Strategy, Legal & Operations

Your first MTD quarterly update: The countdown has begun (7 August 2026)

Here’s the what, why, when, and how of making your first MTD for Income Tax quarterly update. It’s all you need to know in simple language—no jargon.

Published 3 July, 202619 min read Share

Key Takeaways

• The first quarterly update under Making Tax Digital for Income Tax is due by 7 August 2026.
• The month-long window for quarterly update submission opened for taxpayers on 25 June, at the earliest, although for most taxpayers the window effectively opens 6 July.
• You can’t submit a quarterly update without digital records, so if those aren’t present already, they needed to be put in place.
• A quarterly update is not a tax return and is much more limited in terms of the data you need to provide.
• Completing the updates means HMRC will provide you with a tax estimate.
• No tax payment is due because of the quarterly update (although there may be a payment on account that HMRC has previously requested you pay on 31 July).

If you’re a sole trader or landlord coming into Making Tax Digital (MTD) for Income Tax this year, add this date to your diary: 7 August 2026.

That’s the deadline for your first ever quarterly update, the first of four you’re required to provide across the tax year. (The others are 7 November, 7 February, and 7 May the following year—so maybe add those to your diary, too.)

If this is the first you’re hearing of any of this, take a breath, because it’s far more manageable than it sounds. As we explain below, in most cases you can get some free software, connect your bank feed, categorise the transactions and submit. It can take as little as a few minutes.

However, this guide walks you through the entire process in a bid to take you from zero, to (hopefully) hero.

Here’s what we discuss:

What’s the bare minimum for an MTD for Income Tax quarterly update?

In summary, you’ll need the following to make a MTD for Income Tax quarterly update:

• MTD-ready software capable of making MTD for Income Tax updates. You cannot do this using the HMRC website, like you might’ve done with Self Assessment, or by post.
• Digital accounting for your business income and expenditure since the start of the tax year (e.g. 6 April to 5 July for the 7 August quarterly update). These are known as digital records.

Here’s what’s the information required for those digital records:

• Self-employment or landlord income amounts: Things like your sales, takings, fees, and rents.
• Self-employment or landlord expense amounts: Things like the cost of stock, travel costs, office supplies costs, utility and phone bills, financial costs, and cost of repairs/maintenance/service fees for properties if you’re a landlord.
• Dates: When the income was received, or expenses incurred.
• Tax categorisation for each income and expense: For example, travel expenses, advertising, interest on loans, wages paid to staff, or just the cost of goods bought for resale, or used in your business. HMRC provides a handy list.

If all this sounds overwhelming then—don’t panic!

The whole point of MTD for Income Tax is that you use software to make the update. The software makes everything easy. It’ll assist with the categorisation, for example. And you can connect to your bank to get the data you need.

We explain possibly the simplest possible way of doing all this below.

When is the earliest I can submit my MTD quarterly update?

You get just over a month after the end of a quarterly period to submit your update.

For example, for period covering 6 April to 5 July, the first quarterly update due on 7 August.

So, the earliest date to make your update would be 6 July.

However, HMRC says you can submit up to 10 days before this—but only if you’re sure those 10 days won’t have any transactions in them. You might be going on holiday, for example, and want to take care of the update before you leave.

So, the effective earliest date to submit an update is 10 days before the end of the update period.

Again using the first quarterly update as our example, this would be 25 June.

Here’s all that in simple terms for the first quarterly update:

• Period covered: 6 April to 5 July.
• Earliest submission date: 25 June, provided you’re sure there will be no more transactions before 6 July.
• Earliest submission date for the average taxpayer: 6 July.

A quick note: If you use 1 April as the start of the tax year (something known as a calendar year basis), it’s a bit different. The earliest you can update your quarterly update would be 20 June (because that’s 10 days before your period ends on 30 June). But your deadline remains 7 August for the quarterly update.

Do I have the right software for an MTD quarterly update?

As you might expect from the name, Making Tax Digital is about using software for your accounting.

There’s no way around this, and it’s the whole reason why HMRC created the Making Tax Digital initiative.

Alas, you can’t just use any software and be within the rules.

You need to be using software that HMRC has recognised as being MTD-ready.

We’ve covered this already on Sage Advice, so take a look at that article, but if you’ve no idea where to start then we’d suggest signing up to Sage Sole Trader. There are versions for Apple and Android mobiles.

If you want to skip ahead to see how to use Sage Sole Trader for your first quarterly update, click here.

There’s a version of Sage Sole Trader available entirely free of charge and yes, it will take you through the MTD for Income Tax requirements—including your digital tax return, due by January 2028.

Bear in mind that once you’ve made any MTD quarterly update, the data is then stored with HMRC—so you can use whatever software you like next time. You just need to make sure the digital records are imported, because updates are cumulative.

And that’s the next topic we’re going to discuss.

Do I have the right digital records for an MTD for Income Tax quarterly update?

Before you can send a quarterly update, you need somewhere to get the data from.

If you’ve had to follow the MTD for Income Tax rules as of April 2026—which is to say, your qualifying income was over £50,000 for the 2024/25 tax year—you should’ve been keeping digital records of your business and property income and expenses as of 6 April 2026 onwards.

“Digital records” sounds heavier than it is.

In practice, it means your business income and expenses live in software.

At its simplest, this could be a spreadsheet that you’ve linked to HMRC through MTD-ready bridging software.

But for most people, it means simply using MTD-ready accounting software and putting their income and expenditure into it when it happens, or as soon as possible after.

Your quarterly update is simply a summary pulled from those records, so the better your records, the easier every update becomes.

So, what if you have not been creating digital records since 6 April?

Don’t panic. You’re actually in the clear provided you get the digital records into MTD-ready software before the quarterly reporting deadline. We explain a simple way of doing this below using a bank feed.

However, a bank feed on its own isn’t really a good solution long-term.

Now is the moment to build the habits that save you a headache at year-end when your full digital tax return is due. A bank statement tells you money moved, but it doesn’t prove what for, and it won’t capture cash takings or match a payment to the right invoice. If you buy things using cash, it won’t capture that, either.

So keep your receipts and invoices, and let your software do the heavy lifting: snap a photo of a receipt using the accounting app just after you’ve made the purchase, and have the details read off automatically, or set recurring expenses to categorise themselves.

Get this right early and your records stay clean, complete and ready to submit at any point.

What should a quarterly update actually include? (And what should it not?)

This is where most of the nerves come from, so let’s clear it up.

A quarterly update is a digital summary of your income and expenses for the tax year so far, sent to HMRC through your software.

That’s it.

Here’s what a quarterly update is not:

• It’s not a tax return.
• It doesn’t include earnings from full-time employment (e.g. PAYE).
• It doesn’t include dividends, savings interest, pensions, capital allowances, capital gains or losses, reliefs, or tax adjustments and allowances. It really is just income and expenditure.
• It’s not a tax bill.
• It’s not your final, fixed word on your income and expenditure.

Each update is cumulative, meaning it’s a running total from the start of the tax year that overwrites the one before it. So if a figure isn’t quite right, you’re not stuck with it: the next update corrects it automatically, and you tidy everything up properly at year-end.

What you get back once you submit your update is the genuinely useful part, and hardly anybody ever mentions it.

After you submit, you’ll see an estimate of your tax bill for your self-employment and property income, either in your software or your HMRC online account.

That’s a running, real-time view of what you’re likely to owe, which makes it far easier to set money aside as you go and avoid a nasty surprise in January. No more setting aside a nebulous third of your income. Now you can be more precise. The cash flow benefit could be enormous.

One quick practical note: you submit a separate update for each source of income.

So if you’re a sole trader who also lets out a property, that’s two updates each time, not one combined figure. Ditto if you run, say, an online eBay store while you also run a carpentry business. That would be two quarterly updates. Any MTD-ready software recognised by HMRC should let you manage both in the same place.

How can I submit an MTD quarterly update right now?

If this is all new to you and you want to get it sorted out ASAP, then we’d suggest the following, which can be done on your mobile phone:

1. Download Sage Sole Trader. There’s even a free version, that’ll be free forever.
2. Create an account and sign-in.
3. Connect your business bank account, and then import your transactions.
4. Use the categorisation tool to categorise your transactions with just a swipe, if you’re using the app. The app will help auto-categorise, too!
5. If you’ve bought anything with cash, or if you’ve taken any payments in cash, create manual transactions for these using the data from receipts you’ve received, or invoices you’ve created.
6. Open your quarterly update, review it, and then tap to send it to HMRC.

That’s it. Job done.

The first time might take a short while. But by this time next year, once you’ve got the hang of it, it really is something you can do in a few minutes between jobs, or before cracking into your meal deal over lunch—especially if you categorise those digital records as they come in each time.

Can my bookkeeper or accountant handle the MTD quarterly update on my behalf?

Yes—and for plenty of people, that’s exactly the plan.

Just as your accountant or bookkeeper used to handle your Self Assessment return, they can prepare and submit your quarterly updates, and your year-end digital tax return. They can handle maintaining the digital records, too.

If you’d rather not touch the software yourself, you don’t have to. Or if you’d like to do a little of it, like record expenses, but leave the rest to the experts, then that’s also possible.

The two jobs can even be split: a bookkeeper you hire to visit your business might handle the quarterly updates while your accountant takes care of the year-end. (Behind the scenes that comes down to how they’re set up with HMRC, but that’s their concern, not yours.)

The arrangement is much the same as the once-a-year one you may already have. Picture the bundle of records you hand over each year so your return gets filed on time, by 31 January—it’s that same handover, just happening after each quarter rather than once a year.

Here’s what’s involved:

1. Authorise them to act for you. Your accountant or bookkeeper needs your permission to deal with HMRC on your behalf for MTD for Income Tax. They’ll usually set this up and send you a request to approve, which is often just a case of logging in once to confirm the link. An existing authorisation for your Self Assessment may carry across, though a fresh digital sign-off is sometimes needed.
2. Get set up on their software. They’ll typically use MTD-compatible software to manage their clients, so you may need to be added to it. It’s worth a quick conversation about which software before anyone commits, so it fits how you both like to work.
3. Get your figures to them. Two routes here. Either connect your business bank account so transactions flow straight into the software (the quickest option), or send them your paperwork, your receipts, invoices and statements, for them to record. Agree who’s doing the categorising, you or them.
4. Keep it flowing every quarter. The real change is the rhythm. Your records now need to reach them four times a year, in good time before each deadline, and more often still if you have more than one income source, since each one is reported separately.

One thing worth holding in mind: your accountant or bookkeeper is doing all of this for the first time too, and they’re doing it for every affected client at once, all hitting the same quarterly deadlines.

The end of July and first week of August will be their busiest stretch of the new year. So the kindest thing you can do for both of you is get your records or paperwork over early, with plenty of room before 7 August.

Don’t be the client emailing a year’s worth of receipts on the 5th. Get your request in now, agree how you’ll work together, and your first quarter will be calm rather than a scramble.

What happens if I get my first quarterly update wrong—or it’s late?

Here’s the reassuring bit.

First, understand that you should aim for accuracy throughout—ensuring your digital records are accurate, and ensuring your quarterly updates are accurate.

However, HMRC won’t ever impose penalties if you find you’ve made a mistake in your quarterly update, or if you find that you have to adjust things later on. (Note that this is not true for the digital tax return, which must be accurate.)

Some commentators have even suggested this means you can just submit £0 in both the income and expenses categories for every quarterly update.

But the reality is that this is not something you should ever do. This is the kind of pattern that HMRC might pick-up on as problematic.

And why would you? You’re legally required to keep accurate digital records, which means the data will be there anyway. So why not just do it properly, to the best of your ability? What’s more, the quarterly update is genuinely useful to you. You get an estimate from HMRC on how much tax you’ll owe. This is incredibly useful for cash flow.

What about timing? What if you’re late with the update?

Ordinarily HMRC would apply a penalty point. (We’ve discussed the MTD penalty point system previously here on Sage Advice, so take a look at that article for details.)

However, HMRC knows MTD for Income Tax is a big change, so it’s built in some breathing room for the first year (2026-27).

It comes in two separate parts that are easy to mix up.

1. Late quarterly updates won’t cost you penalty points in 2026/27

If you’re in this first wave, there are no penalty points for submitting any of your first four quarterly updates late.

Two things to hold onto, though: you still have to submit all four (you can’t file your year-end return until you have), and this does not cover your year-end declaration, due 31 January 2028, which sits under the normal penalty rules.

It’s a one-year reprieve and from 2027/28 onwards, a late update earns a penalty point, and four points means a £200 penalty.

2. You get slightly longer to pay

For your first year in the new penalty system, you have 30 days from the payment due date, rather than the usual 15, before a late-payment penalty kicks in.

The catch worth knowing: this holds off the penalty, not the interest. Interest still runs from the original due date and can’t be appealed, so it pays to clear what you owe as soon as you can.

Like the points easement, this is a one-off. As of 2027/28, it drops to 15 days.

The smart way to read all this: the safety net is there so you can find your feet without pressure, not so you can put it off. Treat 2026/27 as a low-stakes dress rehearsal. Get your software and your categorising right now, while a slip costs you nothing, and the year-end, when the rules tighten, will look after itself.

Danger! Why you shouldn’t wait until the MTD quarterly deadline

The soft landing period means there’s no points penalty for being a little late for this first year of MTD (2026/27).

But there’s a really good reason why you should make your quarterly update ASAP, rather than leaving it to the last minute.

The first week of August will see a rush of first-time filers all hitting HMRC’s systems at once. If you do run into a problem, that’s the worst possible moment to phone a helpline, for example.

Submit your quarterly update early and you’ve got the time and space to sort any hiccups calmly, while support is easier to reach.

But don’t forget that this is HMRC’s first time experiencing around a million MTD for Income Tax customers making a quarterly update, too.

We’re sure HMRC’s systems will cope just fine, but there’s always a risk—however small—that there are some unforeseen small issues that might cause big problems.

So, again, you don’t want to wait until 7 August to make your update only to find that there are technical issues.

Make the update as soon as you can.

What comes next: Your MTD and Income Tax calendar after the first quarterly update

Your first update is the start of a rhythm rather than a one-off, so it helps to see the road ahead. Here’s what’s coming until the start of 2028:

• 31 July 2026: 2nd payment on account for 2025/26 may be due.
• 7 November 2026: Second quarterly update for 2026/27 is due.
• 31 January 2027: For many taxpayers this is likely to be the last-ever traditional Self Assessment return (for 2025/26). Also, any 2025/26 balancing payment and first payment on account for 2026/27 may be due.
• 7 February 2027: Third quarterly update for 2026/27 is due.
• 7 May 2027: Fourth and final quarterly update for 2026/27 is due.
• 31 July 2027: 2nd payment on account for 2026/27 may be due.
• 7 August 2027: Your first MTD quarterly update for 2027/28 is due.
• 7 November 2027: Your second MTD quarterly update for 2027/28 is due.
• 31 January 2028: Your first MTD digital tax return is due (replacing Self Assessment for 2026/27), plus any 2026/27 balancing payment and your first payment on account for 2027/28 may be due.

The digital tax return is where it all comes together: you confirm your figures, add any other income such as employment, dividends or savings interest, claim your reliefs and allowances, and settle up. It replaces the annual return you’re used to but is very similar. However, most of the data will already be in the system because of your quarterly updates. How neat is that?

It’s also worth knowing the net is widening.

MTD for Income Tax reaches those with qualifying income over £30,000 from April 2027, and over £20,000 from April 2028.

And from 2027/28, the penalty points safety net falls away, which is another good reason to use this first year to get comfortable.

Final thoughts

None of this needs to be stressful, and the worst thing you can do is nothing.

So, a simple plan: get your records flowing by connecting your bank and keeping your receipts and invoices, then do your first update early rather than waiting for 7 August.

You’ve got a forgiving first year and real-time tax estimates on your side, so use them.

Get this one out of the way calmly now, and every update after it gets easier.

Frequently asked questions

Browse more topics from this article

• Making Tax Digital for businesses
• Making Tax Digital for Income Tax