What Information HMRC Requires for MTD for ITSA (Making Tax Digital for Income Tax Self Assessment)

MTD for Income Tax (Making Tax Digital for Income Tax) is a UK government initiative that requires sole traders, landlords and self-employed individuals to submit detailed financial information to HMRC digitally. This includes income, expenses, and any other claims or adjustments related to their business activities. The goal is to ensure accuracy, reduce errors, and make tax filing more efficient through quarterly updates. In this article, we will explain the specific information HMRC requires for MTD for Income Tax submission, including details about income, business expenses, and any adjustments.

Key Information HMRC Requires for MTD Submission

HMRC requires businesses and self-employed individuals to submit accurate income, expenses, and adjustment details under MTD for Income Tax. Here are the key categories of information HMRC expects:

Income Information for MTD Submission

HMRC requires businesses to provide detailed income information, including:

• Turnover: The total income generated from business activities, such as sales and services.
• Other Income: Any additional income such as investment income, rent, or royalties.

Self-employed individuals and small businesses must provide accurate income data to ensure correct tax calculations and avoid penalties for underreporting.

Business Expenses for MTD

HMRC also needs a comprehensive breakdown of business expenses, including:

• Cost of Goods Sold: The price of goods bought for resale or used in the business.
• Staff Costs: This includes wages, salaries, and any other employee-related costs.
• Operating Expenses: Costs related to the business’s day-to-day operations, such as rent, utilities, travel, and insurance.

Businesses in sectors like retail or construction may need to provide more detailed expense reporting to HMRC.

MTD Capital Allowances

Under (MTD for ITSA), individuals, sole traders or landlords must send quarterly summaries of their income and allowable expenses. Capital allowances give tax relief on items such as machinery, equipment, and business vehicles. These are not included in the quarterly updates. Capital allowance claims are made once a year in the final declaration, also called the end of period statement. It includes all the tax adjustments and reliefs for the full tax year.

Examples of claims include:

• Annual Investment Allowance for qualifying capital purchases
• Other allowances such as those for zero emission vehicles or balancing adjustments
  

Landlords and property businesses must report income and expenses every quarter, including costs related to property maintenance and finance. Any capital spending and related allowance claims should be added to the final declaration at the end of the year.

Property Business Requirements Under MTD for Income Tax

Landlords and property businesses must report additional income and expenses related to their properties. Categories include:

• Rental Income: Earnings from renting properties.
• Property Expenses: Costs such as maintenance, repairs, and mortgage interest.
• Furnished Holiday Lettings (FHL): Self-employed landlords with FHL must follow new rules that took effect in April 2025.

UK properties require reporting of rental income, non-residential property finance costs, and property-related expenses. Overseas properties also require reporting, covering income and related expenses. Jointly let properties allow owners to choose whether to report just income or both income and expenses.