Sole trader and one rental property - simple setup?

Hi Brian,

Thank you for your post.

To ensure your setup is both simple and compliant with HMRC rules, you should organise your income streams into two separate businesses within your Clear Books account. HMRC requires that self-employed income and property income are reported as distinct income sources.

You should have one business set up on a Sole Trader plan for your self-employment work and a second business on a Property plan for your rental income. If you have multiple properties, these are all recorded within that single property business, as HMRC requires all UK property income to be submitted together.

Regarding your business bank account, your current setup is workable. While having separate bank accounts is often cleaner, you can continue using one account for both income streams. To stay compliant and keep your records accurate in Clear Books, you will need to follow a specific process when explaining your bank transactions.

In your Sole Trader business, you would explain your self-employed income and expenses as usual. Any transactions appearing on the feed that actually belong to your property business should be marked as personal transactions or drawings.

You would then do the opposite in your Property business. You can link the same bank feed to your property business and explain the rental transactions there, while marking the sole trader transactions as personal.

Alternatively, if you find that process repetitive, you could link the bank feed to just one of your businesses. For the other business, you can use the record income and record expenses buttons to manually enter your figures. This removes the need for a second bank feed and is a very simple way to maintain digital records for MTD.

The most important thing for MTD compliance is that by the time Phase 2 begins in April 2027, you are using recognised software to keep these records digitally and are ready to send your quarterly updates to HMRC for each source.