Quick answer
The final declaration replaces your tax return, the threshold is based on gross income not profit, salary doesn’t count, and you still pay tax on 31 January and 31 July, not every quarter.
Common questions
Do I still need to file a tax return?
If you’re in MTD for Income Tax, the final declaration replaces your Self Assessment return. You still file your last return the old way for the year before you join.
Is the threshold based on profit?
No. It’s based on gross self-employment and property income, before expenses.
Does my salary count towards the threshold?
No. Employment and pension income don’t count.
Do I pay tax every quarter?
No. Quarterly updates are summaries. You pay on 31 January and 31 July, as before.
Can I keep using spreadsheets?
Yes, with bridging software that connects your spreadsheet to HMRC.
My income dropped below the threshold. Can I leave?
If your qualifying income falls below the threshold for three tax years in a row, you can stop using MTD for Income Tax.
Questions to ask your accountant
Will you sign me up for MTD, or should I do it?
Which software will we use, and who pays for it?
Will you send the quarterly updates, or will I?
What do you need from me each quarter, and by when?
Will your fees change now that there are quarterly updates?
Who’s responsible if a deadline is missed?