MTD for Income Tax is live: what your first quarterly update — due 7 August — actually involves

If you are a sole trader or landlord with qualifying income over £50,000, Making Tax Digital for Income Tax stopped being a future problem on 6 April 2026. It is now simply how your tax works — and the first real test of it, the quarterly update for April to June, is due by 7 August 2026.

Having now filed these for a good number of clients, here is the honest picture.

What actually changed in April

Three things, and only three:

1. Digital records. Your income and expenses must be recorded in MTD-compatible software — Xero, QuickBooks, FreeAgent and others — or in a spreadsheet connected through bridging software. A shoebox of receipts and a January memory session no longer satisfies the rules.
2. Quarterly updates. Four times a year you (or we) send HMRC a summary of income and expenses for the quarter. For 2026/27 the deadlines are 7 August, 7 November, 7 February and 7 May.
3. A final declaration replaces the old self assessment return, due as before by 31 January after the tax year — so your first one under MTD, covering 2026/27, is due by 31 January 2028.

Note what did not change: how much tax you pay, and when you pay it. Payments on account run exactly as before.

What a quarterly update is — and is not

This is where most of the anxiety dissolves. A quarterly update is a summary of totals: income and expenses by category, drawn automatically from your software. It is not a tax return. It does not need accounting adjustments, capital allowances or accruals. You are not "finalising" anything four times a year — the accounting judgement all happens once, at the final declaration.

In practice, if your bank feed is connected and your transactions are categorised, an update takes minutes. Our record so far this quarter is a client whose update was filed 41 seconds after they approved it.

Two businesses means two updates

A detail that catches people: updates are filed per business. A sole trader who also has rental property files two updates each quarter — one for the trade, one for the property business. Same deadlines, same software, but do not assume one submission covers you.

The penalty position (better than you fear)

HMRC has confirmed that taxpayers joining MTD in April 2026 will not receive penalty points for late quarterly updates during the first twelve months. That grace period is for finding your rhythm — it is not a reason to ignore the system, because the digital record-keeping requirement itself still applies, and the final declaration deadlines carry the normal penalties.

If you have done nothing yet

You are not in trouble, but move now:

• Check you are actually in scope. The £50,000 test is your combined gross self-employment and property income from your 2024/25 return — turnover, not profit.
• Pick software this week. We set up Xero, QuickBooks or FreeAgent for clients as part of the fixed fee, including bank feeds.
• Reconstruct April–June. Your bank statements make this straightforward in software — it is a few hours' work now and gets the first update in on time.
• Diary the rhythm. 7 August, 7 November, 7 February, 7 May. After two quarters it is muscle memory.

The quiet upside

Clients who moved early all report the same thing: they know their numbers now. Quarterly totals mean no January shock, an accurate tax estimate all year round, and decisions — pricing, equipment, pension contributions — made with live figures instead of last year's.

MTD was sold as compliance. Run properly, it is closer to management information you were never getting.

If your first update is still outstanding, send an enquiry from this page today — there is comfortable time to set you up before 7 August.