Making Tax Digital (MTD) : Reporting RequirementsWritten on April 8, 2025 by Kirk Rice LLP
Where the MTD rules apply to either a person receiving income from property or from a self-employed sole trade business (please see our other articles), the following reporting requirements will need to be met for each source:
Under MTD, individuals will be required to keep digital records of the amount, category and date of income and expenses relating to each source of self-employed sole trade income or property income. These records must be kept either in MTD compatible accounting software or on spreadsheets. HMRC have confirmed they will not supply free MTD software.
It is recommended that separate business bank accounts be used for each source of business income that falls within the MTD requirements. This will aid a smoother quarterly update process (see below).
Kirk Rice LLP will advise affected individuals which accounting software is MTD compatible and best suited to their needs. We will also offer a bookkeeping service for anyone who does not wish to maintain digital records themselves. More details will be published in due course.
Quarterly Updates
These will be based on tax year quarters starting from 6 April, unless the business makes an election to use the calendar quarter, in which case the first quarter will start 1 April (which will be the preferred option for most people).
Tax year quarters (default):
| Quarterly updates | Period covered | Filing deadline |
| 1 | 6 April – 5 July | 7 August |
| 2 | 6 July – 5 October | 7 November |
| 3 | 6 October – 5 January | 7 February |
| 4 | 6 January – 5 April | 7 May |
Calendar year quarters (election):
| Quarterly updates | Period covered | Filing deadline |
| 1 | 1 April – 30 June | 7 August |
| 2 | 1 July – 30 September | 7 November |
| 3 | 1 October – 31 December | 7 February |
| 4 | 1 January – 31 March | 7 May |
The above updates must be made digitally via accounting software, app or using bridging software attached to spreadsheets of data. It is anticipated that where you are a client of Kirk Rice LLP, we will be able to make the submissions on your behalf through recommended third party software.
The information required will be gross income and tax-deductible expenses for each source.
Final Declaration
This is the final step in the process and replaces the self assessment tax return for those caught by the MTD rules. The final declaration will include all MTD income sources, as well as other non-MTD income and capital gain sources, such as interest, dividends, employment income, trust and estate income, foreign sources (other than property income), tax-deductible investments, pension contribution reliefs, relief on charitable donations, etc.
The filing deadline for the final declaration is 31 January, following the relevant tax year. The tax payment deadline is also 31 January.
It is important to note that where a person has property income and self-employment income, separate sets of quarterly updates will be required for each ‘business’ source.
For example, suppose a person has £12,000 gross UK rental income, £6,000 gross overseas property income and £32,000 gross turnover from their self-employment. Total combined income is therefore £50,000, so they fall into MTD. They will be required to maintain separate digital records and make the following submissions to HMRC in respect of each source:
| UK property income | 4 quarterly updates |
| Overseas property income | 4 quarterly updates |
| Self-Employment | 4 quarterly updates |
In the above example, there will be a total of 12 quarterly updates and one Final Declaration (which will include all sources of income and gains not caught by the MTD rules).
More information concerning MTD will be made available here as and when it is published by HMRC. If you are a client of Kirk Rice LLP we will be contacting you over the course of this year to discuss these changes and the options available to you. Please bear with us whilst we work through the impact of these changes.
You can find out more on the Government website. Get in touch with us at info@kirkrice.co.uk
Please note: This article is correct as at the publication date. The answers are given for general guidance only and specific advice should be taken before acting on any of the suggestions made. The information is based on current tax legislation which may change in future. Information is based on our current understanding of taxation legislation and regulations. Any levels and bases of relief from taxation are subject to change. The Financial Conduct Authority does not regulate tax planning.
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