What Are Quarterly Updates in MTD, and How Do You File Them?
- MAZ
- Jul 2
- 15 min read
The Audio Summary of the Most Important Points:
Quarterly Updates Under MTD: What, When and Who Needs to File
So, What Exactly Is a ‘Quarterly Update’ in Making Tax Digital?
Now, if you’ve heard the term “quarterly update” and immediately felt a bit overwhelmed – you’re not alone. Most small business owners, landlords, and even sole traders in the UK are still trying to wrap their heads around it. But let’s cut through the jargon.
A quarterly update is simply a summary of your business income and expenses that you’re now required to send to HMRC every 3 months as part of the new Making Tax Digital (MTD) for Income Tax regime. It’s not a full tax return, and you don’t need to calculate your final tax liability just yet — it’s about keeping HMRC in the loop as the tax year unfolds.
And this isn't about VAT — MTD for VAT has been around since 2019. We’re now talking about Income Tax, and more specifically, self-employed individuals and landlords who’ll be filing these updates instead of just one big return at year’s end.
Who Has to File These Quarterly Updates, and When?
Now it shouldn't be a surprise for you that not everyone is roped in — at least, not yet. Here’s the real breakdown.
From April 2026 (mandatory):
If you’re:
A sole trader or landlord, and
Your combined annual income from self-employment and property exceeds £50,000,
then, you’ll need to file quarterly updates using MTD-compatible software. No exceptions. It applies per person, not per business or property.
From April 2027 (next wave):
If your income is £30,000–£50,000, the MTD rule will catch up with you a year later.
Right Now (2025)? Voluntary Entry
You can sign up early if:
You’re already using digital accounting software,
You’ve submitted a Self Assessment before,
You have no outstanding tax issues, and
You’re not exempt (we’ll cover those cases in a bit).
Here’s a quick visual summary for clarity:
Tax Year | Income Threshold | MTD for Income Tax Status |
2024–25 | Any | Optional for all |
2025–26 | Any | Optional (pilot scheme) |
2026–27 | £50,000+ | Mandatory |
2027–28 | £30,000–£50,000 | Mandatory |
What Goes Into a Quarterly Update?
So the question is… what exactly are you supposed to send every 3 months?
Be careful! A quarterly update isn’t a fully detailed breakdown like a Self Assessment return. You’re not reporting profits, losses, or final tax owed. You’re simply uploading a digital summary of your:
Income received
Expenses incurred (categorised by type: travel, rent, equipment, etc.)
That’s it. HMRC doesn’t want your receipts or invoices at this stage — just totals. But they must be recorded digitally, either as you go or entered later into compatible software.
You also won’t need to provide personal allowances, tax reliefs, or full income splits yet — that comes at the End of Period Statement (EOPS), filed after the tax year ends.
How Often Do You Need to File, and By What Dates?
None of us enjoys deadlines, but MTD has introduced a whole new layer of them. Here’s how the quarterly cycle works if your accounting year follows the standard 6 April to 5 April timeline:
Quarter | Reporting Period | Deadline to Submit |
Q1 | 6 April – 5 July | 5 August |
Q2 | 6 July – 5 October | 5 November |
Q3 | 6 October – 5 January | 5 February |
Q4 | 6 January – 5 April | 5 May |
Now consider this: if you miss these, HMRC’s new penalty system might bite. A points-based system kicks in from April 2026 — miss too many and you’ll face fines.
What Kind of Software Do You Need to File a Quarterly Update?
Here’s the thing: you can’t just log into your HMRC Self Assessment account and upload a spreadsheet. MTD demands HMRC-recognised accounting software.
Popular examples include:
FreeAgent
QuickBooks
Xero
Sage
Zoho Books
And don’t just pick one at random. The software must:
Be officially listed by HMRC as MTD-compatible,
Be capable of storing digital records, and
Be able to send quarterly updates and final returns.
A lot of these platforms offer MTD plug-ins, but make sure yours covers Income Tax, not just VAT.
What If You Have More Than One Source of Income?
Now this is where it gets a bit tricky.
Let’s say you’re juggling a few roles — maybe you:
Rent out two flats in Birmingham,
Drive part-time for Uber,
And sell handmade jewellery online.
Under MTD rules:
Each income source must be digitally recorded, and
Each source gets its own quarterly update (if it meets the income threshold).
Yes, it means more admin, but your accounting software should manage this through separate “business types” or income streams.
Who Can’t Join MTD for Income Tax (Even Voluntarily)?
Now it might seem odd, but some taxpayers are excluded, at least for now.
You can’t sign up for MTD (voluntarily or otherwise) if you:
Are currently insolvent or bankrupt
Claim Blind Person’s Allowance
Are an MP or a religious minister
Receive income from a trust or shared lives scheme
Use profit averaging (like farmers, writers, or artists)
Have a payment plan with HMRC
Act as a nominee or solicitor managing someone else’s tax
If that’s you, keep filing the old-fashioned Self Assessment — for now.
How Do Penalties Work for Late or Incorrect Quarterly Updates?
Now, don’t panic — HMRC isn’t looking to slap fines left, right and centre during the early adoption phase. But once MTD becomes mandatory (April 2026), penalties will apply under a new points-based system:
One missed deadline = 1 penalty point
Reach the threshold (typically 4 points) = automatic £200 fine
Each additional point = another fine, unless cleared
What’s more, points stay on your record unless you:
Submit on time for 12 months straight, and
Catch up on all overdue filings
So if you’re prone to forgetting tax deadlines, now might be a good time to get a digital calendar and automated reminders.
Real-Life Example: Meet Janice, a Landlord in Newcastle
Let’s bring this to life with a real-world case.
Janice owns two rental properties in Newcastle, earning around £55,000 a year in rental income.
In 2025, she voluntarily signs up for MTD to prepare.
She uses QuickBooks Self-Employed, which tracks rental income and bills.
Every quarter, she reviews and submits her summary directly through the app — no spreadsheets, no manual log-ins.
Her accountant finalises things with a single End of Period Statement after April 2026.
Result? No surprise tax bills, and no penalties. Just smoother bookkeeping.
How to File Quarterly Updates Under MTD: A Realistic Guide with Tools & Scenarios
Alright, So How Do You Actually File These Updates?
Now let’s be real — it’s all well and good knowing what a quarterly update is, but how do you actually get it from your spreadsheet or receipts into HMRC’s hands?
The answer: you can’t do it manually.
No more HMRC login → fill in a form → hit submit. Under Making Tax Digital (MTD), all quarterly updates must be submitted through compatible accounting software. That’s non-negotiable.
This software connects directly to HMRC's systems using an API (fancy term for digital handshake) and sends a tidy summary of your business records.
But don’t sweat it. You don’t need to be an IT guru. You just need the right tool and a simple process, which we’ll break down below.
Step-by-Step Guide: How to File Your MTD Quarterly Update
Let’s walk through the whole thing like we’re helping a mate at the pub.
Step 1: Choose an MTD-Compatible Software
Don’t rush this bit. Different tools suit different setups. Here’s a quick comparison:
Software | Best For | MTD Ready for Income Tax? | Starting Price (2025) |
FreeAgent | Freelancers & sole traders | ✅ Yes | Free (with NatWest/RBS) |
QuickBooks Self-Employed | Sole traders, drivers | ✅ Yes | From £10/month |
Xero | VAT-registered businesses | ✅ Yes | From £14/month |
Sage Accounting | SMEs, larger businesses | ✅ Yes | From £12/month |
Zoho Books | Tech-savvy users | ✅ Yes | Free tier available |
Tip: Check HMRC’s official list of MTD software before subscribing.
Step 2: Set Up Digital Record-Keeping
Now you’ve got your software, it’s time to go digital. This doesn’t mean snapping every receipt like you're on Instagram. You just need to:
Enter all income and expenses as they happen
Categorise expenses properly (e.g., travel, office supplies)
Keep everything stored digitally (no paper ledgers allowed)
Your software does the maths and builds the summaries.
Step 3: Link Software to HMRC
Most software will guide you through this:
Log in using your Government Gateway ID
Give the app permission to access your tax records
Set your accounting period (e.g., 6 April – 5 April)
Choose calendar quarters to match HMRC deadlines
Once connected, you're ready to go.
Step 4: Submit the Update
When the quarter ends:
Review the figures (don’t just hit submit blindly)
Check categories, missing entries, or duplicates
Click submit — the software pings it off to HMRC
That’s it. No forms, no paper, no drama.
What If You Make a Mistake in a Quarterly Update?
Now don’t panic if you get something wrong. HMRC’s quarterly updates are summaries, not full tax declarations. They don’t calculate your tax yet, so an error won’t instantly cost you.
Let’s say you forget to include a £1,200 equipment expense in Q2:
You don’t need to amend Q2
Instead, adjust the next quarter to include the expense
Or, correct it in the End of Period Statement (EOPS) after the year ends
In other words: HMRC’s not fussed about perfection — just progress and consistency.
What Happens at the End of the Tax Year?
So the question is, if quarterly updates aren’t tax returns, what wraps it all up?
Here’s how the MTD year ends:
End of Period Statement (EOPS): This is your final income and expense report, with any year-end adjustments — think missing invoices, bank charges, or depreciation.
Final Declaration: Once the EOPS is done, you file a Final Declaration, which replaces your old Self Assessment return. This is where HMRC finally assesses your tax liability.
Deadline? Still 31 January following the end of the tax year, same as before.
What If Your Business or Income Changes Mid-Year?
Now consider this: if you switch from being self-employed to taking on a PAYE role mid-year, or one of your rental properties goes empty — does that mess up the system?
Here’s how to handle it:
Stopped Trading Mid-Year?: File a “Cessation” through your software or via your agent. Only report income/expenses up to the end date.
New Income Source?: You must add it as a separate digital record. If it's rental income, for example, it needs its own stream in your software — and its own updates.
Switched Accounting Method?: You’ll need to declare that change in your year-end summary. Software should guide you through this (or ask an accountant).
Case Study 1: Lenny the London Rideshare Driver
Lenny, 32, from Hackney, drives for Bolt and does freelance web development on the side. His annual income is around £53,000.
He signs up early for MTD in 2025 using QuickBooks Self-Employed.
He sets up two income streams: one for rideshare, one for freelance.
Every week, he logs fuel, insurance, client income, and expenses via the mobile app.
Every quarter, QuickBooks pings him when it's time to submit. He reviews, clicks “Send” — done.
No spreadsheets. No paper trails. No missed deadlines.
Case Study 2: Margaret, a Retired Landlady from Luton
Margaret, 66, rents out 3 properties. She’s semi-retired but still earns £58,000 a year.
She signs up voluntarily for MTD in early 2025.
Her son helps her set up FreeAgent using her RBS business account (FreeAgent is free if you bank with NatWest/RBS).
Her letting agent emails monthly rent statements, which she uploads into the software.
She files 4 quarterly updates, then completes an End of Period Statement with her accountant’s help.
Her accountant makes a few final tweaks, and HMRC receives everything on time. Margaret avoids all penalties and stress.
What If You Use an Accountant or Bookkeeper?
Now, don’t worry if all this digital stuff feels like learning a new language. If you already work with an accountant, they can do all of this on your behalf — provided you give them digital agent access through your Government Gateway account.
Here’s how it works:
You invite your agent via the MTD-compatible software
They handle record-keeping, submissions, and compliance
You still review and sign off before the final declaration
It’s a great option if you’d rather avoid the admin altogether.
Avoiding Common Mistakes (and Penalties)
Let’s face it — even experienced taxpayers trip up when new rules kick in. So here are 5 practical things to avoid:
Missing the Software Deadline: Don’t wait till 2026. Get the software sorted early and practise now, while it’s voluntary.
Choosing VAT-Only Software: Some tools are MTD-compliant for VAT — but not for Income Tax. Check carefully.
Incorrect Accounting Period: MTD works on a 6 April – 5 April cycle. Your software must reflect this, or you risk deadline mix-ups.
Not Separating Income Sources: Lumped together earnings from your Airbnb and dog-grooming side hustle? HMRC wants them reported separately.
Ignoring Reminders: Most platforms have alerts for upcoming updates. Don’t swipe them away like spam — they could save you from a £200 penalty.
Looking Ahead: How MTD Could Change the Way You Work
Now it shouldn’t be a surprise for you that HMRC is playing the long game here. The goal of MTD isn’t just better admin — it’s about real-time taxation and digital compliance.
In the future, we may see:
Automated tax estimates after each quarter
Real-time payment options
More frequent submissions for complex businesses
Expansion to partnerships and Limited Companies
So getting used to quarterly updates now could give you a huge head start.
10 Key Things to Know About Quarterly Updates in MTD for UK Taxpayers
Let’s round it all up. Whether you’re a landlord, freelancer, sole trader or just someone trying to stay ahead of HMRC’s digital overhaul, here are the top 10 practical takeaways from everything we’ve covered.
Each point is clear, current (as of June 2025), and packed with essential value — no fluff, no filler.
1. From April 2026, quarterly updates will be mandatory for self-employed people and landlords earning over £50,000.
This applies to combined income from self-employment and property. If your annual gross income crosses the threshold, you’re in. MTD for Income Tax becomes compulsory, and you must use HMRC-recognised software — spreadsheets alone won’t cut it.
2. A quarterly update is a 3-monthly digital summary of income and expenses — not a full tax return.
You don’t calculate profit, and you don’t pay tax with it. You simply report what came in and what went out, by expense category, through MTD software.
3. The deadlines are fixed based on your tax-year start — not calendar quarters.
Using the standard tax year (6 April to 5 April), here are the deadlines:
Q1 (6 Apr–5 Jul): submit by 5 Aug
Q2 (6 Jul–5 Oct): by 5 Nov
Q3 (6 Oct–5 Jan): by 5 Feb
Q4 (6 Jan–5 Apr): by 5 May
Even if your business is seasonal or fluctuates, these dates stay the same.
4. You must use software that’s MTD-compliant for Income Tax — not just VAT.
A lot of people trip up here. Just because your software is good for MTD VAT doesn’t mean it’s ready for Income Tax. Double-check that it’s listed on GOV.UK and supports quarterly updates, EOPS, and final declarations.
5. If you have more than one income source (e.g., self-employment + property), each needs its own digital record.
MTD requires income and expenses for each stream to be tracked separately, even if it’s all under your name. And yes — each stream has its own quarterly update.
6. Mistakes in quarterly updates can be corrected in the next update or in the final declaration — no need to panic.
If you forget a business cost or overreport income, you can adjust in the next update or fix it in the year-end End of Period Statement (EOPS). HMRC knows this is a work in progress.
7. You won’t face penalties during voluntary sign-up, but late submissions will be penalised after April 2026.
The points-based system means one missed quarterly update = 1 point. Hit 4 points and you’ll be fined £200. Continued late filing could trigger more points and penalties — so staying on schedule is key.
8. You can voluntarily sign up for MTD now (in 2025) if you meet HMRC’s eligibility requirements.
This gives you time to get used to digital tools and reporting before it’s mandatory. You can also opt in for all income sources, provided you have no tax arrears, and you’re not exempt (e.g., bankrupt, MP, etc.).
9. Your accountant or agent can file on your behalf, as long as you give them proper digital authority.
You don’t have to do it alone. Through most MTD software, you can grant access to your agent, and they’ll file the updates for you — keeping you compliant while you focus on your work or business.
10. Filing quarterly updates now gives you more control over cash flow, surprises, and tax planning.
By tracking earnings and expenses regularly, you stay on top of what you owe — no more nasty tax surprises in January. Some software even gives real-time tax estimates to help you budget more effectively.
FAQs
Q1: What is the purpose of quarterly updates in Making Tax Digital for Income Tax?
A1: Quarterly updates are designed to help taxpayers report income and expenses regularly throughout the year, improving accuracy and encouraging real-time tax compliance.
Q2: Are quarterly updates the same as submitting a Self Assessment tax return?
A2: No, quarterly updates are summaries of income and expenses submitted every three months, whereas the Self Assessment tax return is an annual, finalised declaration of all income and taxes due.
Q3: Do you need to submit actual receipts and invoices with quarterly updates?
A3: No, you only need to submit summary figures of income and expenses, but digital records must be kept and stored in case HMRC requests them.
Q4: Can landlords use spreadsheets to submit their quarterly updates under MTD?
A4: Spreadsheets alone are not compliant unless they are used with bridging software that connects to HMRC’s MTD system.
Q5: What if someone has income from both self-employment and property — do they submit separate quarterly updates?
A5: Yes, each income source must be recorded and reported separately, even if it belongs to the same person.
Q6: Can quarterly updates be corrected once submitted?
A6: Corrections cannot be made to the submitted update itself, but any errors can be adjusted in future updates or in the final End of Period Statement.
Q7: Is it compulsory to submit quarterly updates for those earning under £30,000?
A7: No, MTD for Income Tax is not mandatory for individuals earning under £30,000, although this threshold may change in the future.
Q8: Will there be penalties for not submitting quarterly updates on time under MTD?
A8: Yes, from April 2026, a points-based penalty system will apply for late submissions, leading to financial penalties if thresholds are exceeded.
Q9: Can someone use free software to submit MTD quarterly updates?
A9: Some banks offer free MTD-compatible software to their customers, but not all free options meet MTD requirements, so compatibility must be confirmed.
Q10: How do users give their accountant access to submit quarterly updates on their behalf?
A10: Users can authorise their agent through the MTD software platform by linking their HMRC account and granting agent permissions.
Q11: Does MTD apply to people who rent out holiday homes or furnished lets?
A11: Yes, MTD applies if the income from furnished holiday lets is part of the individual's total income and exceeds the relevant thresholds.
Q12: Are pensions or savings income included in MTD quarterly updates?
A12: No, quarterly updates only apply to self-employment and property income, not to pensions, interest, or other passive income.
Q13: How are quarterly update deadlines affected if someone changes their accounting period?
A13: If a different accounting period is used, users must align their software to submit updates based on that period and ensure correct adjustments are made.
Q14: Can you sign up for MTD and still file a traditional Self Assessment for the previous tax year?
A14: Yes, taxpayers signing up for MTD will still need to file a traditional Self Assessment for the tax year before their MTD start date.
Q15: Does HMRC provide any tools or calculators to help estimate tax from quarterly updates?
A15: While HMRC doesn’t provide tax calculation tools from quarterly updates, some software providers offer tax estimation features based on submitted data.
Q16: Are adjustments like capital allowances included in quarterly updates?
A16: No, adjustments such as capital allowances are made in the End of Period Statement after the year ends, not during quarterly submissions.
Q17: Can multiple users access the same MTD software account to manage updates?
A17: This depends on the software used, but many platforms offer multi-user access with different permission levels for business owners and accountants.
Q18: Do you have to pay tax when submitting a quarterly update?
A18: No, submitting a quarterly update does not require payment; tax is paid after the final declaration based on the total annual income.
Q19: What happens if someone misses several quarterly update deadlines in a year?
A19: Repeated missed deadlines accumulate penalty points, and after reaching a threshold, the individual will receive automatic financial penalties.
Q20: Can MTD quarterly updates be submitted using mobile apps?
A20: Yes, many MTD-compatible software providers offer mobile apps that allow users to upload receipts, track income, and submit quarterly updates directly from their phone.
About the Author
Mr. Maz Zaheer, FCA, AFA, MAAT, MBA, is the CEO and Chief Accountant of My Tax Accountant and Total Tax Accountants—two of the UK’s leading tax advisory firms. With over 14 years of hands-on experience in UK taxation, Maz is a seasoned expert in advising individuals, SMEs, and corporations on complex tax matters. A Fellow Chartered Accountant and a prolific tax writer, he is widely respected for simplifying intricate tax concepts through his popular articles. His professional insights empower UK taxpayers to navigate their financial obligations with clarity and confidence.
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