What is a quarterly update?
Under Making Tax Digital for Income Tax (MTD ITSA), you must send four updates a year. Each update is a set of totals by income and expense category, cumulative from 6 April. It is a summary, not a full tax return.
HMRC receives the category totals, not the individual transactions. You can send updates more often than quarterly, but each must cover the full update period.
You must still send an update for a period with no income and no expenses.
Deadlines for the first update
The deadlines depend on the accounting period you use. Most sole traders and landlords use the standard period, which aligns with the tax year.
| Period end | Submission deadline |
|---|---|
| 5 July | 7 August |
| 5 October | 7 November |
| 5 January | 7 February |
| 5 April | 7 May |
You can send an update from the end of the period up to the deadline. You can also send it up to 10 days before the period ends if you expect no further transactions.
What goes in the update
The categories used in quarterly updates are the same income and expense categories as Self Assessment. You record income and expenses in your software, and the software calculates the totals for the update.
Under the cash basis, which is the default method of accounting from 2024-25, income and expenses are recorded when money is received or a bill is paid.
- Income from self-employment
- Income from property
- Allowable business expenses
- Property expenses
What is left out
Not all income is included in MTD ITSA. Some types of income are reported separately on your Self Assessment tax return after the tax year ends.
Income not counted towards the MTD threshold and not included in quarterly updates includes:
Employment income through PAYE
Dividends
State and private pensions
Savings interest
A partnership share as an individual partner
How it links to your tax return
The quarterly updates build up the data for your final Self Assessment tax return. You submit the tax return after the tax year ends, and tax is paid by 31 January.
You still submit the Self Assessment tax return for the tax year before you start using MTD ITSA.
After each update, you can see an estimate of your tax bill in your software or in HMRC online services.
Common mistakes to avoid
One common error is thinking the quarterly update is the tax return. It is not. It is a summary of totals.
Another mistake is missing the deadline. For tax years after 2026-27, missing a submission deadline results in one penalty point. Four points lead to a 200 pound penalty.
Note that for 2026-27, there are no penalty points for missing a quarterly update deadline, but digital records and updates are still required.
Do not change a record once it has been sent to HMRC in a quarterly update. Records must not be moved by hand, either within the software or between products.
Using software for your first update
HMRC does not provide software. You must use compatible software to create and store digital records and send the quarterly updates.
TradeKit is MTD ready - recognised by HMRC (reference D4K6ZS). It helps you create digital records, send quarterly updates, and submit your tax return.
You authorise the software so it connects to HMRC, and repeat that every 18 months without repeating the identity check.