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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 type of business income as a separate income source. Common income sources include self-employment and UK property rental income.

Sage Accounting follows HMRC rules when it submits Income Tax updates. You can't submit self-employment and UK property updates from the same Sage Accounting company. Use a separate company for each income source you want to submit.

CAUTION:

Sage links a 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.

Resolution

Use one company per income source

Each income source must:

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

If you record both income types in one company

Some businesses record trading and rental income in one company for VAT purposes. To submit your MTD updates correctly:

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

If you own property with different ownership splits

Sage Accounting applies one ownership percentage across all properties within a company. It doesn't support different ownership percentages for different properties in the same company.

If you own 50% of one property and 75% of another, you can't record this accurately in a single Sage Accounting company.

NOTE:

Your UK property income remains one income source for HMRC, regardless of how ownership varies between properties. Creating extra companies to work around this would submit more property updates than HMRC expects. If you need to record different ownership splits for different properties, a specialist landlord product is more suitable.

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. This includes:

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