Making Tax Digital for Income Tax: The Facts

The Process

You will be required to regularly record your business income and expenses, ideally as they occur. This is done using compatible accounting or bookkeeping software—which can often be an app on your smartphone or computer—that is approved for the Making Tax Digital (MTD) for Income Tax program.

Submit Summaries Every Quarter

Instead of an annual summary, you will send a brief update to HM Revenue & Customs (HMRC) every three months. These updates, sent directly from your software, provide a snapshot of your earnings and expenditures from self-employment and property income.

It’s important to understand that these are not full tax returns. They are simplified, periodic summaries generated from your digital records. If you maintain your records consistently, submitting these updates can be done with a single click. After each submission, your software can provide an estimated tax calculation to help you budget.

Payment Schedules Remain Unchanged

You will not be required to make tax payments four times a year. The final payment deadline remains January 31. You will continue to settle your tax bill by logging into your HMRC online account via GOV.UK or the official HMRC app, just as you do now.

Quarterly Submission Timetable

The standard reporting periods follow the government’s tax year (April 6 to April 5). The submission deadlines are as follows:

Period: April 6 – July 5 | Deadline: August 7
Period: July 6 – October 5 | Deadline: November 7
Period: October 6 – January 5 | Deadline: February 7
Period: January 6 – April 5 | Deadline: May 7

You also have the option to align your reporting periods with the calendar year if that is more convenient.

The Annual Finalisation Process

Your software will automatically compile your quarterly submissions into a finalized, year-end summary. This streamlines the process and reduces paperwork.

You will then review this summary for accuracy. This is your opportunity to make any necessary adjustments, such as declaring additional income streams (e.g., savings interest or pensions) or applying for eligible tax reliefs.

Once you confirm everything is correct, you will formally submit your final declaration by the January 31 deadline d. HMRC will then use this finalised information to calculate your official tax liability for the year. It is crucial to note that MTD does not alter Income Tax rates, calculation methods, or payment deadlines.