Adjustments
After sending your fourth quarterly update, you may need to adjust your figures before submitting your tax return.
Throughout the year, you should have been correcting your digital records to make sure they’re accurate. After your final quarterly update, Calceum will show your self-employment and property income and expenses for the whole tax year.
You may need to adjust your data before finalising, including:
- Making tax adjustments, such as removing disallowable expenses
- Making accounting adjustments, such as for prepayments or accruals
- Adjusting your income and expenses if you use an accounting period not aligned to the tax year (for example, 1 April to 31 March)
- Claiming reliefs or allowances, such as capital allowances, Rent a Room relief, or using the trading or property income allowance
Making adjustments
You’ll make most adjustments by changing the annual total for an expense category. The category total might represent a single digital record or many. This means you don’t need to adjust each individual transaction.
Tax adjustments
You’ll make tax adjustments by adjusting the annual totals of your expenses.
For example, if you have one phone for business and personal use, you’ll need to reduce the category total for phone, fax, stationery and other office costs, so that it only reflects the amount you’ve used for your business.
Accounting adjustments
If you use traditional accounting, you can adjust the annual totals from your quarterly updates to address accounting adjustments, such as for prepayments or accruals.
Example: Adjustment for a prepayment
You may pay £1,200 in January for a 12-month insurance policy. Instead of recording the full cost in January, you may choose to spread this expense over 12 months, at £100 per month. This would mean one quarter of the expense falls into the first tax year, and three quarters into the next.
To do this, you would reduce the category total for rent, rates, power and insurance costs for the first tax year and increase it for the next.
Example: Adjustment for an accrual
You have received services from a consultant in March 2025 but have not been invoiced. To reflect the costs you have incurred, you may want to record an accrual in that tax year (2024 to 2025). This means your expenses will be matched to the same period.
If your accounting period runs from 1 April to 31 March
You need to make an adjustment at the end of the first tax year where you have chosen to use calendar update periods. This is so your income and expenses from 1 April to 5 April from before the beginning of that tax year are included in your tax return.
For example, if you sign up for the 2025 to 2026 tax year, you’ll need to adjust your totals to include your income and expenses from 1 April 2025 to 5 April 2025.
You will not need to do this for future tax years if you continue using Making Tax Digital for Income Tax.
Find out more about late accounting date rules in the HMRC Business Income Manual.
Claiming reliefs or allowances
You may be able to claim reliefs or allowances that will reduce your Income Tax liability.
Capital allowances
Capital allowances
are a type of tax relief for businesses. They let you deduct some or all of the value of an item from your profits before you pay tax.
You’ll need to record your capital allowance claim in Calceum before you submit your tax return. HMRC will not process your claim until you have submitted your tax return.
Rent a Room relief
The Rent a Room Scheme lets you earn up to £7,500 per year tax-free from letting out furnished accommodation in your home. This is halved if you share the income with your partner or someone else.
You can claim Rent a Room relief either:
- During the tax year through your quarterly updates
- After the end of the tax year through your final quarterly update
If you decide at the end of the tax year that you’d like to claim your expenses instead of the relief, you’ll need to make this adjustment before submitting your tax return.
Trading or property income allowances
If you want to claim tax-free allowances on your property and trading income, you’ll need to claim the allowance after the end of the tax year, before you submit your tax return.
What to do next
After making any necessary adjustments, you’re ready to submit your tax return.