Under Making Tax Digital for Income Tax (MTD for ITSA), for sole traders and landlords the traditional Self Assessment tax return is gradually being replaced with a new digital end-of-year process.
Although quarterly updates are submitted throughout the year, taxpayers will still need to complete a final year-end submission to confirm their overall tax position.
What is the end-of-year submission?
This is effectively the final confirmation of income, expenses and tax calculations for the year.
It brings together:
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Quarterly updates
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Final accounting adjustments
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Relief claims
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Additional income sources
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Confirmation declarations
This process replaces the current standalone annual Self Assessment return for taxpayers within MTD for ITSA.
Why is it still needed?
Quarterly updates are not intended to produce final tax calculations. Many adjustments are only made at year end.
Examples include:
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Capital allowances
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Use of home adjustments
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Accounting adjustments
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Relief claims
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Other taxable income
The end-of-year process ensures the final tax position is accurate before liabilities are confirmed.
What happens during the final declaration?
At the end of the tax year, taxpayers will:
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Review quarterly submissions
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Make any required adjustments
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Include additional sources of income
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Finalise tax calculations
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Submit the final declaration digitally
This becomes the official annual tax submission.
When is it due?
The final declaration deadline remains broadly aligned with the existing Self Assessment timetable.
For example:
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The 2026/27 tax year final declaration will generally be due by 31 January 2028.
This means businesses still need to complete year-end compliance even after submitting quarterly updates.
Does this mean more work?
Potentially at first, but many businesses may find the workload becomes more manageable over time.
Because bookkeeping is updated throughout the year:
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Less work accumulates at year end
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Records are often cleaner
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Tax positions are easier to review
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Missing information is identified earlier
Businesses that already use cloud bookkeeping may find the transition relatively smooth.
What information can be adjusted at year end?
Quarterly updates can be corrected and refined during the final declaration.
Examples include:
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Adjusting expense categories
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Adding omitted transactions
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Claiming allowances
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Correcting bookkeeping errors
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Including personal tax information
This flexibility is important because quarterly submissions are designed to be updates rather than final accounts.
What happens if the final declaration is late?
Unlike the soft treatment for quarterly updates during the first year, late final declarations can still attract penalties.
Businesses therefore need to continue treating the January deadline seriously even under MTD.
How does this change the role of accountants?
Many accountants are shifting from once-a-year tax preparation towards ongoing advisory and bookkeeping support.
This can provide:
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Better tax planning
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More accurate records
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Faster identification of issues
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Improved financial visibility
The relationship between businesses and accountants is likely to become more continuous rather than seasonal.
The importance of maintaining accurate digital records
The end-of-year submission remains a vital part of the MTD process. While quarterly updates provide regular reporting throughout the year, the final declaration is still the point where taxpayers formally confirm their tax position.
The biggest difference is that businesses are now expected to maintain accurate digital records throughout the year rather than scrambling to prepare everything after the tax year has ended.
For many, the time, stress, and risk of mistakes involved in managing this themselves can outweigh the cost of professional support. Our MTD for ITSA accounting service is designed to remove the hassle that comes with these new requirements, making the transition seamless.
If you’d like more information speak to one of our team today on 0161 926 7866 or via smeaccounts@paystream.co.uk, or click here to find out more.
