What is a final declaration? Reporting for MTD for Income Tax

Published Friday 5 December 2025

Table of contents

• What is a final declaration?
• What to do before starting the final declaration process
• What information do I need to provide in a final declaration?
• When do I submit a final declaration?
• Stay compliant with Making Tax Digital with Xero
• FAQs on final declarations

What is a final declaration?

A final declaration is HMRC’s new digital process that replaces the traditional self-assessment tax return. You use it to confirm your annual tax position and what you owe.

This change is part of Making Tax Digital for Income Tax (MTD for Income Tax), which changes how you report your income if you’re a sole trader or landlord. It’s the biggest change to self assessment since 1997. The final declaration confirms your final tax bill for the year.

Making Tax Digital for Income Tax affects different income levels at different times:

• April 2026: If you’re a sole trader or landlord and earn over £50,000 – this includes around 780,000 people
• April 2027: Those earning above £30,000
• April 2028: Those earning above £20,000

What you’ll need to submit:

• Quarterly updates: Four times per year
• Final declaration: Once per year

When will the final declaration process be introduced?

You’ll need to submit a final declaration as part of Making Tax Digital for Income Tax. This applies from April 2026 if you earn over £50,000, from April 2027 if you earn over £30,000, and from April 2028 if you earn over £20,000.

Do I need accounting software to submit a final declaration?

You need HMRC-recognised Making Tax Digital software to submit your final declaration – it’s a legal requirement.

Timeline for software setup:

• By April 2026: Essential for those earning over £50,000
• Earlier is better: Starting now makes the transition smoother

Why cloud accounting software helps:

• Automatic compliance ensures you meet HMRC requirements
• Time savings and accuracy helps streamline record-keeping and submissions
• Additional features to support your business, like invoice generation, bank reconciliation, and expense tracking

What to do before starting the final declaration process

Getting these steps right before you submit your final declaration helps ensure accuracy and avoids potential issues with HMRC. Here's what you need to do:

• Submit all quarterly updates: You must file all four quarterly reports for the tax year
• Report all income sources: Include business income, property income, interest, and dividends
• Provide additional information: Any other relevant financial details HMRC requires

What information do I need to provide in a final declaration?

You don't need to provide new information in your final declaration. You simply review and confirm that you agree with the tax amount HMRC has calculated based on your quarterly updates.

How it works:

• HMRC calculates your tax: Based on your quarterly updates and additional income
• You review the calculation: Check the figures are correct
• You submit acceptance: Confirm you agree with the final tax position

When do I submit a final declaration?

Final declaration deadlines:

• Earliest submission: After the tax year ends (6 April)
• Final deadline: 31 January following the tax year end
• Example: For 2026-27 tax year, submit by 31 January 2028

Income reporting flexibility:

• Non-business income: Submit anytime during the year (interest, dividends, etc.)
• Must complete: Before making your final declaration

What happens if I miss the deadline for submitting a final declaration?

If you submit late, HMRC will apply penalties under the new points-based system (starting April 2026).

Penalty triggers:

• Late submission: Missing the 31 January deadline
• Late payment: Not paying tax owed on time

The new system uses penalty points instead of immediate fines. If you get four points for late quarterly submissions, HMRC will charge a £200 penalty.

Prepare for MTD for IT today

The sooner you start, the easier the transition will be. Find out more about how self assessment is changing and get all the information you need about Making Tax Digital for Income Tax on the Xero resource hub.

Stay compliant with Making Tax Digital with Xero

Use Making Tax Digital-compatible software such as Xero to keep digital records and submit returns. Xero automatically tracks your income and expenses, generates quarterly updates, and helps you submit your final declaration on time. With built-in compliance features, you'll meet HMRC requirements without the manual work – giving you more time to focus on running your business.

FAQ on final declarations

Find answers to common questions about final declarations below.

Who needs to submit a final declaration?

If you’re self-employed or a landlord and your annual business or property income is above the Making Tax Digital for Income Tax threshold, you need to submit a final declaration. Check the latest guidance on the HMRC website or ask your accountant for details.

How do I submit a final declaration?

Use HMRC-recognised Making Tax Digital software to submit your final declaration.

Can I make changes to a final declaration after submission?

You have twelve months to make changes after the filing deadline. For example, if you submit by 31 January 2028, you can make amendments until 31 January 2029.

How is a final declaration different from self-assessment?

A final declaration replaces the annual self assessment tax return if you’re using Making Tax Digital for Income Tax. Instead of one annual return, you send quarterly updates. The final declaration is your last step to confirm your income and tax position using the information you’ve already provided.

What happens if my income is below the MTD threshold?

If your total qualifying income is below the Making Tax Digital for Income Tax threshold, you do not need to follow Making Tax Digital rules. If you are already in the system and your income stays below the threshold for three years, you can claim exemption from the next tax year. You can keep using the current self assessment system unless you choose to join Making Tax Digital voluntarily.

Can I still use my current accountant with the new MTD system?

Yes, you can. Your accountant can manage your Making Tax Digital submissions for you using compatible software such as Xero. Talk to your accountant about the transition so you’re both ready for the changes.