No. The quarterly updates to HMRC aren’t tax returns, they’re simple summaries of how your business is doing.
You’ll be able to see an estimate of your tax bill after sending each update, so it will be easier to plan ahead and there should be fewer nasty surprises when your tax return is due.

No. The new MTD for IT system won’t change the way you pay Income Tax or the dates you need to pay it.

No. You’ll still need to prepare and submit an annual tax return to HMRC.

However, your accounting software will be able to calculate the whole year from your quarterly updates and pull these into an end-of-year tax summary so preparing your annual tax return should be much simpler.

If you miss some information or make a mistake, you’ll be able to add it or correct it on your next quarterly update and you’ll be able to make any adjustments needed
before you submit your tax return.

You’ll be able to add any additional sources of income such as bank interest or pension income and claim any tax reliefs that you’re eligible for.

The standard update period and deadlines line up with the tax year (6 April to 5 April).

However, if your accounting period ends on 31 March, you may find it easier to match your update periods to the calendar year instead. The submission deadlines for the
quarterly updates remain the same.

The quarterly update deadlines are:

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

HMRC is introducing a points-based penalty system. You’ll accrue penalty points any time you miss a submission deadline. If you get four points, you’ll get a £200 fine.

HMRC can also charge a £3,000 penalty for a failure to keep digital records or for a break in digital links within functional compatible software.

HMRC will use your combined income from working for yourself and from rental property to determine when you fall into scope for Making Tax Digital for Income Tax.

However, you will need to keep separate accounting records for both income streams and send separate quarterly updates for each type of income.

You will only submit one annual tax return.

No. HMRC only looks at your total turnover from self-employment and property from your latest tax return.

Your income from self-employment and property will be added together to determine if you are in scope for MTD for Income Tax.

You need to keep an eye on your turnover levels and if you believe that you will breech the threshold during the year you must sign up for MTD.

HMRC won’t sign you up automatically, so you need to make sure you sign up in plenty of time to submit your first quarterly update.

No. In your first year of trading you’ll need to complete and submit a Self Assessment tax return. HMRC will use this to check your turnover and let you know when you need to sign up.

No. At the moment the new regime only applies to sole traders and landlords.

Most of the most commonly used accounting software packages such as Sage, Xero and QuickBooks Online will be compatible with MTD for IT.

If you’re not sure whether your existing software will be compatible, you’ll need to check with your software provider, speak to your accountant or agent, or use HMRC’s list of compatible software.

You can apply for an exemption if you can’t use digital software (e.g. due to your age, disability or location) or if you’re a member of a religious society that doesn’t use electronic communications. You will need to apply for an exemption with HMRC directly, your accountant or agent cannot apply for an exemption on your behalf.

If you’ve already received an exemption from HMRC for Making Tax Digital for VAT then this exemption will automatically apply to Making Tax Digital for Income Tax. You won’t need to reapply for a new exemption.

You need to sign up before your first quarterly update is due.  We recommend signing up well in advance of the deadline and not leaving it to the last minute to avoid unforeseen delays.

Yes, your accountant/agent can sign up for on your behalf, but they may charge a fee for doing this.