The introduction of Making Tax Digital for Income Tax marks one of the biggest changes to the UK tax system in recent years. If you are a self employed individual or landlord who falls within the new rules, you will need to submit quarterly updates to HMRC using compatible software instead of relying solely on an annual Self Assessment process. From 6 April 2026, taxpayers with qualifying income above £50,000 from self employment and property are required to use Making Tax Digital for Income Tax. The scope will expand to lower income thresholds in later years.
If you are preparing your first Making Tax Digital quarterly update, it is normal to feel uncertain. The good news is that with the right preparation, the process can be straightforward and much less stressful than leaving everything until the end of the tax year.
What is a Making Tax Digital quarterly update?
A Making Tax Digital quarterly update is a summary of your business income and allowable expenses for a three month period. Instead of completing all your bookkeeping at the end of the tax year, you maintain digital records throughout the year and submit regular updates through HMRC compatible software.
These updates help you:
- Keep your tax records up to date
- Identify bookkeeping errors earlier
- Estimate your tax position throughout the year
- Reduce the pressure of year end record keeping
Remember that a quarterly update is not your final tax calculation. You will still need to complete the end of year process to finalise your taxable income and any adjustments.
Who needs to submit quarterly updates?
From 6 April 2026, Making Tax Digital for Income Tax applies to many:
- Sole traders
- Self employed workers
- Landlords with UK property income
Initially, the rules apply where qualifying income from self employment and property exceeds £50,000. Further phases will extend the requirements to lower income levels in future tax years.
What records should you keep?
Good digital record keeping is the foundation of successful MTD quarterly reporting.
You should maintain accurate records of:
- Business income
- Sales invoices
- Customer payments
- Business expenses
- Supplier invoices
- Receipts
- Bank transactions
- Business mileage where applicable
Keeping these records updated regularly makes preparing your quarterly update much easier.
How to prepare your first quarterly update
Choose HMRC compatible software
Your records and submissions must be completed using software that supports Making Tax Digital.
The software should allow you to:
- Record income and expenses
- Store digital records securely
- Submit quarterly updates directly to HMRC
- Prepare your year end tax information
Keep records throughout the quarter
Do not wait until the submission deadline.
Updating your records weekly or monthly helps reduce errors and gives you more confidence that everything has been recorded correctly.
Separate business and personal finances
Using a dedicated business bank account makes it much easier to identify business transactions and reduces confusion during bookkeeping.
Check your income and expenses
Before submitting your update, review your records carefully.
Check that:
- All invoices have been included
- Business expenses are correctly categorised
- Duplicate transactions have been removed
- Missing receipts have been added where possible
Review before submission
Although quarterly updates are summaries rather than final tax returns, reviewing the information before submission helps avoid unnecessary corrections later.
Common mistakes to avoid
Many first time users make similar mistakes during their first MTD quarterly reporting period.
These include:
- Leaving bookkeeping until the deadline
- Using software that is not MTD compatible
- Mixing personal and business expenses
- Forgetting cash transactions
- Missing supplier invoices
- Not keeping digital copies of receipts
- Assuming quarterly updates replace the final tax return
Avoiding these mistakes can save time and reduce future compliance issues.
Important deadlines
For taxpayers starting Making Tax Digital from April 2026, the first quarterly update generally covers the period from 6 April to 5 July 2026 and is due by 7 August 2026. Future quarterly updates follow similar reporting periods throughout the tax year.
Meeting deadlines is much easier when your bookkeeping is maintained continuously rather than completed at the last minute.
How Tax2u can help
Making Tax Digital introduces new reporting responsibilities, but you do not have to manage them alone.
At Tax2u, we help sole traders, landlords and self employed workers:
- Register for Making Tax Digital
- Choose suitable software
- Organise digital bookkeeping
- Prepare quarterly updates
- Review income and expenses
- Stay compliant with HMRC requirements
Our experienced team can help you understand the new process while ensuring your records remain accurate throughout the tax year.
Frequently asked questions
Do quarterly updates replace my tax return?
No. Quarterly updates provide HMRC with summaries of your income and expenses. You will still complete the end of year process to finalise your tax position.
Do I need special software?
Yes. Making Tax Digital requires compatible software that can keep digital records and submit updates directly to HMRC.
Can I correct mistakes later?
Yes. If you discover errors after submitting a quarterly update, adjustments can generally be made during the end of year process before your final tax position is confirmed.
Why should I start preparing now?
Preparing early gives you time to organise your records, learn the software and build good bookkeeping habits before deadlines arrive.