Making Tax Digital for Income Tax for Self-Assessment - Quarterly Reporting

Quarterly reports - A MAJOR difference

As you know, under the current Self Assessment system, you must complete a single return before the end of the tax year.

 You enter your income and expenses manually, and HMRC will then calculate how much you owe.

Under MTD ITSA, this process will change significantly.

 Take a look at the step-by-step process we have outlined below.

 The manual reporting process will be replaced and instead, businesses must use MTD-compatible software to submit their financial information, or convert their records into digital form, which will then be regularly sent to HMRC.

 This software will also be able to keep digital records, which is a requirement for MTD for ITSA.

 Over the course of the tax year, you must submit summary reports to HMRC at least every quarter.

 These reports don’t need to include accounting or tax adjustments, although you’re free to include these if you wish to. This means the quarterly submission does not have to be 100% up-to-date.

 Each quarterly report is due within one month and seven days after the quarter ends.

 Why such a drastic change?

 The reasoning behind this change is to make it easier to spot and rectify errors in as close to real time as possible, rather than waiting for issues to show up at the end of the tax year, which could leave you feeling stressed while you find a solution.

Note: You must record and submit quarterly reports for each separate trade and/or property business you manage. The £10,000 threshold applies to you as an individual taxpayer, but the reporting requirements apply to each business separately.

Over the course of the tax year, you must submit summary reports to HMRC at least every quarter.