Strategy, Legal & Operations

How MTD quarterly updates can supercharge your business. Yes, really.

Your MTD quarterly update isn’t just about keeping HMRC happy. From live tax estimates to easier borrowing and smarter planning, here are the fringe benefits for sole traders and landlords that nobody talks about.

Published 21 July, 20269 min read Share

Key takeaways

• MTD’s quarterly updates means you’re in the best position to know about your tax bill, thanks to HMRC’s estimate.
• MTD’s focus on better accounting and up-to-the-minute records could help you get finance such as loans or mortgages.
• MTD is your time to finally get on top of your accounting by making it digital—and reaping the benefits like automation and AI.
• MTD can improve the value you get from your accountant and improve your relationship.

Your first Making Tax Digital (MTD) for Income Tax quarterly update is due by 7 August 2026, and if you’ve read the many articles we’ve written here at Sage Advice, you’ll already know the what, when, and how.

• Is your software MTD-ready—and are you? Here’s how to find out
• MTD for Income Tax: How to switch from Self Assessment

But let’s pause a moment.

The quarterly update isn’t just a hurdle to jump over that keeps HMRC happy.

It comes bundled with a set of genuine business benefits—the kind that were previously reserved for bigger businesses with finance teams.

So, once compliance is in the bag, here’s what else you get. Some of it might surprise you.

Here’s what we discuss in this article:

MTD quarterly updates give you a real-time forecast of your tax bill

This is the fundamental one, but probably the most useful.

Every time you submit a quarterly update, HMRC sends back an estimate of the tax you owe so far, based on your figures. You’ll see it in your software or your HMRC online account.

That’s every time you submit an update. You could submit one now and get that estimate. In other words, it doesn’t just have to be a quarterly thing.  

If you’ve ever done the classic sole trader thing of setting aside “roughly a third” of everything and hoping for the best, you’ll appreciate what a difference this makes.

To be clear, what HMRC provides is not a 100% cast-iron guarantee of what you’ll owe. But it should be a reasonable ballpark figure that can cushion surprises—so, no more January heart attack when the real number lands via your accountant’s arcane calculations.

You know what’s building up, quarter by quarter, so you can put the right money aside as you go.

And don’t forget: four updates a year is the minimum, not the maximum. You can submit frequently—such as once a week—and each submission refreshes your estimate. If you want a near-live view of your tax position, it’s yours for the taking.

MTD quarterly updates are a free quarterly business health check

A quarterly update forces you to do something many small business owners hardly ever make time for:

Sit down with your actual numbers, four times a year, and make sense of them.

That rhythm is powerful in a quiet, actually-quite-useful way.

You’ll spot spending creep while it’s still a trickle. You’ll see seasonal patterns you’d only ever sensed before. You’ll know whether that price rise actually stuck, and whether the quiet months are quieter than last year.

Better still, because your income and expenses now live in software as digital records, you’ve got the raw material for proper reporting.

Most MTD-ready accounting software will turn those records into dashboards, profit reports, and cash flow views with a couple of taps.

That’s the kind of visibility that used to require a finance team. Now it’s a by-product of staying compliant, just by doing the minimum HMRC now requires of you.

MTD quarterly updates mean your accounting is finally, properly digital

Plenty of businesses have been getting by on a carrier bag of receipts, a spreadsheet of good intentions, and a heroic January.

It works, just about, by the skin of your teeth.

But the digital records requirement of MTD is the moment that era ends—and honestly, it’s surely about time, if you speak to those who’ve already made the leap to digital accounting.

Once your accounting lives in software, the tedious stuff starts doing itself.

Your bank feed pulls transactions in automatically. You snap a photo of a receipt and the details are read off for you. Categorisation gets suggested, recurring expenses handle themselves, and AI features increasingly do the heavy lifting in the background.

The admin that used to eat your evenings and weekends can shrink to minutes.

There’s a knock-on benefit too: connecting a bank feed makes mixing business and personal spending genuinely annoying, so this is the natural moment to open a dedicated business account. Once you do, everything—from bookkeeping to borrowing—gets simpler.

MTD quarterly updates mean you can have proof of income whenever you need it

Ask any sole trader who’s applied for a loan or a mortgage: proving your income when you’re self-employed has always been a faff.

Lenders want SA302s and tax year overviews, and by the time you hand them over, the figures can be the best part of two years out of date.

With quarterly updates and live digital records, you’re potentially in a much better position.

You’re able to evidence your income position at any point in the year, backed by data that’s already been submitted to HMRC. For a remortgage, a van on finance, or a business loan, that’s a genuinely stronger hand—especially when your current year is going better than your last tax return suggests (as we all hope it does!).

To be clear, it will ultimately depend on what kind of evidence the lender demands from you. Some might still require last year’s accounts because the banking system can be very slow to modernise—and MTD for Income Tax is brand new.

But as a fringe benefit almost nobody mentions, this kind of visibility for lending could matter more than any of the others the day you need it.

MTD quarterly updates mean you can do tax planning while it still counts

Here’s the difference between predicting your tax bill and actually reducing it. Under the old regime, most people only understood their year in the January after it ended, when it was far too late to do anything about it.

Quarterly updates change the timeline.

If you know by October that you’re having a strong year, you can act before 5 April: bring forward that equipment purchase and use your Annual Investment Allowance, top up your pension, or think carefully about the timing of big invoices.

None of this is exotic. It’s the ordinary, sensible planning that’s only possible when you know where you stand while the tax year is still live. And it’s the kind of thing that growing businesses do all the time. It’s just been hidden from you until now.

This is also exactly the conversation to have with your accountant in the autumn, rather than never.

Which brings us neatly to a final benefit.

MTD quarterly updates mean your accountant becomes an adviser, not a historian

Under annual Self Assessment, your accountant spends most of their time with you doing archaeology. They’re reconstructing a year that’s already over, receipt by receipt.

It’s necessary work, but it’s backward-looking, and it leaves little room for anything else.

You don’t drive by looking in the rear-view mirror. Why run your business that way, by looking at things that are behind you?

With shared, up-to-date digital records, the compliance grunt work can shrink.

That frees your accountant to talk about what’s ahead—your pricing, your profitability, that tax planning above—instead of what’s behind. Same relationship, much more value from it.

And there’s a lovely long-term payoff: by the time your first digital tax return is due on 31 January 2028, and if you’ve done things right, most of your data will already be sitting with HMRC, submitted quarter by quarter. The January cliff-edge just quietly dissolves.

Final thoughts

Get your first quarterly update in—early, ideally, and well before 7 August. But don’t stop there.

Check your tax estimate and set the money aside. Have a proper look at your quarterly numbers. Let the software automate the boring bits.

And book a forward-looking chat with your accountant while the year can still be shaped.

Frequently asked questions

A tax deadline that pays you back. Whoever thought we’d see the day?

Browse more topics from this article

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