Tax return: Your guide to MTD for Income Tax

Published Wednesday 15 April 2026

Table of contents

• What is a tax declaration?
• What to do before starting the tax return process
• What information do I need to provide in a tax return?
• When do I submit a tax return?
• Stay compliant with Making Tax Digital with Xero
• FAQ on tax returns

What is a tax declaration?

A tax return (also known as a finalised tax return) 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 a landlord. It's the biggest change to self assessment since 1997. The tax return 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 self-employed or a landlord and earn over £50,000 – this includes around 780,000 people (now in effect)
• 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
• Tax return: Once per year

When will the tax return process be introduced?

You need to submit a tax return as part of Making Tax Digital for Income Tax. If you earn over £50,000, this requirement is now in effect from April 2026. It applies 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 tax return?

You need HMRC-recognised Making Tax Digital software to submit your tax return – it's a legal requirement.

Timeline for software setup:

• Now required: Essential for those earning over £50,000 (April 2026 mandate now in effect)
• Get started today: If you're not yet affected, 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 tax return process

Getting these steps right before you submit your tax return 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 tax return?

You don't need to provide new information in your tax return. 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 tax return?

Tax return 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 tax return

What happens if I miss the deadline for submitting a tax return?

If you submit late, HMRC will apply penalties under the points-based system (now in effect from April 2026).

Penalty triggers:

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

The 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

If you're affected by the April 2026 mandate, you need to act now. If you're not yet affected, 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 tax return 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 tax returns

Find answers to common questions about tax returns below.

Who needs to submit a tax return?

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 tax return. If you earn over £50,000, this requirement is now in effect. Check the latest guidance on the HMRC website or ask your accountant for details.

How do I submit a tax return?

Use HMRC-recognised Making Tax Digital software to submit your tax return.

Can I make changes to a tax return 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 tax return different from self-assessment?

A tax return 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 tax return 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.