Using Making Tax Digital for Income Tax

Who can use Making Tax Digital for Income Tax

You can voluntarily sign up voluntarilyfor nowthe andservice startif usingall of the servicefollowing if you’re:apply:

• you’re a UK resident
• you’re already registered for Self Assessment
• your withaccounting returnsperiod andaligns paymentsto the thattax areyear up— for example, 6 April 2021 to date5 April 2022
• ayou solehave tradersubmitted withat incomeleast from one business,Self Assessment tax return
• you’re keeping digital records
• one or amore landlordof whothe rentsfollowing outwere included in your last return:
  • an existing self-employment income
  • a UK property source
  • a foreign property source
• you’re up to date with your tax records — for example, you have no outstanding tax liabilities

You cannot sign up yet if you need to report:you:

• need to report income from any other sources
• have an income tax charge — for example, Highhigh Incomeincome Child Benefit Chargescharges or certain pension tax charges
• have a payment arrangement
• do not have an up to date address with HMRC
• are a partner in a partnership
• are currently, or are going to be, bankrupt or insolvent
• are a Minister of religion, Lloyds underwriter or foster carer
• have a third party capacitor, this includes (but is not limited to):
  • trusted helpers
  • insolvency
  • practitioners
  • nominees
  • solicitors

When to use this service

You can voluntarily use the service voluntarily now. This will allow us to test and develop the service before 6 April 2024.

You must use this service starting from 6 April 2024, if your qualifying income is abovemore than £10,000. Find out what is included in your qualifying income.

What you’llyou need to do to use this service

To use Making Tax Digital for Income Tax, you’ll need to:

• get software that is compatible with Making Tax Digital for Income Tax
• use software to keep digital records
• send quarterly updates for business income and expenses
• submit your end of period statement
• submit a final declaration

KeepingHow to keep digital records using software

You’llYou needmust to use compatible software to keep digital records of all your business income and expenses from your self-employment or property business. Find software that is compatible with making tax digital for income tax.

You’ll use this software to keep records and send updates. You should maintain your records using the software:

• as close to the date of the transaction as possible
• before you submit the quarterly update for that period

SigningSign up

You can sign up now for Making Tax Digital for Income Tax for your current or next accounting period.

Alternatively, you can authorise an agent to act for you and they will be able to sign up your business.

Find

If outyou’re howan agent, there is a different way to sign up your client.

How to authorise an agent

You can authorise HMRC to exchange data with an agent acting on your behalf for any Making Tax Digital service. Once authorised, an agent can sign up your business and use software to create, view, edit and send your data to HMRC.us. Your agent may also keep and maintain digital records on your behalf.

If you’ve previously authorised an agent to act on your behalf, you will not need to re-authorise them for Making Tax Digital for Income Tax.

An agent will not necessarily have access to all your source data. If an agent cannot make corrections to your digital records, they’llthey will need to tell you about any corrections needed to your digital records.

If

How you’re an agent there is a different way to signsend up your client.

Sending quarterly updates using compatible software

Before you send quarterly updates, follow the instructions using your Government Gateway user ID and password to authorise your compatible software. You must use the user ID you got when you signed up for either:

• Self Assessment
• an agent services account

After your compatible software is authorised, you’ll send updates for each income source to HMRCus every 3 months. These updates are summaries of your business income and expenses. Your software will tell you when and how to send the updates.

You must submit quarterly updates within one month of the end of that quarterly period. If you do not submit by this deadline, you may have to pay a penalty.

Use standard quarterly period dates

The standard quarterly periods and deadlines in each tax year are:

Quarterly period	Quarterly deadline
6 April to 5 July	5 August
6 July to 5 October	5 November
6 October to 5 January	5 February
6 January to 5 April	5 May

Use calendar quarterly period dates

At a later date, you’llyou will be ablegiven tothe chooseoption to use calendar quarters. We’llWe will tell you how you can do this,this when it is available.

Calendar quarterly periods and deadlines are:

Quarterly period	Quarterly deadline
1 April to 30 June	5 August
1 July to 30 September	5 November
1 October to 31 December	5 February
1 January to 31 March	5 May

SubmittingHow to submit an end of period statement

At the end of the tax yearyear, you need to finalise your business income. For each income sourcesource, you’ll submit an end of period statement. This is wherewhen you:

• make any accounting adjustments
• claim any reliefs
• confirm that the information you’ve sent is correct and complete

Your software will produce these statements for you.

Check the deadline for end of period statements

The deadline for submitting end of period statements is 31 January after the end of tax year. If you do not submit by the deadline, you may have to pay a late submission penalty.

SubmittingHow to submit a final declaration and payingpay tax

The final declaration replaces your Self Assessment tax return. Once you’veyou finalisedfinalise your income by submitting an end of period statement, you’llyou need to:

• tell HMRC about any personal income you have and submit claims for reliefs
• submit your final declaration for the tax year

You must submit your final declaration and pay the tax you owe by 31 January the following tax year.

If you miss the deadline for your final declarationdeclaration, you may haveneed to pay a penalty.

If you do not pay the tax you owe by the deadline, you may haveneed to pay a late payment penalty.