Key Concepts
Before diving into Calceum, it helps to understand some key concepts and terminology used throughout the application and in Making Tax Digital.
Making Tax Digital (MTD)
Making Tax Digital is HMRC’s initiative to modernise the UK tax system. It requires businesses to keep digital records and send tax information to HMRC using compatible software.
Qualifying Income
Your qualifying income is the total gross income from self-employment and property before any expenses are deducted. This determines when you need to start using MTD for Income Tax.
Quarterly Updates
Under MTD, you send summaries of your income and expenses to HMRC four times a year, rather than just once at tax return time. These are called quarterly updates.
Digital Records
MTD requires you to maintain digital records of all business transactions. You can use software like Calceum to record transactions directly, or maintain records in a spreadsheet and import them into Calceum for submission to HMRC.
Accounting Period
Your accounting period is the 12-month period you use for your business accounts. For most sole traders, this aligns with the tax year (6 April to 5 April).
Cash Basis Accounting vs Traditional Accounting
These are two different accounting methods:
- Cash basis accounting — You record income when you receive it and expenses when you pay them
- Traditional accounting — You record income when you earn it and expenses when you incur them, regardless of when money changes hands
Government Gateway
Your Government Gateway account is how you access HMRC online services. You’ll need this to connect Calceum to HMRC and authorise it to send updates on your behalf.
National Insurance Number (NINO)
Your National Insurance number is a unique identifier used by HMRC for tax and benefits. Calceum requires your NINO to connect to HMRC and retrieve your registered income sources.
UTR (Unique Taxpayer Reference)
Your UTR is a 10-digit number issued by HMRC when you register for Self Assessment. HMRC uses this alongside your NINO to identify your tax records.
Tax Year
The UK tax year runs from 6 April to 5 April the following year. For example, the 2025-26 tax year runs from 6 April 2025 to 5 April 2026. Quarterly updates and obligations follow this cycle.
Obligations
Obligations are the deadlines HMRC sets for sending quarterly updates. Each quarter has a submission window, and Calceum shows your obligation status — fulfilled, due, or overdue — on the overview page.
End of Period Statement
After your fourth quarterly update, you send an end of period statement to HMRC confirming your income and expenses for the full tax year. This is sometimes referred to as an annual update.
Final Declaration
The final declaration replaces the traditional Self Assessment tax return. You make your final declaration after the tax year ends, confirming that all information is complete and correct. Once made, your tax return for that year is locked.
Income Thresholds
MTD for Income Tax is being introduced in phases based on qualifying income:
- April 2026 — Individuals with income over £50,000
- April 2027 — Individuals with income over £30,000