Key Takeaways
- MTD quarterly reporting starts 6 April 2026 for sole traders and landlords with gross income over £50,000 from self-employment or property.
- Quarterly updates are cumulative year-to-date totals of income and expenses – not quarterly profit calculations, and you can correct earlier figures in later submissions.
- Each update is due by the 7th of the month following the quarter end: deadlines of 7 August, 7 November, 7 February, and 7 May.
- HMRC will not charge penalty points for late quarterly updates during 2026/27, but this soft landing only applies to the first cohort and does not cover the final declaration.
- Quarterly reporting does not mean quarterly tax payments – tax is still calculated at year-end and paid under the existing January timetable.
Table of contents
- 1. What MTD quarterly reporting actually means
- 2. Who needs to send quarterly updates to HMRC?
- 3. MTD quarterly reporting dates and deadlines
- 4. Penalty points for late or missed quarterly updates
- 5. Do you have to pay tax quarterly under MTD?
- 6. How to prepare for MTD quarterly reporting before April 2026
1. What MTD quarterly reporting actually means
Making Tax Digital for Income Tax changes how sole traders and landlords report their income and expenses to HMRC. Instead of filing one self-assessment tax return at the end of the year, you’ll send four quarterly updates throughout the tax year using MTD-compatible software, followed by a final declaration after the year ends.
The most important thing to understand about these quarterly updates is that they are cumulative.
Each update replaces the last with a running year-to-date total. So your second update doesn’t just cover July to October – it covers April to October. Your third covers April to January. This means you can correct earlier figures in later submissions without penalty or formal amendment.
You are not producing quarterly profit and loss accounts. You are not calculating tax four times a year. You are simply telling HMRC your running totals of income and expenses so far, using software that works with Making Tax Digital.
2. Who needs to send quarterly updates to HMRC?
MTD quarterly reporting applies to individuals with gross income from self-employment and/or property above certain MTD thresholds. The key word is gross – this is total income before expenses, not profit. If you have multiple qualifying income sources, you combine them to determine whether you cross the threshold.
The rollout is phased over three tax years, bringing progressively more taxpayers into scope:
- From 6 April 2026 – sole traders and landlords with qualifying income over £50,000 in the 2024/25 tax year
- From 6 April 2027 – those with qualifying income over £30,000 in the 2025/26 tax year
- From 6 April 2028 – those with qualifying income over £20,000 in the 2026/27 tax year
Whether you cross the threshold is determined by the self-assessment return due on 31 January before the start of the relevant tax year. For the first wave, that means your 2024/25 return due by 31 January 2026.
3. MTD quarterly reporting dates and deadlines
Your quarterly updates must be submitted by the 7th of the month following the end of each quarter.
You have two options for how your quarters are structured – tax year quarters (which run from the 6th of one month to the 5th of the next) or calendar quarters (which align with standard calendar months). Most sole traders will default to tax year quarters unless they arrange calendar quarters with HMRC.
| Quarter | Tax Year Dates | Deadline |
|---|---|---|
| Q1 | 6 Apr – 5 Jul | 7 August |
| Q2 | 6 Jul – 5 Oct | 7 November |
| Q3 | 6 Oct – 5 Jan | 7 February |
| Q4 | 6 Jan – 5 Apr | 7 May |
The first quarterly update under MTD for Income Tax, for those mandated from April 2026, will cover the period 6 April to 5 July 2026. That update is due by 7 August 2026.
After your fourth and final quarterly update, you will need to submit a final declaration by 31 January following the end of the tax year. For the 2026/27 tax year, that means the final declaration is due by 31 January 2028.
4. Penalty points for late or missed quarterly updates
MTD introduces a new points-based penalty system for late submissions. It works like penalty points on a driving licence – you accumulate points for missed deadlines, and a financial penalty only kicks in once you reach a threshold.
Late Submission Penalties
For quarterly filers, the threshold is four points. Each time you miss a quarterly update deadline, you receive one penalty point. Once you reach four points, HMRC issues a £200 penalty. After that, every further missed deadline triggers another £200 fine immediately.
The table below shows how points accumulate for a quarterly filer under MTD for Income Tax.
| Missed Deadlines | Consequence |
|---|---|
| 1st missed quarterly update | 1 penalty point – no fine |
| 2nd missed quarterly update | 2 penalty points – no fine |
| 3rd missed quarterly update | 3 penalty points – no fine |
| 4th missed quarterly update (threshold reached) | £200 penalty issued |
| Each subsequent missed deadline | Additional £200 penalty each time |
Penalty points expire after 24 months, provided you stay below the threshold.
If you have reached the threshold, your points only reset once you complete a full period of compliance – 12 consecutive months of on-time quarterly submissions, with all outstanding returns from the previous 24 months also filed.
Late Payment Penalties
Separate penalties apply if you pay your tax late.
Under the new regime, a penalty is triggered 15 days after the payment due date – reduced from the previous 30-day window under self-assessment. The charges escalate the longer the debt remains unpaid: 3% of the outstanding balance at day 15, a further 3% at day 30, and then 10% per annum on any amount still unpaid from day 31 onwards. Late payment interest applies on top.
If you cannot pay on time, contacting HMRC to set up a Time to Pay arrangement before the deadline can help you avoid late payment penalties, though interest will still accrue.
5. Do you have to pay tax quarterly under MTD?
No. This is the single most common misconception about Making Tax Digital for Income Tax, and it is worth being completely clear: quarterly reporting does not mean quarterly tax payments.
Your tax is still calculated at the end of the tax year, and you pay it under the existing schedule. For most people, that means payments on account on 31 January and 31 July, with a balancing payment on the following 31 January.
The quarterly updates are purely informational. They give HMRC a running picture of your income and expenses throughout the year, but they do not trigger any tax payment obligation at the time of filing.
6. How to prepare for MTD quarterly reporting before April 2026
If your qualifying income puts you in the first wave from April 2026, the time to prepare is now. The transition does not need to be complicated, but it does require some practical steps.
- Start by confirming whether you are in scope
- Choose your MTD software
- Set up your MTD digital records
Finally, talk to your accountant. If you are working with one, they will need to be set up on HMRC’s Agent Services Account and authorised to act on your behalf within MTD.
If you’re a freelancer, sole trader, or landlord in the creative industries and want help with MTD, WallsMan Creative specialises in accountancy for creative businesses across the UK.
Get in touch to make sure you’re ready for MTD!
