Making Tax Digital for Income Tax requires you to send four quarterly updates to HMRC during the tax year.

Each Sage Accounting company submits one income source only.

If you have more than one income source, such as self-employment and UK Property, you must use separate Sage Accounting companies.

What Income Tax categories are

Income Tax categories allow HMRC to identify different types of income and expenses.

Each profit and loss ledger account must have an Income Tax category assigned.

Sage groups transactions by these categories when preparing your quarterly update.

Quarterly submissions don't include balance sheet accounts.

What Sage sends to HMRC

Each quarterly update includes cumulative totals for the tax year to date.

This means:

• Quarter two includes totals for quarters one and two
• Quarter three includes totals for quarters one to three
• Quarter four includes totals for the full tax year

Each new submission replaces the previous total for that tax year.

If you set an ownership percentage for a UK Property business, Sage applies that percentage before sending the totals to HMRC.

Submission deadlines

Send your quarterly update within one month of the end of each quarter.

Check your Income Tax summary in Sage Accounting to view your open obligations and deadlines.

Disallowable transactions

Some expenses aren’t allowable for tax purposes.

To exclude a transaction from your quarterly update, assign the Not reportable Income Tax category.

Sage doesn’t include transactions marked as Not reportable in your submission.

Accuracy of quarterly updates

Quarterly updates provide an estimate of your Income Tax position.

You can correct errors in later quarters before your final end-of-year submission.

Your final figures must be accurate when you complete your end-of-year declaration.

View transaction details

You can review the figures included in your quarterly update.

To investigate category totals:

• Use the Chart of accounts report to check ledger account mappings
• Run the Nominal Activity report to view transaction-level detail

For step-by-step guidance, see Submit your Income Tax quarterly update.