounting company.

Each income source must:

  • Have its own Sage Accounting company
  • Set up separately for MTD for Income Tax
  • Submit quarterly updates independently

Sage links the company to one income source during MTD setup. Once you submit your first quarterly update, you can’t switch the income source for that company.

If you record both income types in one company

Some businesses record both trading and rental income in one company for VAT purposes.

If you want to submit MTD updates correctly, you must:

  • Mark property-related ledger accounts as Not reportable in that company
  • Create a separate Sage Accounting company for your UK Property business
  • Record or copy the property income and expenses into the new company
  • Complete MTD setup in the new company
  • Submit UK Property quarterly updates from that company

This ensures Sage reports the correct income source to HMRC.

Different ownership splits

If you own rental properties with different ownership percentages, HMRC treats these as separate income sources.

Sage currently applies one ownership percentage across all properties within a company.

If your ownership split differs between properties, you must:

  • Create separate Sage Accounting companies
  • Set up each with the correct ownership percentage
  • Submit each income source separately

If you already submit VAT from one company

If you keep more than one income source in one Sage Accounting company for VAT, see Use one ledger for VAT and separate Income Tax sources.

Important

This setup doesn’t change your legal status.

You still submit one final Income Tax return to HMRC that includes:

  • All self-employment income
  • All UK Property income
  • Any other personal income