MTD Quarterly Updates: What Trades Submit and When

A quarterly update under Making Tax Digital is a summary of your income and expenses for a three-month period, sent to HMRC from compatible software — it is not a tax return and it does not come with a tax bill. Four of them go in across the year, then a final declaration at the end pulls everything together. The tax payment dates have not changed.

Where MTD for Income Tax stands now

Making Tax Digital for Income Tax became mandatory from 6 April 2026 for people with qualifying income over £50,000. It extends to those over £30,000 from 6 April 2027, and to those over £20,000 from 6 April 2028.

Qualifying income means gross self-employment and property income before expenses. This catches out trades who think in terms of profit — a sole trader turning over £60,000 and taking home £35,000 is in scope from 2026, not 2027.

If you have both a trade and a rental property, the incomes are added together to test the threshold, but they are reported separately.

The four things MTD actually requires

Strip away the noise and there are four obligations.

Digital records. Your income and expenses have to be recorded digitally, transaction by transaction, as you go. A shoebox of receipts reconciled in April no longer satisfies the rules.

Quarterly updates. Four submissions a year, each a running summary of income and expenses by category for the business.

A final declaration. One submission after the year end that finalises everything — accounting adjustments, any other income, reliefs and allowances — and produces the actual tax figure.

Compatible software. Everything goes to HMRC through software that connects to their systems. A spreadsheet can still be part of the picture if it is linked to HMRC through bridging software, but the link has to be digital.

What actually goes in a quarterly update

Less than most people expect. A quarterly update is a cumulative total of your business income and expenses, broken down into the standard categories — turnover, cost of goods, wages, vehicle running costs, premises, professional fees, and so on.

What it does not include:

Capital allowances.

Private use adjustments.

Reliefs and allowances.

Any other income you have.

A tax calculation you owe money against.

Those all belong to the final declaration. This is why the quarterly update is a lighter piece of work than a tax return — it is a summary of what your bookkeeping already contains, not an exercise in judgement.

The updates are cumulative, which means each one restates the year to date. If you miscategorised something in quarter one, correcting it in quarter two fixes it. There is no separate amendment process for a small error.

The rhythm of a full MTD year

For a standard 6 April to 5 April tax year, the quarters run to 5 July, 5 October, 5 January and 5 April. Each update is due by the 7th of the month after the quarter ends — 7 August, 7 November, 7 February and 7 May — so the first quarter’s update lands in early August, and so on around the year.

There is an option to align quarters to calendar month ends instead, which most software will handle and which makes bank reconciliation considerably easier. If your accountant has not asked you which you want, ask them.

The final declaration is due by 31 January after the end of the tax year — the same date Self Assessment always used.

And the payment dates are unchanged: 31 January and 31 July for payments on account, with the balancing payment on 31 January. Quarterly reporting does not mean quarterly tax.

How this differs from the old Self Assessment rhythm

Under Self Assessment, a lot of trades did their books once a year, usually in a panic in January, roughly ten months after the year they were reporting on.

Under MTD, the work is spread. You cannot leave the bookkeeping until January because you have to submit something in August, November, February and May. The total amount of bookkeeping is similar; the timing is completely different.

For trades who already use accounting software and reconcile monthly, MTD is a modest change. For trades who bag up receipts and hand them over annually, it is a genuine change of habit and the main reason to start early rather than at the deadline.

Setting yourself up so it is a ten-minute job

The trades who find MTD painless all do the same four things.

One business bank account. Not the personal current account with some business bits in it. A clean feed into the software removes most of the work.

Capture receipts at the point of purchase. Photograph the merchant receipt in the van park, not in March. Every serious accounting app does this from the phone.

Categorise weekly, not quarterly. Fifteen minutes on a Friday beats a lost Sunday before a deadline.

Agree the split with your accountant once. Which expenses go where, how the van is treated, how much of the phone bill is business. Set it up once and the software repeats it.

Do those and a quarterly update genuinely is a review-and-submit job.

Penalties and what happens if you are late

HMRC operates a points-based penalty system for late submissions. Miss a deadline and you collect a point; collect enough points and a financial penalty follows. Points expire after a period of compliance.

The practical implication is that one late update is not a disaster, but a pattern of them is. Late payment is treated separately, with interest and escalating charges.

Who is exempt

Exemptions exist but are narrow. They cover people who cannot use digital tools because of age, disability, remoteness of location or religious grounds, and they have to be applied for and granted by HMRC.

Being busy, or disliking computers, is not an exemption.

Keeping the income side healthy

Better records make it much easier to see what the business is actually earning, which tends to prompt harder questions about where work comes from and what it costs to win.

Trade Pilot is free to join and only charges when a real local job lands in your inbox, with each lead sold to no more than three trades in an area. Because there is no monthly subscription, the lead cost sits cleanly against the jobs it produced — which is exactly the sort of line you want visible in your quarterly figures.

Frequently asked questions

Do I pay tax four times a year under MTD?

No. Payment dates are unchanged — 31 January and 31 July for payments on account, with any balance due on 31 January. Quarterly updates are reporting only.

What if I make a mistake in a quarterly update?

Correct it in the next one. Updates are cumulative, so each submission restates the year to date and picks up any correction automatically.

Is my qualifying income turnover or profit?

Gross income before expenses. Add together self-employment and property income to test the threshold.

Can I still use a spreadsheet?

Yes, provided it is linked to HMRC through bridging software so the data transfers digitally. You cannot retype figures from a spreadsheet into a portal by hand.

Do I still need an accountant?

Most trades still do, because the judgement calls all sit in the final declaration — capital allowances, private use, reliefs. What changes is that the bookkeeping has to be current all year, which usually makes the accountant’s job cheaper rather than more expensive.

What if my income drops below the threshold?

Once you are in MTD you generally stay in it unless your income falls below the exit threshold for a sustained period. Check your specific position with your accountant rather than assuming a single quiet year takes you out.

This article is general information, not tax advice. Thresholds and deadlines can change, so check the current rules on GOV.UK or speak to an accountant about your own position.