What is the purpose of an End of Period Statement?
An EOPS allows you to finalise your business income for the period. It’s how you make final adjustments to your accounts, claim any reliefs, and confirm that the information you have submitted is accurate. By submitting an EOPS, you are declaring that:
- The information you have provided for that business is correct and complete.
- You have finalised your tax position for that business for the tax year.
Who needs to send End of Period Statements under MTD for ITSA?
Under MTD for ITSA rules, landlords and sole traders with income over £10,000 in a tax year will need to submit an EOPS from 2024.
It’s important to note that you need to submit an EOPS for each source of business income. For example, if you are a sole trader earning £5,000 per year from your business and an additional £6,000 as rental property income, you will need to send an EOPS for both sources of income.
When will the End of Period Statement process be introduced?
The EOPS process will be introduced in April 2024 when the new MTD for ITSA rules go live. So if your accounting period is 6 April 2024 to 5 April 2025, your first EOPS must be submitted by 31 January 2026 at the latest and can only be made once all quarterly updates have been submitted for that period of time.
From April 2024, all landlords and self-employed taxpayers earning above £10,000 will need to follow the EOPS process. Those impacted by MTD for ITSA will also need to keep digital records of their income and expenditure, and submit quarterly updates and a Final Declaration. You can find out more on our MTD for ITSA resource hub.
What information do you need to provide in an End of Period Statement?
In an EOPS, you will need to review your submitted business income and make any final adjustments. If you have multiple sources of income, you will need to submit separate EOPS for each source of business income. For instance, if you are a sole trader and earn rental property income, you must complete two EOPS for each source of business income.
You will also be required to submit any claims for relief during the affected basis period. Some of the costs you can claim as allowable business expenses include heating, training courses, and office supplies.
When do you submit an End of Period Statement?
Businesses can only complete an EOPS at the end of their accounting period. Businesses will have until 31 January following the end of the tax year to submit their EOPS or risk paying a late submission penalty. So, if your accounting period is 6 April 2024 to 5 April 2025, you will have upto 31 January 2026 to complete, review and submit your EOPS to HMRC.
In the future, HMRC could make calendar year dates available for MTD. We’ll be sure to report on this if plans go ahead.
How do you submit an End of Period Statement?
HMRC-approved accounting software should provide an EOPS for the relevant period once you send all of your quarterly submissions to HMRC. If you need to adjust your accounts or claim reliefs for the period, this would be the time to do so.
This is your final submission and confirmation of the information submitted, so take the time to review the business income source summary before making the EOPS declaration. HMRC will use your EOPS (combined with your quarterly updates and final Declaration) to help determine your tax calculation.
Your EOPS is then sent to HMRC, and your EOPS obligation for the tax year will be fulfilled.
Do you need accounting software to submit an End of Period Statement?
Yes. Those affected by MTD for ITSA will only be able to use HMRC-approved accounting software to submit an EOPS.
At Xero, we’re currently working with accountants and bookkeepers to test our MTD for ITSA beta programme and ensure it meets your needs ahead of 2024. If you’re interested in joining Xero’s MTD for ITSA beta programme, please get in touch with your accountant.
What happens if you don’t submit an EOPS?
Taxpayers will have until 31 January following the end of the relevant tax year to review and submit an EOPS as a part of their obligations under the new MTD for ITSA initiative.
You will face a late submission penalty if you don’t submit an EOPS by the deadline. This is one of the Making Tax Digital penalties that will replace the existing penalty system.
Prepare for MTD for Income Tax Today
The earlier you prepare, the easier you’ll find the transition to Making Tax Digital. Speak to your accountant about signing up for MTD for ITSA early.