What are Making Tax Digital for income tax Quarterly Updates?

Quarterly updates are one of the biggest changes for taxpayers under MTD for income tax. Here we answer a number of questions we have received about what those quarterly updates involve.  

Quarterly updates 

How long do you have to submit each quarterly update after the quarter closes? 

Under MTD for income tax, the default position is that quarterly updates are made on a ‘tax month’ basis e.g. 6th April to 5th July and the quarterly update must be made by the 7th of the following month i.e. 7th August for the April to July quarter.  

You can elect to use calendar months e.g. 1st April to 30th June. The reporting deadline remains the same i.e. 7th August. 

If I have two self-employments and one is over £50k income and the other is under £50K income, do I report both in my quarterly updates? 

Yes. As you are over the £50,000 qualifying income threshold (which is a per person and not a per business threshold) you must register for MTD for income tax for the 2026/27 tax year.  

You will need to submit a quarterly update for each business separately, as quarterly updates are per business and not per person. Speak to your accountant to ensure you have a software solution which allows you to make separately quarterly updates easily.  

If you are paid two months in arrears by customers, how is this treated under MTD for income tax? Are quarterly updates based on invoices or bank payments? 

This will depend on whether your business accounts are drawn up using the cash basis or the accruals basis. For sole traders and partnerships, the default option is the cash basis. The cash basis uses cash-at-bank payment dates, and the accruals basis uses invoice dates. 

Do quarterly MTD updates need to include electricity, gas expenses etc if you're a sole trader working from home? 

Quarterly updates should include the income and expenses of your business up to the end of that quarter. If you don’t have invoices yet or haven’t made payments yet (depending on whether you draw up your accounts under the cash basis or the accruals basis) then you should include those expenses on the quarterly update when you receive an invoice, pay the bill or when the expenses are incurred. 

For the April when you first join MTD for income tax, if I elect to use calendar quarters, do I ignore declaring income and expenses for 1st to 5th April because this will be included in the self-assessment tax return for the previous tax year? 

You should send the first quarterly update with data from the 6th April only. When you or your accountant prepare your end of year tax return, the 1st to the 5th April’s income and expenses will be added in as an end of year adjustment. 

With quarterly updates, do we include invoices as they are sent or as they are paid? 

If you prepare your accounts under the cash basis, you would include invoices when customers have paid and if you prepare under the accruals basis, you would include invoices when you raise them.  

Practically, how do you elect to use calendar months for quarterly updates? 

You need to select calendar months for your quarterly updates in your software solution before you make your first quarterly update for the tax year.  

How will pension contributions be taken into account on quarterly updates? 

Pension contributions should only be included on your end of year tax return and not on quarterly updates. This should ensure you receive tax relief at source.  

What if you take payment in tax year for services you don’t provide until the next year? 

As with the way your accounts and tax return are currently prepared, this depends on whether you draw up your accounts using the cash basis or the accruals basis. If you use the cash basis you would include the payment when you receive it; if you use the accruals basis you include it when the services are provided. 

If I have property income and self-employment income, when it comes to using the tax-free allowance for working from home, do I divide this by four for each quarter and then by two for each income stream? 

If you are claiming the working from home allowance under simplified expenses, this is claimed on the end of year tax return and not on quarterly updates. As your end of year tax return covers all your income streams together, you do not need to apportion the allowance.  

Last updated 2 Jul 2026 | First published 2 Jul 2026

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This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.

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