What is a Final Declaration?
‘Final Declaration’ is a term used by HMRC to describe the process a taxpayer goes through to finalise their end-of-year position for tax and determine what they owe. Final Declaration used to be known as ‘crystallisation.’
As part of the government’s planned Making Tax Digital for Income Tax Self Assessment (MTD for ITSA) rules, the Final Declaration will replace the current annual Self Assessment Tax Return.
When will the Final Declaration process be introduced?
Submitting a Final Declaration will be part of the new MTD for ITSA rules, which come into effect in April 2024.
Do I need accounting software to submit a Final Declaration?
You must have this in place by April 2024, but the sooner you start using cloud-accounting software to keep digital records, the smoother the transition to MTD for ITSA will be.
Besides ensuring that you’re compliant with the new HMRC rules, choosing the right cloud-accounting software will help you to take control of your finances and run a healthy business. If you choose the right MTD software, you’ll benefit from additional features such as invoice generation, bank reconciliation, sending quotes and capturing bills and receipts.
Before starting the Final Declaration process
Before starting the Final Declaration process, you need to make sure that you have completed the following steps:
- Submitted all four quarterly updates for the tax year
- Finalised your End of Period Statement (EOPS) for all your businesses
- Provided your entire income for the relevant tax year e.g. interest and dividends
- Provided any relevant additional information
What information do I need to provide in a Final Declaration?
You must complete the steps above before submitting your Final Declaration.
There is no specific information you need to include in the Final Declaration itself, as it is simply a declaration statement to ‘accept’ your final tax position for the year, which is calculated by HMRC.
When do I submit a Final Declaration?
The Final Declaration can only be made once the relevant UK tax year has ended and must be made by 31 January following the end of the tax year.
You can submit non-business income information to HMRC at any point during the year, but it must be done before you make the Final Declaration.
How do I submit a Final Declaration?
Can I make changes to a Final Declaration after submission?
If you need to make any changes to your Final Declaration you have 12 months from the filing deadline.
What happens if I miss the deadline for submitting a Final Declaration?
If you miss the deadline for submitting your Final Declaration or do not pay the tax you owe on time, you may need to pay a penalty. A new points-based penalty system for MTD for ITSA will come into effect from April 2024.