The MTD for Income Tax final declaration step by step

Finishing the year

1. Send the fourth update

   The fourth update, for 6 April to 5 April, is due by 7 May. Resend it if the records change, joint property expenses need adding, or Rent-a-Room relief is claimed (HMRC: send quarterly updates).

2. Make the adjustments

   After the fourth update, enter the tax and accounting adjustments, allowances and reliefs for each business (HMRC: adjust your income).

3. Add other income

   Add income HMRC does not already hold: savings interest, partnership profits, dividends, some benefits in kind and other income (HMRC: submit your tax return).

4. Review what HMRC has added

   HMRC fills in employment income, pensions, student loans, some state benefits, CIS deductions, Capital Gains Tax on UK residential property already reported, and Marriage Allowance.

5. Check the calculation

   Review the tax calculation in the software against the figures.

6. Get the client's confirmation

   An agent shares what will be submitted and gets the client's written confirmation before filing.

7. Declare and submit

   Confirm the information is correct and complete, and submit by 31 January. Only the main agent can submit (HMRC: submit your tax return).

Adjustments HMRC describes

• Reliefs and allowances, such as the trading income allowance or Rent-a-Room relief, which HMRC's adjustments guidance puts at up to £7,500 a year, halved if the income is shared.
• Tax adjustments, such as cutting a phone cost shared between business and personal use to the business share.
• Accounting adjustments for clients using traditional accounting. HMRC's example spreads a £1,200 annual insurance policy paid in January at £100 a month, and accrues a consultant's work received in March 2026 but not yet invoiced.
• Capital allowances, which HMRC describes as deducting some or all of the value of an item from profits, recorded in the software before the return is submitted. See capital allowances rates for 2026.
• Accounting periods that differ from the tax year. HMRC says no adjustment is needed where the period matches 6 April to 5 April, and special rules apply to periods ending 1 to 4 April. See basis period reform.

A worked example

For example, a sole trader's fourth update shows £48,000 of income and £9,000 of expenses, including £1,200 for a phone used half for the business. The adjustment cuts the phone cost to £600, as in HMRC's example of a tax adjustment, and capital allowances of £2,000 are claimed on a van. Profit for the return is £48,000 less £8,400 of expenses and £2,000 of allowances, which is £37,600.

The agent then adds the client's £1,500 of savings interest and £3,000 of dividends, which HMRC does not hold, checks the employment income HMRC has filled in, reviews the calculation and sends it to the client to confirm.

The return goes through the software

From April 2026 HMRC requires clients using the service to file the tax return through their Making Tax Digital software, according to the Spring Statement 2025 technical note. Regulation 8 of the Income Tax (Digital Obligations) Regulations 2026 puts that requirement in law.

For a client who joined on 6 April 2026, the 2025 to 2026 return due by 31 January 2027 is still an ordinary Self Assessment return. The first return under the service, for 2026 to 2027, is due by 31 January 2028 (HMRC news release, 5 February 2026).

Payments and amendments

Payment dates

Unchanged. HMRC says the service does not change how tax is paid or when (HMRC: submit your tax return).

Amending

Within 12 months of the filing deadline, through compatible software.

Late payment

Penalties under the new regime. See penalties.

Late return

A penalty point for each missed deadline (HMRC: penalties).

Questions