Editor's note: This brief was summarised by The Property AI Newsroom from a report by Property118. Read the original article for full details.

MTD for Income Tax: How Letting Agents Can Correct Quarterly Update Errors

Making Tax Digital (MTD) for Income Tax is now live, and many landlords and letting agents are asking what happens if a quarterly update contains an error. According to Property118, the system is designed to be flexible, allowing corrections before the final declaration is submitted.

Quarterly updates under MTD are cumulative, meaning each update covers the tax year to date. The first update reports from the start of the tax year to the end of the first quarter, the second update includes everything up to the end of the second quarter, and so on. By the fourth update, the full year’s running totals are reported.

The process for submitting these updates may vary depending on the software used. Some software requires users to enter cumulative year-to-date totals, while others calculate the running total automatically by adding the latest quarter’s figures to previous submissions.

If an error is made in a quarterly update, it can be corrected in two main ways. The most common method is to fix the mistake in the next quarterly update by ensuring the year-to-date figures are accurate. Alternatively, if the error is spotted before moving on to the next period, the current quarter can be resubmitted with the correct numbers.

There is no formal amendment process required for honest mistakes, and no penalty for correcting errors in this way. The final declaration, due by 31 January after the tax year ends, is where all figures are confirmed, reliefs and allowances are claimed, and any year-end adjustments are made. This final declaration replaces the old Self-Assessment tax return and serves as a safety net for any remaining corrections.

However, HMRC still expects reasonable care to be taken with each update, and all figures should be as accurate as possible at the time of submission.