MTD quarterly updates: How to submit your first quarterly report to HMRC
Your first MTD quarterly update is due by 7 August 2026. Here's how to get it right.
Chesney McDonald–Small business & finance writer/editor. Read Chesney's full bio
Published Friday 21 August 2026
Table of contents
Key takeaways
- Quarterly updates are summaries of your income and expenses, sent to His Majesty's Revenue & Customs (HMRC) every three months through Making Tax Digital (MTD) compatible software.
- The first deadline for sole traders and landlords with income above £50,000 is 7 August 2026.
- No penalties apply for late quarterly updates during the 2026 – 27 tax year.
- Each update is cumulative from 6 April, so corrections carry forward automatically to your next submission.
What is an MTD quarterly update?
If you're a sole trader or landlord in the UK, you've probably heard about Making Tax Digital for Income Tax Self Assessment (MTD for ITSA). From April 2026, qualifying individuals need to send His Majesty's Revenue & Customs (HMRC) a summary of their business income and expenses every three months. This is called a quarterly update.
A quarterly update isn't a tax return. You don't need to make any tax calculations or adjustments. Instead, your MTD-compatible software sends HMRC a set of category totals covering your income and expenses for the period. HMRC won't see individual receipts or invoices, just the grouped figures.
Each quarterly update is also cumulative. That means every submission covers the full period from 6 April to the end of the current quarter, not just the most recent three months. If you made an error in a previous quarter, the next update will correct it automatically.
What's included in a quarterly update
Your quarterly update covers three main areas:
- Income categories: sales revenue, property rental income, and any other taxable income from your self-employment or property business
- Expense categories: costs such as office supplies, travel, stock and materials, utilities, and professional fees
- Cumulative totals: running figures from 6 April to the end of the quarter you're reporting on
You don't need to categorise every transaction down to the last detail. The categories in your software should map to the headings HMRC expects, making the process straightforward.
Who needs to submit MTD quarterly updates?
MTD for ITSA is rolling out in phases based on your gross income from self-employment and property combined. Around 864,000 sole traders are in scope for the first phase.
- Phase 1 (April 2026): sole traders and landlords with annual gross income above £50,000
- Phase 2 (April 2027): the threshold drops to income above £30,000
- Phase 3 (April 2028): the threshold drops to income above £20,000
"Income" here means your total gross income from all self-employment and property sources combined, before deducting expenses. If you earn £40,000 from freelance work and £15,000 from a rental property, your combined income of £55,000 puts you into Phase 1.
If you have more than one qualifying income source, you'll need to submit separate quarterly updates for each. For example, if you're both self-employed and a landlord, that's two updates per quarter.
MTD quarterly update deadlines for 2026-27
The 2026 – 27 tax year runs from 6 April 2026 to 5 April 2027. You'll submit four quarterly updates during this period, each due roughly one month after the quarter ends. You can choose between standard quarter periods (aligned to the tax year) or calendar quarter periods.
Standard quarter periods
Standard periods follow the traditional tax year dates:
- Q1: 6 April to 5 July 2026, deadline 7 August 2026
- Q2: 6 April to 5 October 2026, deadline 7 November 2026
- Q3: 6 April to 5 January 2027, deadline 7 February 2027
- Q4: 6 April to 5 April 2027, deadline 7 May 2027
Because quarterly updates are cumulative, Q2 covers everything from 6 April to 5 October, not just the three months since Q1.
Calendar quarter periods
If you prefer working with calendar months, you can opt for calendar quarters instead.
- Q1: 1 April to 30 June 2026, deadline 7 August 2026
- Q2: 1 April to 30 September 2026, deadline 7 November 2026
- Q3: 1 April to 31 December 2026, deadline 7 February 2027
- Q4: 1 April to 31 March 2027, deadline 7 May 2027
The submission deadlines are the same regardless of which period type you choose. You can submit your update at any point between the end of the quarter and the deadline.
How to submit your first MTD quarterly update
Submitting your first quarterly update is simpler than you might expect. You don't need to be an accountant to get it done. Follow these five steps:
1. Sign up for MTD for ITSA
Before you can submit a quarterly update, you need to be registered for MTD for ITSA with HMRC. You can sign up through GOV.UK or ask your accountant to do it on your behalf.
- Go to your Government Gateway account on GOV.UK.
- Follow the prompts to sign up for Making Tax Digital for Income Tax.
- Wait for HMRC to confirm your registration (this can take a few days).
If you already file Self Assessment online, you'll use the same Government Gateway credentials.
2. Set up MTD-compatible software
You'll need MTD-compatible software to keep your digital records and submit quarterly updates. HMRC doesn't accept submissions through its website for MTD for ITSA, so compatible software is a requirement, not an option.
- Choose software from HMRC's list of recognised providers.
- Connect your software to your HMRC account by following the on-screen authorisation process.
- Confirm the link is active before your first submission is due.
3. Keep digital records throughout the quarter
Good records are the foundation of a smooth quarterly update. Throughout each quarter, record your income and expenses as they happen using your software.
- Log all business income, including sales, invoices, and rental payments.
- Record every allowable business expense in the correct category.
- Reconcile your bank transactions regularly so nothing gets missed.
You don't need to upload individual receipts to HMRC, but you must keep them for your own records in case of an enquiry.
4. Review your figures before submitting
Before you hit submit, take a few minutes to check your numbers. Your software will show you a summary of the income and expense totals that will be sent to HMRC.
- Compare the figures in your software against your bank statements and records.
- Check that you've categorised transactions correctly.
- Make any corrections now, or leave them for the next quarter (they'll carry forward automatically through the cumulative model).
5. Submit your quarterly update to HMRC
Once you're satisfied the figures are right, it's time to send your quarterly update.
- Open the MTD submission feature in your software.
- Review the summary one final time.
- Confirm and submit your update.
- Save your confirmation reference for your records.
Once you see the confirmation, your first quarterly update is complete.
What happens after you submit a quarterly update?
After you submit, HMRC receives your cumulative income and expense totals for the period. You'll be able to see an estimated tax position in your HMRC online account, giving you a clearer picture of where you stand before the end of the tax year.
If you spot an error after submitting, your next quarterly update will include corrected cumulative figures for the full year to date. The updated totals replace the previous ones automatically.
After all four quarterly updates, you'll complete two more steps to finalise the year.
- End-of-period statement: This is a chance to make year-end accounting adjustments such as capital allowances, disallowable expenses, and other tax reliefs.
- Final declaration: This confirms your total income and claims for the year, replacing the traditional Self Assessment tax return.
In total, the MTD for ITSA annual cycle involves six submissions: four quarterly updates, one end-of-period statement, and one final declaration.
MTD quarterly update penalties
HMRC has confirmed that no penalties will apply for late quarterly updates during the 2026-27 tax year. This soft-landing period gives you time to adjust to the new system without financial risk.
From the 2027-28 tax year onwards, HMRC will introduce a points-based penalty system for late submissions.
- You'll receive one penalty point for each late quarterly update.
- Once you reach four points, you'll get a £200 penalty.
- Further late submissions after reaching the threshold will trigger additional £200 penalties.
- You can reset your points by submitting on time for a set period.
The penalty system is designed to be proportionate. The occasional late submission won't result in an immediate fine, and you'll have opportunities to bring your record back on track.
Simplify your MTD quarterly updates with Xero
Staying on top of quarterly updates is much easier when your software does the heavy lifting. Xero's cloud accounting platform can help you manage the routine work of MTD for ITSA, from digital record-keeping to submitting your quarterly updates directly to HMRC.
With Xero, your bank transactions flow in automatically, income and expenses are categorised as you go, and your quarterly figures are ready to review and submit when the deadline approaches. You'll spend less time on admin and more time running your business.
Try Xero today and get one month free.
FAQs on MTD quarterly updates
Here are answers to some of the most common questions about submitting your updates to HMRC.
Do you need an accountant to submit MTD quarterly updates?
No. MTD-compatible software guides you through the process, and many sole traders handle their own submissions. That said, an accountant can help if you have complex tax affairs or want professional support.
What if you have no income or expenses in a quarter?
You still need to submit a quarterly update, even if the figures are zero. Your software will let you submit a nil return for the period.
Can you submit quarterly updates more often than every 3 months?
Yes. You can submit more frequently if you prefer, for example monthly. The quarterly deadlines are the latest you can submit, not the only times you can do so.
What's the difference between a quarterly update and a final declaration?
A quarterly update can only be submitted after the quarter ends, while the final declaration can only be filed once all four quarterly updates and the end-of-period statement are complete. The final declaration is where you confirm your tax position for the year and claim any reliefs.
What records do you need to keep for MTD?
You must keep digital records of all business income and expenses, including dates, amounts, and categories. You should also retain supporting documents like invoices, receipts, and bank statements. While HMRC only receives category totals through your quarterly updates, you need to keep the underlying records for at least five years.
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