Is the income tax self assessment changing?

From 6 April 2024, the way in which sole traders and landlords report their income to HMRC will change.

In the current system, anyone in the self assessment regime submits one annual tax return by 31 January following the end of the tax year (or 31 October if filed on paper). Depending on an individual’s trading levels, they may also submit annual accounts for their sole trade.

Any income tax payments are due by 31 January following the end of the tax year, unless you are required to make payments on account in advance of filing the tax return.

Records are required to be kept for 5 years and 10 months following the end of the tax year. For example, records relating to the 2022/23 tax year will need to be kept until 31 January 2029. These records can be kept in any format.

For those with trading or rental income of at least £10,000 in a tax year, there will be the requirement to file quarterly returns online to report their trade and rental income. The 4 quarters and their filing deadlines will be:

6 April to 5 July: filing deadline 5 August

6 July to 5 October: filing deadline 5 November

6 October to 5 January: filing deadline 5 February

6 January to 5 April: filing deadline 5 May

There will also be the requirement to file an end of period statement (EOPS) and final declaration online by 31 January following the end of the tax year. The EOPS will bring together the 4 quarterly submissions and include any relevant accounting adjustments or relief claims. The final declaration will effectively replace the self assessment tax return and is the point at which any other income for the year in brought in, such as interest or dividends, or disposals for capital gains tax purposes.

Income tax payments will still be due by 31 January following the end of the tax year and the payments on account scheme will remain unchanged.

Another change is that all records will be required to be kept in a digital format. This could be in the form of a bank feed, electronic invoices, or uploading photos of your paper records. Records should be kept for 5 years and 10 months following the end of the tax year, on the basis that HMRC have not stated otherwise.

Summary of the changes to take place

To see the rest of our Making Tax Digital for Income Tax Self Assessment info and tips here.