Find out about keeping digital records, signing up and using software to send income and expenses updates.Published 19 March 2020
Last updated 21 July 2020 — see all updatesFrom:HM Revenue & Customs
Contents
- Who can follow the rules
- When to follow the rules
- Keeping digital records
- Signing up
- Sending updates using software
- Finalising your business income
- Submitting a final declaration
To follow the rules for Making Tax Digital for Income Tax, you’ll need to:
- keep digital business records
- get compatible software
- sign up
- send business income and expenses updates
- finalise your business income
- submit a final declaration instead of a Self Assessment tax return
Who can follow the rules
You can follow the rules voluntarily if all of the following apply:
- you’re a UK resident
- you’re registered for Self Assessment and your returns and payments are up to date
- you’re a sole trader with income from one business only or a landlord who rents out UK property (or both)
You cannot sign up if you need to report:
- income from any other sources
- any taxable payments you make or that you claim tax relief on
When more businesses can sign up, this page will be updated.
When to follow the rules
You can choose to follow the rules voluntarily now.
You must follow the rules for your next accounting period that starts on or after 6 April 2023, if your taxable turnover from your self-employed business or income from property is above £10,000.
Keeping digital records
You’ll need to keep digital records of all your business income and expenses – this includes income from self employment or property.
You should start to keep digital records at the start of the accounting period you are signing up for. You’ll need to do this for the whole of the accounting period.
You’ll use software to keep records and send updates. Make sure you have software that’s compatible with Making Tax Digital for Income Tax.
Signing up
You can sign up now for your current or next accounting period.
You can sign up your business for Making Tax Digital for Income Tax, or if you’re an agent there is a different way to sign up your client.
Sending updates using software
Before you send updates, follow the instructions using your Government Gateway user ID and password to authorise your software – use the user ID you got when you signed up for either:
- Self Assessment
- an agent services account
After your software is authorised you’ll send updates to HMRC every 3 months. Updates are summaries of your business income and expenses. Your software will tell you when and how to send the updates.
Finalising your business income
At the end of your accounting period you need to finalise your business income in a declaration. This is where you confirm that the updates you sent are correct and make any accounting adjustments.
Submitting a final declaration
The final declaration replaces the Self Assessment tax return.
Submit your final declaration after the end of the tax year it applies to. This is where you can tell HMRC about any personal income you have or reliefs you claim.
You’ll then be able to view a tax calculation in your software, or by signing into:
- Self Assessment (if you’re a sole trader or landlord)
You must submit your final declaration and pay the tax you owe by 31 January the following tax year.Published 19 March 2020
Last updated 21 July 2020 + show all updates