With MTD ITSA rapidly approaching, it is important to understand how you identify your businesses so that you can report back on your income and expenses properly for HMRC. Depending on the business type, you’re required to complete different self-assessment forms to HMRC.

For example, as a sole trader, you’re required to complete the SA103, and as a property owner you need to submit an SA105 etc. Fundamentally, this changes the types of transactions that will qualify as allowable/disallowable expenses, so it’s important to get this right.

The same business/property types are consistent with MTD ITSA too, so setting this up now will mean you’re ready for the new requirements.

In Coconut, when you create an income stream, we’ll ask you to identify the type of business, so that we can help you submit the correct values.

Selecting a type

Income streams can be accessed through ‘My details’ tab on Coconut Web (or ‘Client Details’ on the Accountant Platform). From here you can create a new income stream or edit an existing one.

You’ll be asked to select the type for any given income stream. The list below is defined by HMRC and you should be careful to select the correct one:

  • Sole trader - you run your own business as an individual and are self-employed.

  • UK Property - you own one or more residential/commercial UK properties that do not fall into the FHL category (see below).

  • UK Furnished Holiday Letting - you own one or more furnished holiday lets. In order to qualify as a FHL a property must be in the UK or EEA and must be available for letting for 210 days or more and must be let for 105 days or more.

  • EEA Furnished Holiday Letting - you own one or more properties overseas in the EEA that are available for letting 210 days or more and are let for 105 days or more.

  • Foreign Property - you own one or more properties overseas that you receive income from that do not qualify as EEA Furnished Holiday Lets (see above).

  • Limited company - you have an incorporated business. A limited company is a form of business which is legally separate from its owners/directors (note, if a property is owned by a limited company, you should select this instead).

Percentage ownership

For any property type, you will also be able to choose % of ownership if it’s a split ownership to ensure the right figures are visible in your summaries and reports.

If you own a property with one or more other people, simply indicate what % ownership on the property you have and we’ll ensure that your tax figures reflect this ownership split.

Reporting

As described above, when you select your income stream types, you’ll get access to a different suite of reports required for HMRC. Here’s a quick list of the reports you’ll be using based on the type you’ve selected:

  • Sole trader - SA103S

    • If you earn over £85,000 you’ll be required to produce an SA103F

  • UK Property - SA105 (Non-FHL)

  • UK FHL - SA105 FHL (UK & EEA)

  • EEA FHL - SA105 FHL (UK & EEA)

  • Foreign property - SA106 Foreign Property (Non-FHL)


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