What Making Tax Digital means for you

Making Tax Digital for Income Tax changes how you report rental or self-employment income to HMRC. Instead of one Self Assessment return a year, you keep your records digitally and send HMRC short running updates as you go. This app is that digital record, and it sends the updates for you.

What Making Tax Digital is

Making Tax Digital for Income Tax is HMRC's way of moving Income Tax reporting away from a single end-of-year return. Under it you do three things:

1. Keep your records digitally in compatible software (this app counts as that software).
2. Send four quarterly updates a year, each a running summary of your income and expenses.
3. Finalise the year by submitting your tax return after the tax year ends.

The app is recognised by HMRC and connects directly to HMRC's Making Tax Digital service, so once you are set up everything is sent from here.

Note: Whether and when you need to join Making Tax Digital depends on your circumstances. This guide explains how the app works, not whether the rules apply to you. For that, see the Making Tax Digital guide and the Making Tax Digital status checker, or check with HMRC or your accountant.

The two things HMRC tracks

HMRC tracks exactly two obligations for the income this app covers:

1. Quarterly updates (four per tax year).
2. Your tax return after the tax year ends.

That is the whole picture. There is no separate annual submission deadline to worry about. The app's Deadlines page shows both obligations, sourced from HMRC, so you always know what is outstanding.

Quarterly updates, in plain English

A quarterly update is a short, running summary of your income and allowable expenses, sent to HMRC roughly every three months. The four standard quarters are:

• 6 April to 5 July
• 6 July to 5 October
• 6 October to 5 January
• 6 January to 5 April

Two things make this easier than it sounds:

• The figures are built for you. You do not type in a quarter total. You record your income and expenses as transactions, and the app adds them up into the right HMRC categories when you go to submit. See Recording income and expenses.
• Each update is cumulative. Every update covers the whole tax year so far, from 6 April up to the end of that quarter, so a later update simply supersedes the earlier ones. If you spot a missed or wrong transaction, you fix it in the app and your next update carries the correction automatically. There is no need to go back and re-open a finished quarter. See The cumulative model and corrections.

Quarterly updates are estimates. They do not need to be perfect, because you finalise everything at year-end.

Tip: When you are ready, you submit from Send update to HMRC, not from the Sent to HMRC page. See Send a quarterly update.

Your tax return

After the tax year ends, you confirm the full year's figures and submit your tax return. This is how you tell HMRC the year is complete: it covers everything HMRC holds for you for the year.

Important: The app covers UK property and self-employment income, and other income such as employment, dividends, interest, pensions and state benefits through its Additional income pages. If you have income the app does not yet report (for example capital gains), report it to HMRC with its services or your accountant before you submit your tax return here: your tax return covers everything HMRC holds for you for the year, so anything reported after it is submitted needs an amendment. If HMRC lists a foreign property business for you, the app may not be able to submit your tax return at all: your Year-End Review says so, and you then submit it with HMRC's services or software that supports foreign property. See Year-end and your tax return.

The app is your digital record (no separate software needed)

Making Tax Digital asks you to keep digital records of your income and expenses and to submit them through compatible software, with a digital link between the two. This app is an all-in-one that does both, so you do not need a separate spreadsheet and bridging tool.

HMRC does also allow keeping your records in a spreadsheet and submitting through bridging software; this app simply is not a bridging tool. If you already keep a spreadsheet, you do not lose that work: import it, and the app brings in each row as a transaction so your records are held here and stay digital from end to end. It does not take a set of totals. See Import transactions from a CSV.

If something goes wrong

• HMRC says you are not signed up for Making Tax Digital. You can carry on recording properties, businesses, income, and expenses. The app keeps everything and shows a notice linking you to GOV.UK to sign up, then you refresh once HMRC confirms (and use Reconnect in Settings if it still shows afterwards). See Not signed up for Making Tax Digital yet?.
• You found a mistake in a quarter you already sent. You do not amend the old quarter directly. Correct the underlying transaction and your next cumulative update fixes it. See The cumulative model and corrections.

Frequently asked questions

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