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MTD Quarterly Updates: Step-by-Step Submission Guide
From 6 April 2026, UK self-employed people and landlords with qualifying income over £50,000 must submit Making Tax Digital (MTD) quarterly updates to HMRC. By 2028, this will affect almost every self-employed person in the UK — with income thresholds dropping to £30,000 and £20,000.
This isn’t just “another tax form.” Quarterly reporting means filing 5 times per tax year instead of 1, using mandatory digital software, with strict deadlines and serious penalties for getting it wrong.
This guide is a step-by-step walkthrough written by ICAEW chartered accountants who file MTD quarterly updates for clients every quarter. We’ll cover the exact process, what to include, deadlines, software, and the realistic time commitment.
What Is an MTD Quarterly Update?
An MTD quarterly update is a digital submission to HMRC reporting your business income and expenses for a 3-month period. Under MTD ITSA (the new income tax system), you’ll submit 4 quarterly updates per tax year plus 1 Final Declaration.
Quarterly Update Includes:
Total business income (sales / turnover) for the quarter
Total allowable business expenses for the quarter
Categorised by expense type (e.g., mileage, materials, utilities)
Property income reported separately from self-employment
Year-to-date cumulative figures (not just that quarter)
Quarterly Update Does NOT Include:
Final tax calculation (that’s the Final Declaration)
PAYE salary or employment income
Dividends, interest, pensions, capital gains
Tax payment (no payment due with quarterly updates)
Key insight: Quarterly updates are CUMULATIVE — each update includes year-to-date totals, not just that quarter’s figures. Q2 includes Q1 + Q2 data. Q3 includes Q1 + Q2 + Q3. Q4 includes the whole year.
How Often Do I Need to File MTD Updates?
MTD ITSA requires quarterly submissions, 4 per tax year, plus an annual Final Declaration:
Submission | Frequency | Deadline |
|---|---|---|
Q1 Quarterly Update | Every 3 months | 7 August |
Q2 Quarterly Update | Every 3 months | 7 November |
Q3 Quarterly Update | Every 3 months | 7 February |
Q4 Quarterly Update | Every 3 months | 7 May |
Final Declaration | Once per year | 31 January (following year) |
Are MTD Submissions Monthly or Quarterly?
Most UK taxpayers file quarterly under MTD ITSA. HMRC has not introduced monthly MTD ITSA submissions, only quarterly is mandatory.
However, MTD for VAT has different frequency options:
Standard VAT: Quarterly (4 returns/year)
Monthly VAT: 12 returns/year, chosen by some exporters expecting refunds
Annual VAT: 1 return/year, small businesses on the Annual Accounting Scheme
Read our complete MTD Deadlines & Key Dates guide for every UK tax deadline.
MTD Quarterly Periods (UK Tax Year)
The UK tax year runs from 6 April to 5 April. Quarterly MTD periods follow this schedule:
Quarter | Period Covered | Filing Deadline | What You Submit |
|---|---|---|---|
Q1 | 6 April – 5 July | 7 August | Q1 income + expenses (year-to-date) |
Q2 | 6 July – 5 October | 7 November | Q1 + Q2 income + expenses (cumulative) |
Q3 | 6 October – 5 January | 7 February | Q1 + Q2 + Q3 cumulative totals |
Q4 | 6 January – 5 April | 7 May | Full tax year totals |
Important: Each quarterly deadline is 1 month + 7 days after the period ends. Mark these in your calendar with a 30-day advance reminder. Missing a deadline triggers a penalty point, accumulate 4 points and HMRC issues a £200 fine.
How to File an MTD Quarterly Update: Step-by-Step Process
Here’s the exact process for filing your MTD quarterly update. We’ll use Xero as the example (similar process applies to QuickBooks, Sage, FreeAgent, etc.):
Step 1: Reconcile Your Bank Transactions
Before you can submit, your accounting software must reflect every business transaction for the quarter. Connect your business bank account via open banking (Xero, QuickBooks, FreeAgent all support this) and:
Match each bank transaction to an invoice or receipt
Categorise each transaction correctly (sales, materials, travel, etc.)
Resolve any unreconciled items
Mark personal transactions as drawings, not business expenses
Time commitment: 2-4 hours per quarter for a typical sole trader (longer for businesses with high transaction volume).
Step 2: Add Outstanding Invoices & Receipts
Make sure ALL invoices issued and receipts received during the quarter are entered into your software:
Sales invoices you’ve issued (whether paid or not)
Purchase invoices from suppliers
Cash expenses (photograph receipts and upload)
Mileage logs for business travel
Home office costs (if claiming)
Pro tip: Use your software’s mobile app to photograph receipts immediately at the point of purchase. Apps like Xero, QuickBooks, and FreeAgent all OCR receipts and create expense records automatically.
Step 3: Check Your Cash Accounting Setup
Most self-employed individuals are now on the cash basis (default since April 2024) — meaning you account for income when received and expenses when paid, not when invoiced.
Verify your software is set to cash basis (or accruals if you’ve opted to use accruals).
Read our MTD Cash Accounting guide if you’re unsure which basis applies to you.
Step 4: Review Expense Categories
Quarterly updates report expenses by category. Common allowable categories include:
Cost of goods sold / materials
Wages, salaries, and subcontractors
Rent, rates, and utilities
Vehicle and travel costs
Repairs and maintenance
Professional and legal fees
Insurance
Marketing and advertising
Subscriptions and software
Office supplies and telephone
Misclassifying expenses is a common cause of HMRC enquiries — review each transaction’s category before submitting.
Step 5: Reconcile Property Income Separately
If you have rental income, this is reported as a separate “business” within MTD ITSA. Track:
Gross rent received per property
Allowable property expenses (NOT mortgage interest – that’s a tax credit)
Per-property income/expense split if you have multiple properties
Read our MTD for Landlords guide for landlord-specific quarterly reporting tips.
Step 6: Generate Quarterly Update Preview
Your software will prepare a quarterly update summary showing:
Total income for the quarter (cumulative)
Total expenses by category (cumulative)
Net profit/loss to date
Review every figure carefully. Once submitted, corrections can only be made by submitting a revised update.
Step 7: Submit to HMRC
Click “Submit MTD Quarterly Update” in your software. The software will:
Connect to HMRC via secure API
Send your figures directly to HMRC’s system
Receive a confirmation message and reference number
Save the submission record for future reference
Important: Take a screenshot of the confirmation message with the timestamp. If anything goes wrong with the submission (HMRC outage, software glitch), this is your evidence.
Step 8: File Subsequent Quarters
For Q2, Q3, and Q4, repeat the same process. Each quarterly update will be cumulative — Q2 includes Q1 data, Q3 includes Q1+Q2, Q4 includes the whole year.
How Long Does an MTD Quarterly Update Take?
Be realistic about the time commitment. Here’s what we see across our client base:
Business Type | Time per Quarter (DIY) | Time per Year |
|---|---|---|
Simple sole trader (under £25k turnover) | 3-5 hours | 12-20 hours |
Established sole trader (£25-£60k turnover) | 5-8 hours | 20-32 hours |
Multi-property landlord (2-4 properties) | 6-10 hours | 24-40 hours |
Self-employed + landlord combo | 8-12 hours | 32-48 hours |
High-volume small business (£60k+) | 10-15 hours | 40-60 hours |
Reality check: Many self-employed individuals tried DIY for one quarter and quickly realised the time + stress + penalty risk justified hiring a chartered accountant. The cost of outsourcing is often LESS than the equivalent billable hours you’d lose to MTD admin.
Our Quarterly MTD Submissions service handles everything, including the bookkeeping, categorisation, review, and submission. Most clients save 6-10 hours per quarter.
Common MTD Quarterly Update Mistakes
Mistake 1: Treating Each Quarter as Standalone
Quarterly updates are cumulative. Many people submit Q2 with just Q2 figures (not Q1 + Q2). This causes HMRC to flag your account for review.
Mistake 2: Mixing Personal and Business Transactions
Under MTD’s quarterly visibility, HMRC’s algorithms spot this fast. Personal transactions in a business account (or vice versa) get flagged.
Fix: Open a separate business bank account immediately, Starling Business, Tide, and Revolut Business all offer free options.
Mistake 3: Forgetting Property Income
If you’re self-employed AND have rental income, BOTH must be reported in quarterly updates, separately. Many freelancers with one rental flat forget this.
Mistake 4: Missing the Cumulative Nature
Q3 submission must include Q1 + Q2 + Q3 data. If you submitted Q1 and Q2 correctly but only put Q3 figures in your Q3 submission, your year-to-date totals will be wrong.
Mistake 5: Late or Last-Minute Submissions
Trying to file on deadline day means software outages, HMRC gateway issues, and missing receipts can cause you to miss the deadline entirely. Always submit at least 7 days early.
MTD Quarterly Updates vs Old Annual Self-Assessment
Here’s how MTD quarterly reporting differs from the old annual system:
Feature | Old Self-Assessment | MTD Quarterly Reporting |
|---|---|---|
Frequency | Once per year (January) | 5 times per year (4 quarterly + 1 Final) |
Record-keeping | Paper or any spreadsheet OK | Digital records mandatory |
Filing method | HMRC online portal | MTD-approved software only |
Time per submission | 1-2 days (annual cram) | 3-15 hours per quarter |
Total annual time | 10-20 hours | 12-60 hours |
Penalty for late | £100 instant fine + £10/day | Points system → £200 fine |
HMRC visibility | Once per year | Quarterly (real-time) |
Tax planning opportunity | Limited (year-end only) | Year-round visibility |
Silver lining: While MTD adds time and frequency, it does give you year-round visibility of your tax position. Used properly, this can support better cash flow planning, tax-efficient decisions, and zero January panic.
MTD-Compatible Software for Quarterly Updates
You MUST use HMRC-approved MTD software to file quarterly updates. The most popular options for UK self-employed and landlords:
Software | Best For | Approx Monthly Cost |
|---|---|---|
Xero | Multiple income streams, growing businesses, landlords with 3+ properties | £15-£35 |
QuickBooks Self-Employed | Simple sole traders, freelancers | £10-£25 |
FreeAgent | NatWest/RBS business account holders | Free or £15 |
Sage Business Cloud | Established UK businesses, larger sole traders | £14-£40 |
Zoho Books | Budget-conscious self-employed | £10-£25 |
Hammock | Dedicated UK landlord software | £15-£30 |
Excel + Bridging software | DIY-leaning with simple income | £1-£3 (bridging only) |
See our complete comparison: Best MTD Software UK 2026 for detailed feature-by-feature analysis.
What Happens After You Submit a Quarterly Update?
Once you’ve submitted, here’s what to expect:
Immediate Confirmation
Your software will receive a confirmation message from HMRC with a submission reference number. This proves the submission was made on time.
HMRC’s Estimate of Tax Position
HMRC’s system will show an estimated tax position based on your year-to-date figures. This is NOT a tax bill — it’s just an estimate to help you plan.
No Payment Required (Yet)
Quarterly updates don’t trigger immediate tax payments. Your actual tax bill is calculated and paid via the Final Declaration by 31 January following the tax year-end.
Possible HMRC Queries
If your quarterly figures look unusual to HMRC’s algorithms (huge expense spikes, unusual income patterns), you may receive a query letter. Respond promptly and accurately.
What’s the Difference Between Quarterly Updates and the Final Declaration?
Feature | Quarterly Update | Final Declaration |
|---|---|---|
When | 4 times per year (every quarter) | Once per year (31 January) |
What’s included | Income + expenses for that period (cumulative) | Complete tax calculation |
Other income | Self-employment + property only | All income (PAYE, dividends, interest, etc.) |
Tax reliefs | Not claimed at this stage | Claimed at this stage |
Payment | No tax payment due | Tax bill payable by 31 January |
Purpose | Update HMRC on your business | Settle the full tax year |
Read our MTD Final Declaration vs Self-Assessment guide for the full comparison.
MTD Quarterly Updates: Frequently Asked Questions
How often do I need to file MTD updates?
MTD ITSA requires 4 quarterly updates per year plus 1 Final Declaration. MTD for VAT requires either quarterly, monthly, or annual returns depending on your VAT scheme.
Are MTD submissions monthly or quarterly?
MTD ITSA is quarterly only (4 per year). MTD for VAT can be quarterly, monthly, or annual depending on your VAT scheme. There is no monthly MTD ITSA option.
When are MTD quarterly deadlines?
MTD ITSA quarterly deadlines are 7 August (Q1), 7 November (Q2), 7 February (Q3), and 7 May (Q4) — one month and one week after the end of each quarter.
Do I need to pay tax with each MTD quarterly update?
No. Quarterly updates report your figures but don’t trigger immediate tax payments. Your actual tax bill is paid via the Final Declaration by 31 January following the tax year-end.
What happens if I miss a quarterly MTD deadline?
You receive 1 penalty point. Accumulating 4 points triggers a £200 fine. Continuing to miss deadlines after that means £200 fines each time.
Can I file MTD quarterly updates through the HMRC website?
No. You must use HMRC-approved MTD-compatible software. The HMRC online portal does NOT support MTD ITSA quarterly submissions.
Are MTD quarterly updates cumulative or per-quarter?
Cumulative. Each quarterly update includes year-to-date totals from the start of the tax year, NOT just that quarter’s figures in isolation.
What information do I need to include in a quarterly update?
Total business income, total expenses by category, and year-to-date cumulative figures for both self-employment and any property income. PAYE salary and dividends are NOT included.
How long does an MTD quarterly update take to file?
3-15 hours depending on your business complexity. Simple sole traders: 3-5 hours. Multi-property landlords: 6-10 hours. High-volume businesses: 10-15 hours.
Can I correct an MTD quarterly update after submission?
Yes. You can submit a revised quarterly update to correct errors. HMRC will use the most recent submission. However, repeated revisions may trigger an enquiry.
Do I need to submit a quarterly update if I had no business activity?
Yes — you must still submit a nil return. Failing to submit (even if you had no activity) earns a penalty point. Your software will allow a “nil” submission.
What if my income drops below the MTD threshold mid-year?
You still need to file quarterly updates for that tax year. The threshold check is at the START of the tax year — you can’t drop out mid-year. You’re locked in for at least 3 years.
Can someone else file MTD quarterly updates for me?
Yes — a chartered accountant or tax agent can file on your behalf. You’ll need to formally authorise them through HMRC’s agent services.
What’s the difference between MTD quarterly reporting and quarterly VAT?
MTD for VAT applies to VAT-registered businesses — covering VAT only. MTD quarterly reporting refers to MTD ITSA — covering income tax (for self-employed and landlords). They’re separate systems.
Can I do MTD quarterly updates manually without software?
No. Manual submission isn’t allowed under MTD. You must use HMRC-approved software (Xero, QuickBooks, Sage, FreeAgent, etc.) or HMRC-approved bridging software with Excel.
Don’t Want to Spend 30+ Hours Per Year on MTD Updates? Let Us Handle It
MTD quarterly updates are 5 times more work than the old annual self-assessment. For most self-employed people and landlords, the time spent on quarterly bookkeeping, software setup, and submissions easily exceeds 30 hours per year, time that could be spent earning.
Our Quarterly MTD Submissions service handles everything for you:
- Software setup and ongoing management
- Monthly bookkeeping and bank reconciliation
- Receipt categorisation and expense management
- Quarterly update preparation and review
- Direct submission to HMRC
- Deadline tracking, never miss another submission
- Final Declaration filing with tax optimisation
- Transparent monthly pricing, no surprises
Book your free 30-minute MTD quarterly reporting call, we’ll explain how our service works and give you a quote based on your business.
BOOK YOUR FREE MTD CLARITY CALL →
Or call us directly: +44 (0) 75 079 66252
Bilal Chudher
(FCCA, FCA, TEP & MBA) Chartered Accountant
