MTD year-end: adjustments and your tax return

Quarterly updates are running totals of income and expenses. They are not the end of the process. Once the tax year is over, HMRC’s guidance says you use your Making Tax Digital for Income Tax software to complete and submit your tax return, having first made any adjustments and added any other income HMRC does not already hold. That return is what generates your Self Assessment tax bill for the year.

Once you have sent your fourth quarterly update, HMRC holds your self-employment and property income and expenses for the year. You may then need to adjust those figures, for example by:

• Claiming reliefs or allowances, such as the trading income allowance or Rent-a-Room relief (up to £7,500 a year, halved if shared).
• Making tax adjustments, such as removing expenses you cannot claim. HMRC’s example is a phone used for both business and personal calls, where you reduce the category total so you only claim the business share.
• Making accounting adjustments, such as prepayments or accruals, if you use traditional accounting. HMRC says cash basis is the default for self-employment and property income, and if you use it you do not need to make these adjustments.
• Adjusting for your accounting period, if your books do not run from 6 April to 5 April. If they do, no adjustment is needed.
• Claiming capital allowances on assets such as plant and machinery.

You usually make these by changing the annual total for an expense category in your software, not by editing individual transactions.

Your tax return covers all your taxable income, not only your business. HMRC says it will add information it already holds, and that you must check it. Items HMRC says it will add include PAYE employment income, pension income, some taxable state benefits, CIS subcontractor deductions, Capital Gains Tax on residential property disposals and Marriage Allowance claims.

If HMRC does not hold the information, you add it yourself. HMRC’s examples are savings interest, your share of profit from a partnership, and dividends, including those from your own company. If you are a company director who also has a sole trader or rental business in scope for MTD, this is the point where your dividends go on the return.

Director with dividends? See our director Self Assessment help →

1. Confirm in your software that you are ready to submit.
2. View and check the tax calculation.
3. Submit the return, declaring that the information is correct and complete to the best of your knowledge.

Your software then confirms the return has been submitted. If you spot an error afterwards, HMRC says a correction made in your software overwrites the previous information.

The deadline is 31 January following the end of the tax year, and you can file earlier. For example, HMRC says you can submit a 2025 to 2026 return at any time from 6 April 2026 to 31 January 2027. If you start MTD for Income Tax in April 2026, that 2025 to 2026 return is still filed the way you always have. Your first return completed through MTD software is for 2026 to 2027, due by 31 January 2028.

Missing the return deadline earns a late submission penalty point. HMRC’s guidance says there are no penalties for missing a quarterly update deadline in 2026 to 2027, but the points system applies to later years and to tax return deadlines. The threshold is 4 points for a £200 penalty. Penalties for paying late are separate.

MTD penalties in full →

The year-end return is where most of the judgement sits: what to disallow, which reliefs apply and how dividends or partnership income fit in. If you would rather hand it over, call 0114 327 1480. This page is general guidance, not personal tax advice.

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