Provisional and estimated figures in tax returns

What is the difference between a provisional and an estimated figure in a tax return? When should provisional figures be used? What are the reporting requirements? When can HMRC charge a penalty?  

This is a freeview ‘At a glance’ guide to provisional and estimated tax figures in tax returns.

Provisional vs estimated figures: what is the difference?

A provisional figure in a tax return is one which is used temporarily, pending the later submission of the final or more accurate figure.

• With a provisional figure, the taxpayer intends to amend it later.

An estimated figure in a tax return is one which is intended to be accepted as the final figure because it is not possible to provide a more accurate figure. This might be where a valuation is used, or Records have been lost.

• With an estimated figure, the taxpayer has no intention to amend it later.

When can provisional figures be used?

Provisional figures which represent a 'best estimate' at the time can be included in a tax return where some information cannot be finalised within the normal Self-assessment time limit, despite the taxpayer’s best efforts.

• Any provisional figure used should be reasonable and take account of all the information available.
• Provisional figures may be needed in some returns due to Basis Period reform.

Boxes in a tax return should not be left blank due to a lack of information.

• HMRC will consider this to be an incomplete return, and penalties may be charged.

HMRC do not consider a return containing a provisional figure as unsatisfactory, although they may open an enquiry to look at it further.

• A penalty on the grounds of Careless or deliberate inaccuracy may be charged if there was no good reason for using a provisional figure, or it was not estimated reasonably. 

Reporting requirements

If a provisional figure is used in a tax return:

• Put an ‘X’ in Box 20 of Page TR8.
• Include details of the provisional amount in the white space, including the:
  • Reason for using a provisional figure.
  • The approximate time that a final figure is likely to become available.

If an estimated figure is used in a tax return:

• Include details of the estimated amount(s) in the white space, including the reason for using an estimate.
• Do not put an ‘X’ in Box 20 of Page TR8.
  • For 2017-18 and prior, HMRC's guidance stated that Box 20 should be crossed when including estimated figures. This changed for 2018-19 and subsequent years, and the box should not now be crossed. 

Updating provisional values

A tax return containing a provisional figure should be amended:

• As soon as a correct figure becomes available.
• Where the previously provisional figure should instead be taken as a final figure.

The normal tax return amendment window is 12 months from the filing date of the return (i.e. usually the second 31 January following the end of the tax year).

• If there is an unreasonable delay in amending a provisional value, HMRC may charge a penalty. 

HMRC one-to-many letters

In August 2023, HMRC began sending one-to-many letters to tax agents where multiple clients submitted provisional figures in their 2021-22 tax returns.

Affected agents were asked to review provisional returns submitted and amend them with the actual figures:

• By 30 November 2023, if actual figures are now available.
• By 31 December 2023, in all other cases.

The ultimate amendment deadline for 2021-22 tax returns was 31 January 2024.

Once the agent has amended the relevant tax returns, they are asked to send HMRC a spreadsheet via email setting out, for each amended return, the:

• Name of the taxpayer.
• Redacted UTR.
• Difference between the provisional and actual figures. 

Useful guides on this topic

Penalties: Errors in Returns and Documents (subscriber version)
What penalties apply if you make an error or mistake? Is there a penalty if you fail to tell HMRC about an under-assessment? How are penalties calculated? How do you check penalties? What can you do if you receive a penalty?

Client guide: Reasonable care and tax penalties
What triggers a tax penalty? What standard of care is expected from a taxpayer? What is reasonable care? When is an error careless?

Record-keeping & tax: What, how and until when?
How long do your need to keep your books and records for tax? Record-keeping for Income Tax (IT), PAYE, Capital Gains Tax (CGT), VAT and Corporation Tax (CT). What if you lose your records?

Calendar of tax deadlines and new tax measures
When do common recurring tax deadlines fall? What other tax-significant events are upcoming? What do I need to remember this month? 

CGT: Post transaction valuation check
What is a post-transaction valuation check? When and how can I apply for one?

External link

CIOT: HMRC One to Many Agent Letter – Income Tax Self Assessment (ITSA) Provisional Returns 2021/22