While MTD is now underway, recent analysis suggests that sign-ups have been slower than expected. Since the start of the financial year, around 400,000 taxpayers have signed up to MTD for Income Tax which is less than half of the estimated 864,000 taxpayers who need to be registered ahead of the 7 August deadline.
As the deadline approaches, we’ve been working closely with clients who are required to comply with MTD for Income Tax, discussing the new requirements and collecting the necessary information to prepare and submit their first quarterly updates.
Here is our summary on what you need to know about the first quarterly update deadline, what information you’ll need to submit and how our Making Tax Digital service can take care of the process for you.
Who needs to file?
You need to submit your first MTD quarterly update if you are:
- A self-employed sole trader; or
- A landlord;
And your combined gross (pre-expense) income from self-employment and property exceeds £50,000, based on the figures reported on your 2024/25 Self Assessment tax return.
If you operate more than one business, you’ll need to submit a separate quarterly update for each business.
What do you need to know?
- The first quarterly update under Making Tax Digital for Income Tax is due by 7 August 2026.
- The submission window opened from 25 June 2026 for the earliest taxpayers, although for most businesses the practical submission period began on 6 July 2026.
- A quarterly update is not a tax return. It is a much simpler submission containing a summary of your income and expenses.
- HMRC will use the information submitted to provide you with an estimated tax position for the year.
- No tax is payable because you submit a quarterly update, although you may still have a 31 July payment on account if HMRC has previously requested one.
- You cannot submit an MTD quarterly update without maintaining digital records (or us doing this for you on your behalf), so it’s essential this is in place before submitting.
What if I’m late or make an error?
As with Self Assessment, it’s important to submit your quarterly updates on time and ensure the information is as accurate as possible.
If you miss the 7 August 2026 deadline, HMRC may issue a late submission penalty under its points-based penalty system. Rather than receiving an immediate financial penalty for a first late submission, you’ll normally receive a penalty point. Once you reach the penalty threshold for your submission frequency, a £200 fixed penalty can apply, with further penalties for continued non-compliance. HMRC have decided for the first year that no penalties shall be imposed.
If you realise you’ve made a mistake after submitting a quarterly update, don’t panic. Quarterly updates are not final tax returns and are intended to provide HMRC with an in-year picture of your income and expenses. Figures can be corrected and updated in later quarterly submissions or when your Final Declaration is prepared at the end of the tax year.
The best way to avoid problems is to keep accurate records throughout the year and provide your information as promptly as possible each quarter. If you’re unsure about your obligations or think you’ve made an error, we’re here to help. We can review your records, advise on any corrections that may be needed and ensure your submissions remain compliant.
Making Tax Digital: We can take away the burden
If you don’t want the inconvenience or time commitment of running compatible software or preparing quarterly submissions and year-end declarations yourself, we offer a service that takes care of the entire process for you.
Our Making Tax Digital service is available to both new and existing tax clients, allowing you to remain fully compliant while we handle the administration.
How does our MTD service work?
1. You send us your information your way
Each quarter we’ll send you a reminder to provide your income and expense information for your self-employment or property business.
The process is designed to be as simple as possible. You can send your records in whatever format suits you, including:
- Excel spreadsheets
- Manual records
- Scanned documents
- Receipts and invoices
If you use a letting or property management company, we can obtain your authorisation and deal directly with them to obtain the information we need.
If you already use compatible software such as Xero, Sage or QuickBooks, you can continue submitting your own quarterly updates if you wish, while we review your records and complete your year-end Final Declaration.
2. We prepare and submit your quarterly updates
Once we’ve received your records, we’ll prepare your quarterly update using MTD-compliant software.
You’ll receive a draft copy for approval before we submit it to HMRC on your behalf.
These quarterly submissions are simply progress updates rather than final figures. If your income or expenses change during the year, the figures can be updated in later quarters. Providing accurate information each quarter also makes your year-end submission much more straightforward.
3. We complete your Final Declaration
At the end of the tax year, we’ll carry out everything you would normally expect as part of our Self Assessment service, including:
- Preparing your Final Declaration and tax return.
- Performing all required tax calculations.
- Identifying any tax reliefs, allowances or repayments you’re entitled to claim.
- Checking that you’re on the correct tax codes.
- Liaising with HMRC on your behalf.
- Submitting your Final Declaration once you’ve approved it.
4. Relax – you’re Making Tax Digital compliant
With our support, you won’t need to worry about understanding the technical requirements or meeting multiple deadlines throughout the year.
We’ll help keep you compliant, prepare the required submissions and deal with HMRC, giving you more time to focus on running your business or managing your property portfolio.
Need help with your MTD filings?
If you’re affected by Making Tax Digital for Income Tax and haven’t yet prepared your first quarterly update, now is the time to act.
If you simply want someone else to deal with the quarterly submissions and year-end declaration, we’re here to help.
Please get in touch with our tax team for a quotation and to discuss how our Making Tax Digital service can make compliance simple.
Ammad provides personal taxation planning, advisory and compliance services.
