Some things can't go in a quarterly update because they depend on the whole year: capital allowances, the trading or property allowance, Replacement of Domestic Items Relief and certain adjustments to your profit. You claim these once a year as annual allowances and adjustments, before you file your final declaration.
This step is optional. If you have nothing to claim, you can skip it.
What counts as an annual adjustment?
Self-employment
- Trading income allowance — a flat deduction of up to £1,000 instead of your actual expenses. You can claim this or the other allowances, not both.
- Capital allowances — Annual Investment Allowance (AIA), the main pool (18%), special rate pool (6%), single asset pool, zero emissions car allowance, enhanced capital allowance, allowance on sales and business premises renovation allowance.
- Adjustments — goods and services for own use, included non-taxable profits, accounting adjustment, averaging adjustment, outstanding business income and balancing charges.
- Other information — whether your business details changed recently, and a Class 4 National Insurance exemption reason if one applies (for example, over State Pension age).
UK property
- Property income allowance — a flat deduction of up to £1,000 instead of your actual expenses. You can claim this or the other allowances, not both.
- Capital allowances — Annual Investment Allowance, zero emissions car allowance, other capital allowance and business premises renovation allowance.
- Cost of replacing domestic items — Replacement of Domestic Items Relief for like-for-like replacement furniture, appliances and furnishings in a furnished residential let.
- Adjustments — balancing charge, private use adjustment and BPRA balancing charges, plus whether you are a non-resident landlord or jointly let a room under Rent a Room.
Cash basis and equipment: most sole traders use the cash basis. Under the cash basis, most equipment (computers, tools, furniture) is an ordinary expense in the quarter you pay for it, so you don't claim it here. Cars are the main exception. If you use traditional (accruals) accounting, equipment goes through capital allowances instead.
What doesn't go here
- Mortgage interest — landlords report residential finance costs in their quarterly property updates. HMRC applies the 20% tax credit in your calculation.
- Losses from earlier years — these are handled separately under Losses & Relief (see below).
- Structures and Buildings Allowance — this can't be submitted through Affordable MTD. Claim it through your HMRC online account. Most sole traders and landlords don't need it.
Step-by-step: claiming annual allowances and adjustments
1. Open Annual Allowances & Adjustments
On your dashboard, open the Annual Allowances & Adjustments section (marked Optional). Each of your businesses is listed separately — your self-employment and your UK property business each have their own claims.
2. Add claims for a business
Click Add claims next to the business. If you've already submitted for that business, the button says Review / Edit instead.
3. Enter your figures
Fill in only the boxes that apply and leave the rest blank or at 0. Remember: if you claim the £1,000 trading or property allowance, leave the other allowances empty.
4. Submit to HMRC
Click Submit Annual Allowances. The business is then marked Submitted on your dashboard. Repeat for each business you have claims for.
5. Add any losses
If your business made a loss in an earlier year, use Manage losses in the Losses & Relief section to bring it forward against this year's profit, or to claim sideways relief against other income.
6. File your final declaration
Once your four quarterly updates and any annual adjustments are in, file your final declaration. The final declaration wizard includes an Allowances step so you can review what you've claimed before you submit.
Made a mistake? Click Review / Edit, change the figures and click Update Annual Allowances. You can update them as often as you need until you submit your final declaration for that tax year. If you need to remove them completely, use Delete Annual Allowances.
When to do it
You can add annual allowances and adjustments at any point in the tax year, but it's usually easiest after the year ends on 5 April, when you know your final figures. For the 2026-27 tax year, they must be in before you submit your final declaration, which is due by 31 January 2028.
Frequently asked questions
Do annual adjustments go in my quarterly updates?
No. Capital allowances, the trading and property allowances and losses are claimed once a year here, not in quarterly updates. Mortgage interest and rent-a-room income are different: they go in your quarterly property updates.
Do I have to submit annual adjustments?
No. The section is optional. If you have nothing to claim, skip it and go straight to your final declaration.
Can I claim the trading allowance and my expenses?
No. The £1,000 trading allowance (or property allowance) replaces your actual expenses for that business. It's only worth using if your allowable expenses for the year are under £1,000.
Where can I read more about allowances?
See our guides to what goes in quarterly updates versus annual adjustments, capital allowances and the trading allowance.
Year end, sorted
Quarterly updates, annual adjustments, losses and your final declaration — all in Affordable MTD. Free for the 2026-27 tax year, then £19.99 a year.
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