Making Tax Digital for Income Tax (MTD IT) changes how sole traders and landlords report their income to HMRC. Instead of submitting one annual return, income and expenses are reported throughout the year.
This article explains:
- What a cumulative summary is
- The difference between the three-line and full reporting methods
- Submission deadlines and compliance requirements
- The approval and finalisation process
What Is a Cumulative Summary?
Under MTD for Income Tax, businesses must submit quarterly updates to HMRC. These updates must reflect the cumulative position from the beginning of the tax year up to the end of the relevant quarter.
The Cumulative Summary in Capium is the structured summary of:
- Income
- Allowable expenses
- Disallowable expenses for the relevant reporting period.
Click on this article to create your first quarterly cumulative summary in Capium.
What does my Cumulative Quarterly Submission include?
Each quarterly submission is cumulative, meaning:
Q1 includes data from the start of the tax year to the end of Quarter 1.
Q2 includes data from the start of the tax year to the end of Quarter 2.
Q3 includes data from the start of the tax year to the end of Quarter 3.
Q4 includes data from the start of the tax year to the end of Quarter 4.
This is how the quarters appear under the standard tax year basis (6th April 20XX to 5th April 20XY).
Standard Submission – MTD IT Quarters
Quarter | Period Covered | Cumulative From | Submission Deadline |
Q1 | 6 Apr – 5 Jul | 6 Apr – 5 Jul | 7 Aug |
Q2 | 6 Jul – 5 Oct | 6 Apr – 5 Oct | 7 Nov |
Q3 | 6 Oct – 5 Jan | 6 Apr – 5 Jan | 7 Feb |
Q4 | 6 Jan – 5 Apr | 6 Apr – 5 Apr | 7 May |
Under this method, each quarter runs from the 6th of one month to the 7th of the relevant quarter-end month, and each submission is cumulative from 6 April.
This is how the quarters appear under the calendar date basis (1st April 20XX to 31st March 20XY).
Calendar Submission MTD IT Quarters
Quarter | Period Covered | Cumulative From | Submission Deadline |
Q1 | 1 Apr – 30 Jun | 1 Apr – 30 Jun | 7 Aug |
Q2 | 1 Jul – 30 Sep | 1 Apr – 30 Sep | 7 Nov |
Q3 | 1 Oct – 31 Dec | 1 Apr – 31 Dec | 7 Feb |
Q4 | 1 Jan – 31 Mar | 1 Apr – 31 Mar | 7 May |
Under this method, quarters align with calendar months, and each submission is cumulative from 1 April.
How does HMRC handle the Cumulative Submission?
Each submission reports the total income and expenses from the start of the tax year up to the end of that quarter.
Because of this, each new quarterly update effectively replaces the previous one.
When Q1 is submitted, it reports the year-to-date position up to the end of Quarter 1.
When Q2 is submitted, it does not just report Quarter 2 in isolation. It includes all figures from the start of the tax year up to the end of Quarter 2. As a result, the Q2 submission becomes the current year-to-date position and supersedes the totals previously reported in Q1.
The same principle applies to Q3 and Q4. Each new submission contains updated cumulative totals and therefore overrides the earlier submission as HMRC’s latest view of the taxpayer’s position for that tax year.
Any changes made to transactions in earlier quarters are automatically reflected in the next quarterly submission, because the system recalculates and resubmits the full year-to-date totals.
Earlier submissions are not deleted, but they are effectively replaced by the most recent cumulative update.
This approach allows corrections to be made naturally in later quarters without the need to formally amend earlier quarterly submissions.
The Two Submission Methods: Three-Line vs Full
HMRC permits two reporting methods for quarterly updates under MTD IT.
Three-Line Method
The three-line method can be used where the client’s total annual turnover across all businesses is below £90,000.
Under this method, the quarterly update consists of:
- Total income
- Total expenses
- Net profit (or loss)
Although the submission to HMRC is simplified, Capium maintains full digital records behind the scenes for transparency and reconciliation.
Even if the three-line method is used for submission:
- Full digital records must still be maintained
- Records must comply with HMRC’s MTD digital record-keeping standards
- Underlying data must be preserved for audit and reconciliation
This ensures that accountants retain visibility and compliance is maintained throughout.
Detailed/Full Method
Where turnover exceeds £90,000, or where greater detail is preferred, the detailed/full method must be used.
Under this method:
- Income categories are reported separately.
- Expense categories are reported separately.
- Disallowable expenses are shown separately.
This method provides greater transparency and mirrors traditional Self Assessment business reporting categories.
Where Does the Cumulative Data Come From?
The cumulative summary is entirely formed from digital records within Capium.
There are four ways to populate these records:
Capium 365
Capium bookkeeping
Spreadsheet import (manual digital import)
Manually key in records (digitally stored within MTDIT)
Multiple Income Sources
If a client has more than one income source, for example:
- Sole trade business
- UK property income
- Foreign property income
NOTE: Each source must have its own digital records.
Capium then consolidates the relevant sources into the cumulative summary, ensuring:
No duplication
Proper separation of income streams
Correct HMRC reporting
The cumulative summary is therefore not manually constructed - it is the direct output of compliant digital records.
Submission Deadlines and HMRC Compliance
Under MTD for Income Tax, quarterly updates must be submitted:
One month and seven days after the end of the quarter.
For a tax year running 6 April to 5 April, the standard quarters and deadlines are:
Quarter | Period Covered | Submission Deadline |
Q1 | 6 April – 5 July | 7 August |
Q2 | 6 July – 5 October | 7 November |
Q3 | 6 October – 5 January | 7 February |
Q4 | 6 January – 5 April | 7 May |
Even if a business elects to use calendar quarters instead of standard tax quarters, the deadline remains the 7th of the following month after the one-month grace period.
Failure to meet deadlines may result in penalties under HMRC’s points-based penalty system.
Reviewing and Submitting the Cumulative Summary
Once digital records are complete:
1. Review the cumulative figures displayed.
2. Cross-check against underlying digital records.
3. Ensure reconciliation has been performed.
4. Confirm that income and expenses are correctly categorised.
Client Approval (Recommended Best Practice)
Capium includes a “Submit for Approval” function.
Although client approval of quarterly submissions is not mandatory under HMRC rules, it is strongly recommended as part of good governance and engagement management.
Benefits include:
- Clear audit trail
- Reduced risk of dispute
- Improved transparency
- Professional protection for the accountant
Once approved, the submission can be sent directly to HMRC using the “Submit to HMRC” button.
After the Four Quarterly Submissions
Quarterly updates do not finalise the tax position.
After Q4 has been submitted:
Adjustments and allowances must be completed.
Examples include:
- Capital allowances
- Private use adjustments
- Accounting adjustments
A Final Declaration must then be submitted to HMRC.
The Final Declaration confirms:
- All income sources
- Adjustments and reliefs
- Final tax liability
This replaces the traditional Self Assessment tax return submission process for those within MTD IT.
Key Compliance Considerations
To remain compliant under HMRC’s MTD IT rules, the following must be observed:
- Digital records must be kept using MTD-compatible software.
- Records must be preserved digitally.
- Quarterly updates must be cumulative.
- Submissions must be made by statutory deadlines.
- Final Declaration must be completed annually.
- Underlying records must support figures submitted.
Capium’s MTD IT module has been designed to ensure:
- Full digital audit trail
- Structured quarterly compliance
- Clear separation of income sources
- Accurate year-to-date reporting
Summary
The Cumulative Summary in Capium’s MTD IT module is:
1. A year-to-date summary of income and expenses
2. Automatically built from compliant digital records
3. Submitted quarterly to HMRC
4. Available in both three-line and full reporting formats
5. Replaced each quarter with updated cumulative figures
6. Followed by adjustments and a Final Declaration
By ensuring that digital records are maintained accurately and reviewed before submission, businesses and accountants can meet HMRC’s Making Tax Digital requirements confidently and efficiently.
Please see related articles below for more information:
MTD IT - How to set up the module for the first time
MTD IT – Client Authorisation Workflow
MTD IT - Checking and Registering your client with HMRC