Guidance

Use software to send Income Tax updates

If you’re self-employed you can join the Making Tax Digital pilot for Income Tax.

Overview

As part of the Making Tax Digital pilot, self-employed businesses and landlords can voluntarily use software to keep their business records digitally and send Income Tax updates to HMRC, instead of filing a Self Assessment tax return.

This means you’ll see an estimate of how much tax you might owe as you go, rather than waiting until the end of the tax year.

By signing up to HMRC’s secure service, you’re helping to test a new way of working out your tax as part of the Making Tax Digital pilot.

Who can use this service

You’ll be able to use software to report your Income Tax if at least one of the following applies:

  • you’re a sole trader with income from one business
  • you rent out UK property (excluding furnished holiday lettings)

If you have income from any other sources you may still have to report it using a Self Assessment tax return.

How it works

  1. If you do not already have software to keep your business records, you can choose from a number of options.

  2. Use your software to keep a record of your income and expenses. If you want to carry on using your current methods to keep your business records, make sure that the software you use to send updates to HMRC can link to this to automatically transfer the data.

  3. Every 3 months, use your software to send your income and expenses summary to HMRC.

  4. You can view an estimate of the tax you might owe at the end of your accounting year, based on the information you have provided so far in your business tax account as well as through your software.

  5. Send a final report to confirm your income and expenses at the end of your accounting year. If you need to claim allowances and reliefs, you can do this within that final report. You’ll be able to see a tax calculation for the year.

You can also choose to:

  • send an update to HMRC more often, for example, if you want to see a more up-to-date estimate of the tax you might owe

  • pay your bill as you go, if it makes it easier for you to manage your budget

  • ask your accountant to send updates for you

Sign up

To sign up, you’ll need to use the Government Gateway user ID and password you got when you signed up to the Self Assessment online service.

Sign up

Service availability

You can check the availability and any issues affecting this service.

When to send updates

Once you’ve linked your software to HMRC you’ll be reminded when you need to send your Income Tax updates. You’ll need to send them every 3 months.

You also need to send a final report for the year. If you need to claim allowances and reliefs, you can do this within that final report. The deadline will depend on the tax year your accounting period ends in.

Example 1 - your accounting period is 6 April 2018 to 5 April 2019

You signed up to use software to send Income Tax updates on 6 April 2018.

You send in 4 Income Tax updates, the last one on 6 April 2019.

In this case your final report is due 31 Jan 2020.

You’ll still need to send HMRC your Self Assessment tax return for the tax year 2017 to 2018 no later than 31 January 2019.

Example 2 - your accounting period is 6 May 2018 to 5 May 2019

You signed up to use software to send Income Tax updates on 6 May 2018.

You send in 4 Income Tax updates, the last one on 6 May 2019.

In this case your final report is not due until 31 January 2021. This is because your accounts fall in a different tax return period.

You’ll still need to send HMRC your Self Assessment tax return for the tax years 2017 to 2018, and 2018 to 2019 no later than 31 January 2019 and 2020.

Pay your tax bill

The deadlines for payment remain unchanged. You can also choose to pay as you go.

If you need help

Check with your software supplier if you need help, for example with recording your business records, or sending updates.

If you have another query about the Making Tax Digital pilot for Income Tax, contact HMRC.

Published 15 March 2018
Last updated 4 June 2018 + show all updates
  1. You can now use software to send Income Tax updates if you receive income from renting out UK property (excluding furnished holiday lettings).
  2. You can now use software to send Income Tax updates if you receive income from renting out UK property (excluding furnished holiday lettings).
  3. First published.