Send an end-of-year update for MTD for Income Tax

This article explains how to send an end-of-year update to HMRC for Making Tax Digital (MTD) for Income Tax.

The end-of-year update can be submitted after the final quarterly update for the tax year in question and after the tax year has ended. It covers all the adjustments and allowances that need to be reported before you submit the final declaration.

If you have multiple income streams signed up to MTD for Income Tax, for example if you have multiple self-employments or you have a self-employed business and also rent out properties, you’ll need to send an end-of-year update for each income stream. You can find out what counts as multiple income streams, as well as tips for managing more than one income stream, in our how to efficiently manage multiple income streams guide.

1. Navigate to the Income Tax area

Navigate to the ‘Taxes’ tab at the top of the screen and select ‘Income Tax’ from the drop-down menu.

Select the relevant tax year from the list.

2. Add any adjustments and allowances

Next, select the ‘Annual summary’ tab.

Add any adjustments and allowances, and non-financial information that you want to send to HMRC as part of the end-of-year update. You must complete the non-financial information section in order for the submission to be successful.

Read more about how to complete the annual summary page and what each of the adjustments and allowances are for MTD for Income Tax.

If you’re unsure whether you need to add any adjustments and allowances, please speak to your accountant. If you’re not currently working with an accountant, you may wish to find one using FreeAgent CoPilot.

3. Check your figures

Next, check that you’ve entered all of the relevant data for the tax year in question. In order to create an accurate submission, FreeAgent needs to have all the details of your properties (if you have an unincorporated landlord account type), bank transactions, invoices, bills and out-of-pocket expenses.

If you're below the VAT threshold and not VAT-registered, you can leave the VAT rate as 'Auto' when explaining bank transactions or change it to 'Out of Scope'. If you leave the VAT rate as 'Auto' and then register for VAT in the future, FreeAgent will automatically reclaim the VAT on these purchases on your first VAT return if required.

FreeAgent will automatically populate your total income for each quarter in the income section of the self employment page if you have a sole trader account, or the UK property page if you have an unincorporated landlord account type.

FreeAgent will also automatically populate your total day-to-day running costs for each quarter in the expenses section of the self employment page if you have a sole trader account, or the UK property page if you have an unincorporated landlord account type.

4. Submit your end-of-year update to HMRC

Once you’re happy with the information, select ‘Send End of Year update’ in the top-right.

Select ‘Send End of Year update’ to complete the process.

Once the update has been submitted and received by HMRC, you’ll see confirmation that the end-of-year update has been sent to HMRC in the banner at the top of the page.

You’ll also receive confirmation via email.