Making Tax Digital for Income Tax – how to make a quarterly update

If you fall within the qualifying conditions for MTD for income tax, you must:

• keep digital bookkeeping records
• submit quarterly updates throughout the year to HMRC and
• file your end of year tax return all using your MTD-compliant software

This guide explains what a quarterly update is, what information it should include and how to submit it.

What is an MTD for income tax quarterly update?

An MTD for income tax quarterly update is a summary of income and expenses for your self-employment and property businesses, for the previous three-month period.

A quarterly update is not a tax return and no tax becomes payable when you submit it.

Quarterly updates are cumulative within the tax year, meaning each submission replaces the previous one. This allows errors and omissions to be corrected in later quarterly updates or in the end of year tax return.

Who must submit quarterly updates?

MTD for income tax is being introduced in stages, depending on your level of qualifying income in the previous reported tax year: 

Tax year used for threshold calculation	Qualifying income threshold	When MTD applies
2024/25	£50,000 or more	6th April 2026
2025/26	£30,000 or more	6th April 2027
2026/27	£20,000 or more	6th April 2028

Qualifying income is income from self-employment and property rental before expenses are deducted.

The thresholds are based on your total qualifying income as an individual, not per income source. However, each income source requires a separate MTD for income tax quarterly update. For instance, if you rent out four UK properties and have an interior design business, you would need to make a quarterly update for your property income and another for self-employment income. 

Limited companies are not within the scope of MTD for income tax.

What are the quarterly update deadlines for 2026/27?

The quarterly update deadlines for the 2026/27 tax year are set out below. By default, MTD for income tax uses standard quarters (based on tax months), but you can elect to use calendar quarters if your software provider permits this.

The deadlines are the same regardless of which quarter type you use.

Quarter	Standard (default)	Calendar (if elected)	Deadline
Q1	6th April – 5th July 2026	1st April – 30th June 2026	7th August 2026
Q2	6th July – 5th October 2026	1st July – 30th September 2026	7th November 2026
Q3	6th October – 5th January 2027	1st October – 31st December 2026	7th February 2027
Q4	6th January – 5th April 2027	1st January – 31st March 2027	7th May 2027

Your end of year tax return for 2026/27 should be submitted by 31st January 2028. All your income sources (including those outside MTD for income tax, such as employment income and savings interest) should be combined for your tax return. Adjustments and allowances are also included at this stage.

Standard quarters vs calendar quarters

Calendar quarters may be more convenient if you already submit quarterly VAT returns, helping to reduce administration and reconciliation work.

The election must be made before your first quarterly update is submitted and cannot normally be changed later.

What do I include in a quarterly update?

Your quarterly update should include a summary of income and expenses for each income source. No tax adjustments should be included and you should not include details of other taxable income or gains. These are all reported in the end of year tax return by 31st January, after the tax year ends. This tax return replaces the self-assessment tax return once you are within MTD for income tax.

How to submit an MTD quarterly update – step by step

You must ensure your MTD for income tax compatible software is set up and linked to your HMRC Business Tax Account. Once it is in place, follow these steps:

1. Link the bank account(s) used for each source of business income to your software, where applicable. Pulling your business bank account feed through to your bookkeeping software will reduce your admin time considerably.
2. Make sure your software records your business income and allowable expenses. These records do not need to be sent to HMRC, but they must be kept digitally to form your quarterly updates and in case of HMRC query.
3. At the end of each quarter, review your income and expense totals and check they are complete and accurate. If necessary, you can submit provisional figures and correct them in a later update or your end of year tax return.
4. Submit your quarterly update to HMRC through your software by 7th August (or the relevant deadline for quarters 2, 3 and 4). You will receive confirmation once HMRC has accepted the submission.
5. You will also submit the end of year tax return through your software. The existing self-assessment portal will not be available to MTD for income tax users from April 2026.
6. Keep your digital records for at least five years after the 31st January tax return filing deadline for the relevant tax year.

Does submitting a quarterly update mean I owe tax immediately?

No, the quarterly updates do not create a tax payment. The payment dates of 31st January (and 31st July for Payments on Account) are unchanged.

However, you may see an estimated tax position after submission of the update. The estimate may be incorrect because it does not include any adjustments or other taxable income sources.

What are the penalties for missing a quarterly update?

MTD uses a points-based penalty system. If you miss a filing deadline, such as a quarterly update or end of year tax return, you will receive a penalty point.

Once you reach four points, a £200 penalty applies. HMRC will not issue penalty points for late quarterly updates during the 2026/27 tax year (known as a ‘soft landing period’). However, the soft landing does not apply to the end of year tax return.

Separate penalties apply for late payment of tax, and they increase the longer the tax remains unpaid. HMRC may also charge penalties of up to £3,000 for failing to keep adequate digital records, although these are not applied automatically.

What is the difference between a quarterly update and the end of year tax return?

A quarterly update is a summary of income and expenses, for qualifying income sources only. An end of year tax return is a comprehensive end of year submission and includes claims for allowances and reliefs as well as non-qualifying income sources.

In the first year of using MTD for income tax, you will still need to complete a self-assessment tax return for the previous tax year (2025/26). This is because when you start completing quarterly updates, they are in real time for the current tax year, and not the previous one.

The key to making MTD for income tax stress-free is to choose compatible software, keep accurate digital records, and stay on top of your filing deadlines. Get advice from your accountant if you are unsure of anything – don’t leave it until the end of the tax year and hope for the best!

For the latest official rules and guidance, see HMRC's Making Tax Digital for income tax guidance.

How can TaxAssist Accountants help?

If you're unsure which software package to use or would like help with your quarterly updates, we can manage the process on your behalf and help with:

• software choice and setup – we partner with QuickBooks, Xero , Dext and Hammock 
• digital record-keeping
• quarterly updates, and
• your tax return

 

 

Last updated: 1st July 2026