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Quarterly updates vs end of year tax return - FAQ

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Summary

Quarterly updates and end of year tax return serve different purposes in Sage Sole Trader. This FAQ explains what you include in each submission and why.

Description

What are quarterly updates used for?

Quarterly updates send HMRC a year to date snapshot of your income and expenses.

They help HMRC confirm that you submit updates regularly throughout the tax year.

Quarterly updates don’t finalise your tax position.

What do I include in quarterly updates?

Include:

  • Income received so far in the tax year
  • Allowable business expenses recorded so far
  • Totals grouped by Income Tax categories

Sage submits cumulative figures, not individual quarterly totals.

What do I not include in quarterly updates?

Don't include:

  • Capital allowances
  • Accounting adjustments
  • Private use adjustments
  • Mortgage interest relief
  • Reliefs calculated at year end
  • Pension contributions

These items rely on full-year information and are part of your end of year tax return.

What is the end of year tax return used for?

End of year tax returns finalise your tax position for the year.

These submissions confirm your final income, expenses, and tax adjustments.

What do I include in the end of year tax return?

Include:

  • Capital allowances
  • Private use adjustments
  • Accounting adjustments
  • Pension contributions
  • Mortgage interest relief
  • Final corrections or claims
  • PAYE income from employment

You combine your self-employed income and your PAYE income at this stage to complete your Self Assessment.

HMRC then calculates your final tax position based on all income sources.

Why are quarterly and year end tax return submissions separate?

Quarterly updates focus on regular reporting.

The end of year tax return focuses on accuracy and completeness.

This separation means you can submit quarterly updates without calculating final adjustments each time.

Who decides how to treat specific items?

Your accountant or tax adviser can help you decide how to treat specific items.

Sage can't tell you which adjustments apply to your business. If you need advice, speak with an accountant or HMRC.