How to Submit Your First MTD Quarterly Update

/Published:1st June 2026/inContractors, Freelancers, Landlords, Making Tax Digital, Self Employed, Sole Trader
Accounting Wise - how to submit your first MTD quarterly update

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Making Tax Digital for Income Tax (MTD for ITSA) is one of the most significant changes to the UK tax system in a generation. From April 2026, sole traders and landlords with qualifying income above £50,000 are required to keep digital records and submit quarterly updates to HMRC through compatible software. If you fall into this group, your first quarterly update will be due by 7 August 2026, covering the period 6 April to 5 July 2026.

If you have never submitted a quarterly update before, the process can feel daunting. This post looks at the different steps, from setting up your software to hitting submit, so you know exactly what to expect and can meet your obligations with confidence.

What Is a Quarterly Update?

A quarterly update is a digital submission sent to HMRC four times a year through MTD-compatible software. It is not a tax return. Its purpose is to give HMRC an up-to-date picture of your income and expenses across the tax year, allowing them to calculate a running estimate of your tax liability.

Each update covers a specific three-month period and must include a summary of your business income and allowable expenses for that period. You are not required to pay tax at this point. Payment obligations remain broadly aligned with the existing Self Assessment timeline, with a final declaration replacing the traditional tax return at the end of the year.

For official confirmation of what quarterly updates involve, see HMRC’s MTD for Income Tax guidance on GOV.UK.

Who Needs to Submit Quarterly Updates?

The requirement to submit quarterly updates under MTD for IT applies to:

  • Self-employed sole traders with total gross income from self-employment above £50,000 in the relevant tax year (mandated from April 2026)
  • Landlords with gross property income above £50,000 (mandated from April 2026)
  • Those with a combination of self-employment and property income that together exceed £50,000
  • Those with income between £30,000 and £50,000 will be mandated from April 2027
  • Those with income between £20,000 and £30,000 will be mandated from April 2028

If you have voluntarily signed up for MTD for IT ahead of your mandation date, the same process applies. If you are unsure whether you are currently required to comply, speak to your accountant or check HMRC’s official MTD for IT overview.

The Four Quarterly Update Periods

HMRC divides the tax year into four standard quarterly periods. Each has a submission deadline seven days after the period ends:

  • Quarter 1: 6 April to 5 July — deadline 7 August
  • Quarter 2: 6 July to 5 October — deadline 7 November
  • Quarter 3: 6 October to 5 January — deadline 7 February
  • Quarter 4: 6 January to 5 April — deadline 7 May

Some MTD-compatible software providers also offer a calendar quarter option (ending on the last day of June, September, December, and March) if you prefer that approach. You should confirm which basis applies to you before submitting your first update.

Before You Begin: What You Need in Place

Before you can submit your first quarterly update, three things must be in order.

1. MTD-Compatible Software

You cannot submit quarterly updates through HMRC’s own website. You must use HMRC-recognised MTD-compatible software. This might be accounting software such as QuickBooks, Xero, Sage, or FreeAgent, or a dedicated bridging tool if you maintain records in spreadsheets. Your software must be able to connect directly to HMRC’s systems via the MTD API.

2. An HMRC Online Account and MTD Enrolment

You must be enrolled in MTD for IT. If you have been mandated, HMRC will have written to you. You will also need a Government Gateway user ID linked to your Self Assessment record. Your software will authenticate through this when it connects to HMRC.

3. Digital Records

MTD requires that you maintain digital records of your income and expenses. This means recording transactions in your software as you go, rather than collecting receipts at year end. For the first quarterly update, your records need to cover 6 April 2026 to 5 July 2026 at a minimum.

Step-by-Step: How to Submit Your First Quarterly Update

Step 1: Log Into Your MTD-Compatible Software

Open your accounting software and navigate to the MTD or tax submissions section. Different software packages label this differently. In Xero, for example, you will find it under the tax or VAT and MTD area. In QuickBooks, look for the tax centre. In FreeAgent, head to the taxes dashboard. If you are using bridging software linked to a spreadsheet, open that application and connect to your spreadsheet first.

Step 2: Connect Your Software to HMRC (First Time Only)

If this is your first submission, you will need to authorise your software to communicate with HMRC. This is a one-time process. Your software will prompt you to sign in with your Government Gateway credentials and grant permission for the software to submit on your behalf. Once authorised, this connection is stored and does not need to be repeated each quarter.

Step 3: Review Your Digital Records for the Quarter

Before generating the update, review your records for the period. Check that:

  • All income has been recorded and categorised correctly
  • All allowable business expenses have been entered and allocated to the correct categories
  • Any bank feeds or imported transactions have been reconciled
  • Personal drawings or non-business transactions have been excluded
  • Any cash transactions have been entered manually

The accuracy of your quarterly update depends entirely on the quality of your underlying records. HMRC does not expect perfection at this stage, but estimates or omissions can create complications when you come to file your end-of-year final declaration.

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Step 4: Generate the Quarterly Summary

Once your records are in order, instruct your software to generate the quarterly summary for the relevant period. The software will pull together your income and expense totals under the required HMRC categories. These categories align with those used in Self Assessment and include headings such as turnover, cost of goods sold, employee costs, premises costs, travel and subsistence, advertising, and so on.

If you are a landlord, the categories relate to property income and the allowable expenses associated with your rental business, such as repairs, letting agent fees, mortgage interest (subject to the finance cost restriction), insurance, and service charges.

Step 5: Check the Summary Before Submitting

Your software will present a summary screen showing the totals it intends to submit. Check these figures carefully against your records. Look for:

  • Any categories showing zero that you would expect to have entries
  • Any categories showing unusually high or low amounts
  • Total income that broadly matches your invoices or rental receipts for the period
  • Total expenses that appear reasonable relative to your income and business type

You are not required to include every piece of supporting detail in the update. The submission contains summary totals only. However, your underlying digital records must be complete and retained for at least five years after the relevant tax year.

Step 6: Submit to HMRC

When you are satisfied with the summary, confirm the submission. Your software will send the data to HMRC via the MTD API. You should receive an on-screen confirmation, and most software will also provide a submission reference number. Keep a record of this.

HMRC will respond with an updated tax estimate based on the year-to-date figures. This is informational and does not trigger a payment obligation.

Step 7: Note Your Next Deadline

After submitting, make a note of your next quarterly deadline. Consider setting a calendar reminder two to three weeks before the deadline so you have time to reconcile your records and review the summary without rushing.

What Happens After You Submit?

Once your quarterly update is received by HMRC, they will update your in-year tax estimate. You can view this through your HMRC online account or through your software, depending on its features. This estimate takes into account the income and expenses you have reported to date, along with any applicable allowances.

At the end of the tax year, after the fourth quarterly update, you will need to submit an end-of-period statement for each source of income (for example, one for your self-employment and one for your property business, if applicable) and then a final declaration. The final declaration replaces the Self Assessment tax return and confirms that all your information is complete and accurate. Tax payment deadlines remain as set out in existing Self Assessment rules.

What If You Make a Mistake?

If you realise after submitting that a quarterly update contained incorrect figures, you can amend it. Most MTD-compatible software allows you to resubmit an updated figure for a previous period. HMRC’s systems will update the running estimate accordingly.

It is better to correct an error promptly than to leave it to the end-of-year declaration. If the error is significant, speak to your accountant before resubmitting to understand any implications.

Penalties for Missing Quarterly Deadlines

HMRC has introduced a points-based penalty system for MTD for IT. Each missed quarterly update filing earns one penalty point. Once your points total reaches the threshold (four points for quarterly filers), a fixed financial penalty of £200 applies. Points can be reset if you file on time for a sustained period.

Late payment penalties for any tax owed remain separate from the points system. For full details, see HMRC’s guidance on MTD penalties.

Tips for Staying on Top of Your Quarterly Updates

  • Set up a bank feed: Connecting your business bank account to your accounting software means transactions are imported automatically, reducing manual data entry and the risk of omissions.
  • Reconcile monthly, not quarterly: Reviewing your records once a month rather than leaving everything to the last week of the quarter makes the submission process much faster and less stressful.
  • Keep business and personal finances separate: A dedicated business bank account makes it significantly easier to identify and categorise business transactions.
  • Use software expense tools: Many accounting packages offer mobile apps that let you photograph receipts and categorise them on the spot, keeping your records current throughout the quarter.
  • Work with an accountant: For sole traders and landlords new to MTD, working with a qualified accountant removes the risk of getting the setup wrong and ensures your figures are accurate before each submission.

Final Thoughts on Submitting your Quarterly Submission

Submitting your first MTD quarterly update does not need to be complicated. The key is preparation: get your software in place, connect it to HMRC before your first deadline, and keep your digital records current throughout the quarter. The actual submission process is straightforward once your records are in order, and most MTD-compatible software makes it a matter of reviewing a summary and clicking confirm.

The bigger shift is cultural. MTD asks you to engage with your finances more regularly throughout the year rather than in one annual rush. Done well, that change can give you a much clearer picture of how your business or property income is performing and help you plan for your tax liability before it falls due.

If you would like support getting set up for Making Tax Digital for Income Tax (MTD for ITSA), or if you want an accountant to handle your quarterly submissions on your behalf, book a callback with the Accounting Wise team or call us on 0330 113 8442. We work with sole traders and landlords across the UK and can take the complexity of MTD off your plate entirely.

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Submitting Your First MTD Quarterly Update FAQ

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Yes. If you are mandated for MTD for IT, you must submit a quarterly update for every period, even if your income or expenses were nil. Submitting a nil return is straightforward through your software and takes only a few minutes.

Yes. If your accountant has agent authorisation for your MTD for IT account, they can submit quarterly updates on your behalf using their own agent-compatible software. This is common where clients prefer to hand over the technical side of the process. You will still need to provide your income and expense information to your accountant in a timely manner each quarter.

HMRC permits the use of spreadsheets for record-keeping, provided you use HMRC-recognised bridging software to connect the spreadsheet to HMRC’s systems for submission. The bridging software reads your figures and formats them correctly for the MTD API. A list of compatible bridging tools is available on GOV.UK.

Not initially. Under the current rules, tax payments due under Self Assessment remain on the existing schedule: a payment on account in January and July, and a balancing payment in January following the end of the tax year. Quarterly updates change how you report, not when you pay. HMRC has consulted on whether to align payment more closely with quarterly reporting in future, but no changes to payment dates have been confirmed for 2026.

At a minimum, you must keep digital records of each transaction, including the date, amount, and category. You do not need to store digital copies of every receipt, though this is good practice. Bank feeds and invoicing tools integrated with your accounting software can significantly reduce the administrative burden of maintaining digital records throughout the quarter.

Glossary of Key MTD Terms

MTD for IT (Making Tax Digital for Income Tax) – The HMRC initiative requiring sole traders and landlords to keep digital records and submit quarterly updates through compatible software instead of an annual Self Assessment return.
Quarterly Update – A digital submission sent to HMRC four times a year summarising your income and expenses for that three-month period. It is not a tax payment or a tax return.
Final Declaration – The end-of-year submission that replaces the traditional Self Assessment tax return. It confirms all your income and expenses for the full tax year are complete and accurate.
End-of-Period Statement (EOPS) – A submission made at the end of the tax year for each income source (e.g. self-employment or property) confirming the figures for that source are finalised.
MTD-Compatible Software – Accounting or bridging software approved by HMRC that can connect directly to its systems via the MTD API to submit quarterly updates on your behalf.
Bridging Software – A tool that connects a spreadsheet or non-compatible system to HMRC's MTD API, allowing you to submit quarterly updates without switching to full accounting software.
Digital Records – A requirement under MTD to record each transaction digitally, including the date, amount, and category, rather than keeping paper records or end-of-year summaries.
Bank Feed – An automatic connection between your business bank account and your accounting software that imports transactions in real time, reducing manual data entry.
Government Gateway – The HMRC online portal used to access tax accounts and authorise software to submit on your behalf.
Agent Authorisation – Permission granted to an accountant or tax agent allowing them to manage your MTD submissions and communicate with HMRC on your behalf.
Points-Based Penalty System – HMRC's penalty regime for MTD for IT, where each missed quarterly deadline earns one penalty point. Reaching the threshold of four points triggers a £200 fixed penalty.
Payment on Account – Advance payments towards your Self Assessment tax bill, paid in January and July each year. Quarterly updates do not change these payment dates.
Quarterly Period – One of four fixed three-month windows in the tax year for which a quarterly update must be submitted. The standard periods run from 6 April, 6 July, 6 October, and 6 January respectively.
Income Source – A distinct category of income reported separately under MTD, such as self-employment income or UK property income. Each source may require its own end-of-period statement.
Nil Return – A quarterly update submitted with zero income and expenses for the period. Still required even if you had no business activity during that quarter.
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