Making Tax Digital: Submitting your MTD Returns

With the introduction of Making Tax Digital (MTD), this process changes. If you fall within MTD, you will now be required to submit quarterly updates alongside your annual return, using HMRC approved MTD-compatible software.

If you have both sole trade and rental income, you will need to report each separately within your quarterly updates.

What are the quarterly deadlines?

The quarterly submissions are spread evenly throughout the tax year. You will have until midnight on the following dates to submit:

• 7 May
• 7 August
• 7 November
• 7 February

You will also need to submit your annual return on 31^st January in the following year, which will include other types of income discussed below.

Even if you have no income or expenses for a quarter, you will still need to submit a nil quarterly report.

Estimated tax position

After each quarterly submission, HMRC will provide an estimate of your tax due via your online services account.

This estimate only relates to your self-employment and/or rental income. It does not include other income or reliefs, so it should be treated as an indication rather than a final figure.

The tax liability will not be due until 31 January the following year.

Making corrections

If you notice an error in a quarterly submission, this can be corrected at the year end.

Quarterly returns are expected as accurate as possible, but HMRC does not apply penalties for inaccuracies at this stage. Instead, you will be able to amend any errors on the annual return before you submit to HMRC.

The annual return will need to be accurate to avoid any penalties.

Before submitting your annual return, you will have the opportunity to adjust your figures, remove disallowable expenses, and claim any reliefs or allowances available. This can include claiming the trading or property allowance.

Submitting your annual return

You must submit your annual tax return by the 31^st January the following year, just like submitting your Self-Assessment Tax Return.

You will still need to report all other sources of taxable income, such as employment income, bank interest, and investment income on the annual return.

If HMRC have details on your other taxable income, they will add this to your return automatically once all your quarterly returns have been submitted. HMRC will also add any Student Loan repayments or Child Benefit you have received to your return. If you qualify for Marriage Allowance, this will also be added.

Once HMRC have updated your annual return, you should be able to view your final tax calculation in your chosen software or your HMRC online services account.

HMRC will not be able to add any bank interest, dividends, investment income or income received from a partnership. If you have income from these sources, you will need to include these yourself.

Change of circumstances

After signing up for making tax digital, your circumstances may change during the tax year. For example, you may cease trading or sell a rental property.

If this happens, you should inform HMRC of the change(s). Once updated, you may no longer need to submit quarterly updates, depending on your circumstances.

Changing your MTD-compatible software

Choosing software can feel like a significant decision, but it is not fixed.

You can change software during the year or at the end of the tax year. Waiting until the end of the year is often simpler, as it avoids the need to transfer and recreate records.

Signing up for MTD part way through the year

If you sign up to MTD during the tax year, you have two options:

1. Catch up your digital records from the taxable year, and submit your quarterly updates, or
2. Start collating your digital records from the date of sign-up and update earlier records later in the tax year.

In either case, your digital records must be complete for the full year before submitting your annual return.

Frequently Asked Questions

Do I still need to file an annual return?

Yes. The annual return remains essential and includes all income.

Will I pay tax quarterly?

No. Tax is still due by 31^st January following the tax year.

Can I correct mistakes in quarterly submissions?

Yes. Adjustments can be made before submitting the annual return.

Need support with MTD?

Making Tax Digital changes how and when you report your income, but with the right approach, it can be managed smoothly.

If you would like support with your quarterly reporting, software setup, or annual return, we can help you navigate the way with clarity and confidence.