Making Tax Digital (MTD) for Income Tax is introducing new digital reporting responsibilities for many sole traders and landlords across the UK. Since April 2026, taxpayers included in the first mandatory group have been required to maintain digital financial records and send quarterly updates to HM Revenue & Customs (HMRC) through compatible software.

The first major reporting deadline is 7 August 2026. Preparing records in advance, checking transactions and selecting suitable accounting software can help taxpayers adapt to the new system and reduce last-minute pressure.

Understanding the MTD quarterly update requirements can help individuals and businesses identify their obligations, organise their financial information and plan for each submission.

What Are Quarterly Updates Under MTD?

An MTD quarterly update is an electronic report summarising the income and expenses recorded by a sole trader or property business during a reporting period. The information is submitted to HMRC using compatible accounting software.

A quarterly update is different from an annual tax return. Its purpose is to provide HMRC with regular information about business income and expenditure during the tax year.

Under the standard reporting schedule, the first update generally covers 6 April to 5 July 2026 and must be submitted by 7 August 2026.

Taxpayers who choose calendar-based reporting periods may use different period dates. They should check their individual reporting arrangements to establish which dates apply.

Who Is Required to Use MTD for Income Tax?

MTD for Income Tax became mandatory from April 2026 for sole traders and landlords with qualifying income above £50,000.

The planned expansion of the system is expected to lower the qualifying income threshold to above £30,000 from April 2027.

Some individuals may be eligible for an exemption, including those who cannot reasonably use digital services because of their personal circumstances.

If you are uncertain whether MTD applies to you, review your qualifying income and the latest HMRC guidance before your reporting obligations begin.

What Information Should Quarterly Updates Contain?

Quarterly updates generally include totals for income and expenses recorded digitally during the relevant reporting period.

Under the standard method, submissions are cumulative. Each update covers the tax year from its beginning to the end of the relevant quarter, rather than reporting only the transactions from the latest three-month period.

Maintaining accurate bookkeeping is therefore essential. Recording transactions regularly is usually more efficient than attempting to reconstruct several months of financial activity just before a submission deadline.

Property businesses should also ensure that their financial information is clearly organised. A service charge accountant's role may involve recording transactions, reviewing financial data and helping maintain accurate property-related accounts.

Why You Should Prepare Before 7 August 2026

The 7 August 2026 deadline is the first major quarterly reporting date for the 2026/27 tax year.

Preparation should begin well before the deadline. Taxpayers need to check that transactions have been recorded digitally, income and expenses have been categorised correctly and their chosen software can submit the required information to HMRC.

HMRC has confirmed that late quarterly updates will not attract penalty points during the 2026/27 tax year. However, taxpayers must still meet their quarterly reporting responsibilities. Separate penalties may apply to late annual tax returns or overdue tax payments.

Keep Your Digital Records Updated

Maintaining financial information throughout the year is one of the most effective ways to prepare for quarterly reporting.

Regularly recording transactions reduces the amount of work needed at the end of each reporting period and makes it easier to identify missing details or inconsistencies before an update is submitted.

Depending on the nature of the business, digital records may cover:

• Sales and other business income

• Allowable business expenses

• Rental income and property-related costs

• Sales and purchase invoices

• Bank transactions

• Accounting entries

• Receipts and supporting financial documents

Consistent bookkeeping also gives business owners a clearer view of their financial position and helps them prepare quarterly figures with greater accuracy.

Choosing the Right MTD-Compatible Software

Taxpayers who fall within MTD for Income Tax must use compatible software to submit their quarterly updates.

HMRC does not provide the accounting package itself, so individuals and businesses need to choose a suitable commercial solution based on their requirements.

Before selecting software, consider whether it can handle your income sources, expense categories and reporting needs. You should also confirm that it supports the digital record-keeping and submission functions required for MTD.

Property businesses may have more complex accounting arrangements than sole traders with straightforward income. Organisations reviewing the quality of their accounting systems may also benefit from professional audit service support when assessing their financial records and internal procedures.

Check Your Figures Before Sending an Update

Quarterly updates are not annual tax returns, but the figures submitted to HMRC must still be based on reliable financial records.

Before submitting an update, review your income and expenditure categories and confirm that all relevant transactions have been included.

Reconciling bookkeeping records with bank statements can help identify missing payments, duplicate entries and transactions recorded under the wrong category.

If you discover an error, correct the relevant digital records promptly so that the problem does not continue into subsequent reporting periods.

A regular review process can improve the accuracy of quarterly submissions and make annual tax preparation more straightforward.

MTD Quarterly Update Deadlines for 2026/27

Taxpayers following the standard reporting cycle should keep the following dates in mind:

This schedule applies to the standard reporting approach.

Taxpayers using calendar-based update periods may have different period-end dates. The corresponding submission deadlines generally remain 7 August, 7 November, 7 February and 7 May.

Always confirm the reporting arrangement that applies to your circumstances before relying on a deadline schedule.

Preparing Landlords and Property Businesses for MTD

Landlords and property businesses should review their accounting procedures before quarterly reporting becomes a requirement for them.

Useful preparation steps include recording rental income digitally, categorising property expenses, retaining invoices and receipts, reconciling bank accounts and checking that the selected software meets MTD requirements.

For property managers dealing with service charge funds, organised financial records are particularly important. Reviewing service charge accounting responsibilities can help property professionals understand the work involved and recognise when specialist accounting assistance may be useful.

Businesses should also consider whether they need support with bookkeeping, tax planning, compliance reviews or audit-related work.

Quarterly Reporting Does Not Replace Your Annual Tax Return

MTD quarterly updates form part of a wider tax compliance process. They do not replace other tax or regulatory responsibilities.

Business owners and company directors should continue to monitor their other obligations while managing quarterly submissions. For example, reviewing the director ID verification deadline can help directors prepare for Companies House identity verification requirements.

Taxpayers must still complete their annual Income Tax Self Assessment return, including any necessary adjustments, claims and declarations.

For the 2026/27 tax year, the annual tax return deadline is 31 January 2028.

MTD should therefore be treated as an ongoing accounting responsibility, with records maintained throughout the year rather than updated only when a quarterly deadline approaches.

How Coxhinkins Can Assist With MTD Preparation

Preparing for quarterly reporting is easier when bookkeeping records are accurate and financial information is organised consistently. Professional accounting support can help businesses review transactions, maintain reliable records and understand their reporting obligations.

Property managers and organisations responsible for service charge accounts may also benefit from specialist knowledge of property accounting and financial compliance.

Coxhinkins can support businesses with accounting and compliance matters as they prepare for changes such as Making Tax Digital.

Before 7 August 2026, make sure your digital records are up to date, your accounting software is appropriate and your reporting process is ready. Early preparation can help make quarterly submissions more manageable and reduce the likelihood of avoidable accounting errors.