After the fourth update: year-end adjustments and your MTD tax return

Owain is fictional, but the point he has reached is one that everyone in Making Tax Digital (MTD) for Income Tax comes to once a year. He is a self-employed plumber, and for the 2026 to 2027 tax year he has kept digital records and sent each quarterly update on time, the last of them by 7 May 2027. With four updates sent, he wonders whether the year is finished, or whether something is still left to do. This guide sets out what GOV.UK says about the end of an MTD year, so that someone in his position can see what the last step involves and why it matters.

Why the quarterly figures are not the final word

The quarterly updates tell HMRC what has come in and gone out, but they are not where the year is settled. GOV.UK’s page on adjusting your self-employment and property income puts it this way. Once you have sent your fourth quarterly update, HMRC will have details of all your self-employment and property income and expenses. This is for every business that you have, for the tax year. Using your software, you may then need to adjust the data you have sent, before you complete and submit your tax return.

So the four updates are the starting point for the year rather than its final figures. Owain’s updates show his takings and costs by category, and the year-end is where those totals are adjusted before the return is completed. GOV.UK lists the kinds of adjustment this could include:

• claiming reliefs or allowances that reduce the amount of your self-employment or property income that is taxable, such as the trading income allowance
• making tax adjustments, such as removing expenses that you cannot claim, also known as disallowable expenses
• making accounting adjustments, such as for prepayments or accruals
• making adjustments because of your chosen accounting period
• claiming capital allowances that let you deduct the cost of capital assets, such as plant and machinery

Mistakes found during the year are a separate matter, and they do not wait for the year-end. Throughout the year, you need to correct your digital records as soon as possible to make sure they are accurate, if you become aware of an error.

How adjustments are made

The way adjustments work in the software is simpler than it might sound, because they are made to totals rather than to every entry. You will make most adjustments by updating the annual total for an expense category in your software. This means that if you have created multiple digital records that relate to the same category, you will not need to adjust each individual transaction.

Reliefs and allowances come first in GOV.UK’s list. You may be able to claim reliefs or allowances that will reduce how much Income Tax you owe. Which of them apply depends on your own circumstances, so this guide does not suggest any, and GOV.UK’s page is the place to read about each one.

Tax adjustments take out costs that cannot be claimed. You will need to make tax adjustments by adjusting the annual total of your expenses. For example, if you have one phone for business and personal use, you will need to reduce the category total for ‘phone, fax, stationery and other office costs’, so that you’re only claiming the expenses that were used in relation to your business. A phone that Owain also uses privately would be exactly this case.

Accounting adjustments depend on the accounting method you use, so you may have none to make. Cash basis is the default accounting method for self-employment and property income. You do not need to make these adjustments if you use cash basis. If you choose to use traditional accounting, your software will allow you to adjust the annual totals from your quarterly updates to address accounting adjustments, such as for prepayments or accruals. GOV.UK links to its page on business records if you are self-employed for more about traditional accounting.

Rent-a-Room relief works through the records

GOV.UK treats Rent-a-Room relief a little differently from the other adjustments, so it is worth knowing about if you let a furnished room in your own home. The Rent-a-Room relief lets you earn up to £7,500 per year, tax-free from letting out furnished accommodation in your home. This is halved if you share the income with your partner or someone else. If you intend to use the relief, you can create digital records of the Rent-a-Room income during the tax year, which will be included in each quarterly update.

Capital allowances

Owain’s tools and equipment bring in the last kind of adjustment on GOV.UK’s list. Capital allowances are a type of tax relief for businesses. They let you deduct some or all of the value of an item from your profits before you pay tax. You will need to use your software to record your capital allowance claim before you submit your tax return. Your software may be able to record your claim during the tax year, but HMRC will not process your claim until you have submitted your tax return.

That last point matters for timing. A claim can be recorded in the software during the year, but HMRC deals with it only once the return has gone in. GOV.UK’s guide to claiming capital allowances explains what can be claimed.

When your accounting period is not the tax year

One kind of adjustment depends only on the dates your accounts cover. Your accounting period is the period that your books or accounts cover. If your accounting period aligns with the tax year (6 April to 5 April), then you do not need to make any of these adjustments. Your software will also automatically default to an accounting period that aligns with the tax year.

If your accounts run to a different date, there is more to check. If your accounting period does not align with the tax year, then you will need to adjust your totals for self-employment or property income and expenses, or confirm that no adjustment is required. GOV.UK sets out three cases, and each is quoted here as it stands, because the detail depends on when you started and how your software is set up.

GOV.UK’s page includes the steps and an example for these cases, and it is the place to check before making this kind of adjustment.

Adding your other income and gains

The return covers more than the business. Owain’s plumbing income has been reported through the year, but anything else he has received also belongs on the return. You need to make sure all your other taxable sources of income or gains for the year are included in your Making Tax Digital for Income Tax software. GOV.UK’s page on submitting your tax return divides this into what HMRC adds and what you add yourself.

If HMRC has information about your other income sources, HMRC will add them to your tax return for you. GOV.UK lists:

• employment (PAYE) income
• student loan plan type and postgraduate loan (including repayments taken from PAYE, if any)
• income from state, private and occupational pensions
• other taxable state benefits
• Construction Industry Scheme (CIS) — subcontractor deductions
• Capital Gains Tax residential property disposals
• Marriage Allowance claims

After HMRC has added this information, you can find it in either your software (when you ask for a calculation) or your HMRC online services account. You must check this information before you submit your tax return. In other words, the figures HMRC fills in are still yours to check.

If HMRC does not have all the information about your other income sources, you will need to add them yourself. GOV.UK lists:

• savings interest
• your share of profit from a partnership as an individual partner
• dividends (including those from your own company)
• payrolled benefits in kind that are not subject to Class 1A National Insurance contributions
• any other income or gains that have not been automatically added

You must add this information before you submit your tax return.

Checking and submitting through your software

Once the adjustments are made and the other income is in, the return is completed and sent from the same software Owain has used all year. Before you submit your tax return, you must add all income sources and gains and check all information is correct and complete. You will need to use your software to make any corrections before you submit. Once you have made your corrections, this will overwrite the previous information. You must then submit your tax return using Making Tax Digital for Income Tax software.

GOV.UK gives the steps in this order:

1. Go into your software and confirm you’re ready to submit.
2. View and check the tax calculation is correct.
3. Submit your tax return by declaring that your information is correct and complete to the best of your knowledge.

You’ll then see a message in your software to tell you your tax return has been submitted. The second step is where the adjustments and other income come together in one calculation, so it is worth taking slowly.

If an accountant or other agent handles your return, the same checks happen on their side, with one more involving you. An agent can only submit their client’s tax return using Making Tax Digital for Income Tax if they are the client’s main agent. GOV.UK’s steps for an agent are:

1. Go into your software and confirm you’re ready to submit.
2. View and check the tax calculation is correct.
3. Share a copy of the information being submitted with your client.
4. Ask the client to check and provide written confirmation the information is correct and complete.
5. Submit your client’s tax return by declaring that the information and calculation is correct and complete to the best of your knowledge.

One thing the return cannot do is claim a refund. If you think you are due a tax refund, you cannot claim the refund in your tax return using Making Tax Digital for Income Tax. GOV.UK explains how to claim one in its help and support section.

The deadline, and the year before MTD

You must submit your tax return by 31 January following the end of the relevant tax year, but you can submit it earlier. For Owain’s 2026 to 2027 tax year, that means by 31 January 2028. GOV.UK’s own example shows how wide the window is: the 2025 to 2026 tax return can be sent at any time from 6 April 2026 to 31 January 2027. If you miss the deadline for submitting your tax return, you will receive a late submission penalty point.

You will still need to submit a Self Assessment tax return as you normally do for the tax year before you start using Making Tax Digital for Income Tax. For tax years after this, you will need to use your Making Tax Digital for Income Tax software to complete and submit your tax return. The guide to MTD and your January return explains how those two deadlines overlap in the first year.

If the calculation looks wrong or the software will not submit

GOV.UK sets out an order to follow, and it starts with the software rather than with HMRC. If there is an issue in your software and you are unable to resolve the problem yourself, you must contact your software provider for support first. If you have spoken to your software provider and they have not been able to resolve your issue, and you still cannot confirm your tax calculation is correct or submit your tax return, you must tell HMRC as soon as possible. HMRC’s contact details are on GOV.UK’s Self Assessment general enquiries page.

After the return has gone in

Submitting the return is what turns the year into a bill. The information you give to HMRC will generate your Self Assessment tax bill for that tax year. Making Tax Digital for Income Tax will not change the way you pay tax or the dates that payments are due. If you do not pay your Self Assessment tax bill on time, you will receive a late payment penalty. The penalties guide explains how late submission and late payment penalties work.

Changing the return later

If Owain finds a mistake after he has submitted, the return can still be put right. If you need to make a change to a tax return after you have submitted it, you should use your compatible software. You can make a change to a tax return within 12 months of the submission deadline. When you make changes in your software, your HMRC online services account or agent services account will show an updated tax calculation. You can see it by signing in to HMRC online services, or an agent can see it in their agent services account.

The timing decides which route applies. If you need to change information related to your digital records before you submit your tax return, you should correct your digital records instead of making a change to your tax return. Changes to your tax return may affect when you need to start using Making Tax Digital for Income Tax. If you no longer need to use Making Tax Digital for Income Tax after making a change to your Self Assessment tax return, you can either opt out or continue using Making Tax Digital for Income Tax voluntarily. The guide to opting out of MTD explains what GOV.UK says about leaving.

Where to go next

For the dates themselves, the MTD deadlines calendar lists every quarterly update and return deadline. If the year you are finishing is your first, the January return guide explains why a Self Assessment return for the year before MTD is due first. The penalties guide covers what happens when a return or payment is late, and the guide to getting help with MTD explains who GOV.UK says to ask when you are stuck. If you are still choosing software, the software selector compares products against how you work. GOV.UK’s pages on adjustments and submitting your tax return have the rules in full.

Questions people ask about finishing an MTD year