Overview

When working with Making Tax Digital for Income Tax (MTD IT) through Capium, you’ll come across specific terms used by HMRC.
This guide explains what those terms mean — helping you and your clients stay compliant and understand the digital tax process.

Key Terms Explained

Client

A client is an individual taxpayer or landlord whose tax affairs you manage as an agent under MTD ITSA.
Each client must have:

  • A valid Unique Taxpayer Reference (UTR).
  • An active MTD IT enrolment within HMRC.
  • An agent authorisation linked to your firm through the Agent Services Account (ASA).

Clients can include:

  • Sole traders
  • Landlords
  • Individuals with other sources of income that fall under MTD IT reporting.

Agent

An agent is an authorised tax professional or firm (like your accountancy practice) that acts on behalf of clients to manage digital tax obligations.
Agents must:

  • Hold an Agent Services Account (ASA).
  • Link their ASA with HMRC’s MTD IT system.
  • Gain client authorisation through HMRC before submitting updates or declarations.

Property Business

This refers to income from property letting activities.
Each property (or set of properties) will be reported with its own income source ID.
Foreign and UK properties are treated separately under MTD.

Business Source

A business source represents each trading activity your client operates.
For example, if a client runs both a plumbing business and a consultancy, each will have its own business source ID.

Obligation

An obligation is a required digital submission within a specific timeframe.
This includes:

  • Quarterly Updates
  • End of Period Statements (EOPS)
  • Final Declaration

Each obligation has an open and close date provided by HMRC via API.

Update

An update is a digital submission of income and expense data for a specific period.
Under MTD IT, clients (or their agents) must send quarterly updates to HMRC for each business or property source.

Final Declaration

After the tax year ends, the Final Declaration replaces the traditional Self Assessment return.
It confirms all income sources and adjustments and declares the taxpayer’s final liability.

Income Source ID

Each business or property source registered under MTD ITSA is assigned an Income Source ID.
This ID is used to track all updates and submissions for that specific source.

Key Takeaways for Capium Users

  • Every MTD client must be linked to your ASA.
  • You’ll submit quarterly updates through Capium 365 for each income source.
  • The Final Declaration closes the year and replaces the SA100 for those clients.
  • Capium 365 automatically maps your clients’ businesses and properties to their respective Income Source IDs for accurate submissions.