What is an MTD quarterly update?

An MTD quarterly update is a summary of the income and expenses recorded in your MTD-compatible software.

Every three months, your software adds together the digital records you have kept for your business or property income and sends totals for the relevant income and expense categories to HMRC.

Importantly, a quarterly update is not a tax return. HMRC does not require you to make all the accounting and tax adjustments that would normally be made when preparing your year-end accounts before submitting each update.

This means quarterly updates are primarily about keeping your records up to date and giving HMRC an ongoing picture of your income and expenses.

Who has to submit MTD quarterly updates?

MTD for Income Tax is being introduced in stages.

You will generally be required to use MTD if your qualifying income from self-employment and property is:

• more than £50,000 – MTD applies from 6 April 2026;
• more than £30,000 – MTD applies from 6 April 2027; or
• more than £20,000 – MTD applies from 6 April 2028.

Qualifying income means your gross income before expenses and tax from self-employment and property combined.

So, for example, if you have £25,000 of self-employment income and £28,000 of gross rental income, your combined qualifying income would be £53,000.

What information goes into a quarterly update?

Your compatible accounting software uses the digital records you've kept throughout the period to calculate totals for your income and expense categories.

For a self-employed business, these can include turnover and categories of business expenses. Property businesses have their own relevant income and expense categories.

You don't normally need to make year-end accounting or tax adjustments before submitting the quarterly update.

That's an important distinction because an MTD quarterly update isn't the same as preparing a set of quarterly accounts.

Are MTD quarterly updates cumulative?

Yes.

This is something that can easily cause confusion.

Each quarterly update covers the period from the beginning of the tax year up to the end of that quarterly period, rather than reporting only the most recent three months.

For somebody using the standard tax-year periods, that means the updates broadly cover:

• 6 April to 5 July (filing deadline 7 August)
• 6 April to 5 October (filing deadline 7 November)
• 6 April to 5 January (filing deadline 7 February)
• 6 April to 5 April (filing deadline 7 May(

Because the figures are cumulative, corrections you make to your digital records can be picked up in a later update without having to resubmit each previous quarterly update.

Can I use calendar quarters instead?

Yes.

If your accounting period runs from 1 April to 31 March, you can choose calendar update periods. These run to:

• 30 June
• 30 September
• 31 December;
• and 31 March.

The submission deadlines remain 7 August, 7 November, 7 February and 7 May.

Your chosen MTD software will deal with the submission process.

Do I need to submit a quarterly update for every business?

Potentially, yes.

If you have more than one self-employment or property business within MTD, quarterly updates are required for each relevant income source rather than simply sending one combined figure covering everything.

This is particularly important for people who have several sources of income – for example, somebody who is self-employed and also receives rental income.

Do MTD quarterly updated replace the tax return?

No.

This is probably the biggest misconception about MTD.

Sending four quarterly updates does not mean that your tax affairs are finished at the end of the year.

You will still need to submit a tax return after the tax year has ended. At this stage the information for the year can be checked, necessary adjustments made, reliefs and allowances claimed, and other relevant income or gains included.

The tax return and payment deadline remains 31 January following the end of the tax year.

Do I have to pay tax every quarter under MTD?

No.

Quarterly reporting does not introduce quarterly Income Tax payments.

Although your software or HMRC's online services can provide an estimate of your tax position based on the information submitted, your normal Income Tax payment deadlines continue to apply. 

So don't confuse quarterly reporting with quarterly tax payments.

What happens if I miss an MTD quarterly update?

There is an important concession for the first year of mandatory MTD.

For the 2026/27 tax year, HMRC will not issue penalty points for late quarterly updates.

You still need to maintain the required digital records and send the outstanding quarterly updates before you can submit your tax return.

From subsequent tax years, the late-submission penalty regime applies to quarterly updates. A missed quarterly deadline can result in a penalty point. Once the four-point threshold is reached, a £200 penalty can be charged, with further £200 penalties possible for subsequent missed obligations while at the threshold. 

Do I need accounting software for MTD quarterly updates?

Yes. MTD requires you to maintain digital records and use MTD-compatible software to send the required information to HMRC.

This is why it is worth getting your bookkeeping system organised before MTD applies to you.

Waiting until a quarterly deadline and then trying to reconstruct three months of transactions rather defeats one of the main purposes of Making Tax Digital.

What should I be doing now?

If MTD applies to you, the biggest practical change isn't really the quarterly submission itself.

It's moving towards regular digital bookkeeping.

If your income and expenses are being recorded correctly as you go along, the quarterly submission should be relatively straightforward. If your bookkeeping has traditionally consisted of handing your accountant a year's worth of paperwork after the tax year has finished, MTD requires a much bigger change in approach.

Need help with Making Tax Digital?

Making Tax Digital doesn't need to mean doing your accounts four times a year.

At Tunstall Accounting, I can help sole traders and landlords understand whether MTD applies to them, choose an appropriate bookkeeping system and deal with the ongoing MTD requirements.



If you're unsure what you need to do, get in touch and I can talk you through it.