MTD for Income Tax Self Assessment (ITSA)

This section guides you through setting up and filing the required quarterly updates for your sole trade or property income.

Quick start guide to submitting quarterly updates using Bridging mode:

1. Click on Obligations then an Open obligation, this takes you to the update screen.

2. Set the end date to the date your figures are made up to, as the screen is initially preset with the start of the tax year and defaults the end date to the current date.

3. On the "Update Income and Expenses" screen, click the "Import figures" button.

4. Open the downloaded Income and Expenses template and add it as a new sheet to your existing accounting spreadsheet.

   Download example SA103 Self Employment template (XLSX)

   Download example SA105 UK Property template (XLSX)

   Download example SA106 Foreign Property template (XLSX)

5. Link the income and expense cells in the template sheet to your figures by adding cell references to your existing sheet.

6. Save the completed spreadsheet to your computer.

7. Click "select file" in the file chooser, select the saved spreadsheet, and click the "upload" button. The figures will load from the first sheet, but you can choose an alternative sheet if necessary.

8. Review the imported figures against your original spreadsheet and click "submit".

After submission, you can check that the update was successful by clicking on the "Income and Expenses" tile, where the last submission date and the displayed figures should be updated. You must make at least four updates, one after each quarter, to fulfill your obligations.

Quick start guide to submitting quarterly updates using Accounting mode:

1. On the self-assessment homepage, select the relevant tax year. Choose the "business income" tile, and then select an income source, such as "UK property". The process is the same for self-employment and foreign property.
2. Click on "Accounting" to use accounting mode, which records income and expenses and automatically calculates the quarterly income tax summary.
3. Set the percentage of income attributable to you (e.g., 50% for jointly owned property). Choose whether to report income and expenses including or excluding VAT.
4. Because accounting mode was chosen, you will be prompted to add a linked business to record income and expenses.
   • Complete the required fields, noting that some are pre-filled with HMRC information.
   • For VAT-registered businesses, enter the VRN and VAT scheme.
   • Complete the remaining business details and submit.
5. Confirm your accounting period and click submit.
6. The submission mode will now be set to "Accounting" with the linked business set. To add income and expenses, click on the linked business button on the business income screen, or click on the individual at the bottom left and select the linked business.
7. Record Transactions (Manually):
   • From the business home screen, click the "transactions" tile.
   • Click the "Add" button.
   • Select the date, input a transaction description, and optionally assign a contact or business.
   • Choose a category (which are UK property specific in the example) and transaction type.
   • Enter a VAT rate (if applicable) and the gross amount; the net amount will be calculated.
   • Indicate if it is a refund, and then click submit.
8. Import Transactions (Bulk):

   • From the transaction screen, click "Manage," then "Import".

   • On the import screen, select "File import," and then "Select a file" to open the file chooser.

   • Select a spreadsheet or CSV (e.g., bank transactions or financial records from other software) and click "Upload".

     Download example transaction template (XLSX)

     Download example transaction template (CSV)

   • The system will attempt to map the file's data, but date, description, and amount are required at a minimum.

   • Check the preview and click "Submit". You can delete the import and start again if needed.

9. Submit Update to HMRC:
   • Click on "Home," then choose "Self-Assessment," and click "Go to MTD Self Assessment".
   • On the self-assessment screen for your business, click on "Income and expenses".
   • Click on "Prepare update".
   • Because you are in accounting mode, the boxes will be pre-filled with cumulative totals from your transactions for the selected update period.
   • Check your figures and click "Submit".

You can make as many updates as you like, but you must make a minimum of four updates, one after each quarter has ended, to fulfill your obligations.

Adding an Individual for Income Tax Self Assessment

If you've not already created an Individual for the purposes of submitting Income Tax Self Assessment (ITSA) then you'll need to follow these steps:

1. From the side menu, click the link to Add Business/Individual.

2. Choose "Individual" as the type of entity you want to add.

3. Input your First name, Last name, and your UK National Insurance number (NINO).

   • Note: The NINO is essential for linking your profile to HMRC's ITSA records.

4. Click "Submit" to save the individual income source.

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Other ITSA Screens (Annual Finalisation)

The following sections allow you to perform year-end adjustments, declare other non-business income, and manage any business losses.

Adjust Income & Expenses

This screen is used to correct any cumulative income or expense totals that you submitted in your earlier quarterly updates.

1. Access Adjustment: Select the Adjust Income & Expenses tile from the ITSA dashboard.

2. Select Period: Choose the specific Tax Year you need to adjust.

3. Review Totals: The screen will display the cumulative annual total for each income and expense category based on the four quarterly updates you previously filed.

   • Note: Since the quarterly updates are cumulative, correcting an error in a previous quarter will affect the figures here.

4. Enter Corrected Figures: If you find an error (e.g., you missed an invoice or wrongly categorised an expense), you can override the automatically calculated total for the relevant category and enter the correct, final annual figure.

5. Submit Adjustment: Click "Submit Adjustment". This sends the updated annual totals for that income source to HMRC, ensuring your total profit calculation is accurate before proceeding to the final declaration.

Adjustments & Allowances

This is a critical year-end screen used to apply tax and accounting rules that are not included in the quarterly updates.

1. Access Screen: Select the Adjustments & Allowances tile from the ITSA dashboard.

2. Make Accounting Adjustments: If you are using the traditional (accrual) basis of accounting, you will enter amounts here for items like:

   • Prepayments: Paying an expense that relates to a future tax year (e.g., insurance paid in advance).
   • Accruals: An expense that was incurred but not yet paid or invoiced by the tax year end.

3. Claim Tax Allowances: Enter your claims for tax reliefs that reduce your profit, such as:

   • Capital Allowances: Claims for qualifying business assets (e.g., equipment, vehicles).
   • Disallowable Expenses: Deduct any expenses that are not allowable for tax (e.g., personal use portion of a phone bill, entertainment).
   • Rent a Room Relief: If applicable, claim the tax-free allowance for letting furnished accommodation in your own home.

4. Finalise: Click "Save and Proceed". The system uses these figures to finalise the statutory taxable profit or loss for the income source.

Brought Forward Losses

This screen tracks and applies any tax losses carried over from previous tax years to reduce your current year's tax bill.

1. View Brought Forward Loss: Select the Brought Forward Losses tile. The screen will display any unused losses from earlier tax years that are available to be used now.

2. Apply Loss: The system will automatically, or prompt you to, apply any eligible brought forward losses against the current year's taxable profit for the same trade.

3. Update Balance: Once applied, the remaining available loss to be carried forward to future years is updated.

Loss Claims

This screen allows you to make claims for losses incurred during the current tax year against other income (known as 'sideways relief').

1. Identify Current Loss: Ensure your Adjustments & Allowances screen has confirmed a trading or property loss for the current tax year.

2. Claim Relief: Select the Loss Claims tile. You can then specify how you wish to use the loss:

   • Sideways Relief: Claim to set the loss against your other sources of income (e.g., employment, dividends) from the current year, subject to HMRC caps.
   • Carry Forward: Choose to carry the loss forward to be used against profits of the same trade in future tax years.

3. Submit Claim: Click "Submit Loss Claim" to inform HMRC of your intention to use the loss in the specified manner.

Tax Calculations

The Tax Calculations section allows you to view an estimate of your Income Tax and National Insurance liability at various points throughout the year. This gives you a better idea of how much tax you may owe before the annual filing deadline.

This calculation is an estimate based on the information submitted to HMRC so far. It should not be treated as your final tax bill.

1. Navigate to Tax Calculations: From the ITSA menu for your chosen income source, click on Tax Calculations.

2. Trigger a New Calculation: To get the latest estimate based on your most recent quarterly update and any adjustments:

   • Click the blue "Trigger" button located in the top-right corner of the Tax Calculations screen.

3. View Calculation History: The main Tax Calculations screen displays a history of all previously requested estimates, showing the period, the creation date, and the type of calculation requested (e.g., In year, Intent to Finalise, Final Declaration).

4. Review the Calculation Details: Click on any calculation in the list to view the full detailed breakdown.

   • Overview: Shows the tax year, the period covered, and the request details.
   • Messages: This section will flag any important Info, Warnings, or Errors returned by HMRC that could affect the accuracy of the calculation.
     • Example Warning: You may need to provide further information during the final declaration.
     • Example Error: You have not provided final confirmation of income and expenses for all business sources.
   • Inputs: Lists all the financial information used to create the estimate (e.g., personal information, income sources, allowances, losses, claims).
   • Calculation: Provides the estimated results, including the breakdown of:
     • Taxable event gain income
     • Pension profit
     • Student loans
     • Total Income Tax and National Insurance due

Final Declarations

The Final Declarations screen is the final step in the MTD for ITSA process and takes place once a tax year has ended (after 5 April). This declaration replaces the old annual Self Assessment tax return.

Purpose of the Final Declaration

The Final Declaration is your annual chance to tell HMRC about all your income and apply all personal allowances, reliefs, and finalise your tax calculation.

It includes:

• The business and property figures that were finalised in the Adjustments & Allowances screen.
• Any non-mandated income (e.g., employment, dividends, savings interest).
• Any personal claims or reliefs.

1. View Open Declarations: From the ITSA menu, click on Final Declarations. This screen displays a list of tax years for which a declaration is due. An "Open" status means the final submission for that year has not yet been filed with HMRC.

2. Select Declaration: Click on the required period (e.g., 06/04/18 - 05/04/19) to begin the finalisation process.

3. Review and Add Information: Before submitting, the app will guide you through sections to ensure all your income is accounted for:

   • Business Income: Confirms the final profit/loss figures that were determined using the Adjustments & Allowances screen for all your self-employment and property sources.
   • Additional Information: This is where you declare any non-mandated income that was not included in the quarterly updates, such as:
     • Employment income
     • Savings and interest income
     • Dividends
     • Capital Gains
     • Pension income
   • Tax Calculations: Use this screen to run a final, definitive tax estimate before submission.

4. Confirm and Submit: Once all income, allowances, and reliefs have been entered and the tax calculation has been reviewed, you will make the final legal declaration.

   • Click the "Submit Final Declaration" button (usually found on the review page).
   • The status of the tax year will change from "Open" to "Fulfilled," confirming the completion of your MTD ITSA requirements for that period.

Note: Once the Final Declaration is submitted, any further changes (amendments) must typically be filed separately, although the app supports amending previous submissions via the Tax Calculations screen.