Help with Making Tax Digital for Income Tax (MTD)

A quarterly update is a financial record of your income and expenses for the previous 3 months. This is the information that you would normally enter into your books, such as sales income, rental income, travel expenses, maintenance costs, advertising, materials, costs of goods bought for resale, insurance, phone costs etc. The Quarterly Update will only contain details of income and expenses from work, UK property or foreign property. 

Don't panic - this doesn't mean you need to pay tax four times a year! You'll still only pay income tax once a year and submit your annual self assessment tax return by the usual 31st January deadline. But it does mean that you'll have to keep digital records and send details of your income and expenses, from work or properties, to HMRC each quarter in addition to your self-assessment tax return. You'll need to use approved digital software to do this.

The date when you need to start the MTD and the Quarterly Updates will depend on your turnover, not profit. Turnover is your gross income from work and property BEFORE tax and expenses are taken off.

Making Tax Digital for Income Tax will be phased in between April 2026 and likely April 2028. 

• If your combined income from work and property is over £50K in the 2024 to 2025 tax year, you will need to start in April 2026.
• If your combined income from work and property is over £30K in the 2025 to 2026 tax year, you will need to start in April 2027.
• If your combined income from work and property is over £20K in the 2026 to 2027 tax year, you will need to start in April 2028. This is likely, but not yet confirmed.

For example, if you sold services or products that amounted to more than £50K in the tax year 2024-2025 (this is about £960 per week before tax and expenses), you will need to start MTD for Income Tax from April 2026, even if, after expenses, you only receive a profit of £20K.

HMRC should write to you to let you know when you need to start using Making Tax Digital for Income Tax. They will review your self-assessment tax returns and make a decision. However, you can start it voluntarily if you wish. 

You will need to register to start using MTD for income tax - HMRC do not do this automatically for you. Click here to visit HMRC's website to do this.

You will have one month from the end of the quarter to submit your figures to HMRC. 

Update Q1: 6th April to 5th July will be due by 7th August

Update Q2: 6th July to 5th October will be due by 7th November

Update Q3: 6th October to 5th January will be due by 7th February

Update Q4: 6th January to 5th April will be due by 7th May

End of year Self Assessment tax return: 6th April to 5th April will be due by 31st January

Late submissions of the quarterly updates will usually incur penalties. However, if you’re required to use Making Tax Digital for Income Tax from 6 April 2026, HMRC will not apply penalties for late submissions of the quarterly updates for the first tax year (2026 to 2027).

The Quarterly Updates must be submitted to HMRC electronically before the deadlines using approved software. You can do this yourself, or you can pay an accountant or bookkeeper to do this for you. However, paying an accountant five times a year can get very expensive! Furthermore, many old-school accountants or smaller accounting firms may not have the capacity to undertake all the extra work.

With support and training, you will be able to do this yourself. 

Being able to do the Quarterly updates yourself will:

• Save you money
• Improve your record keeping
• Give you full control over your tax records
• Ensure the submissions are done on time, avoiding penalties
• Give you flexibility to choose whatever software suits you

Keeping digital records simply means that the amount you've spent (your expenses) and the amount you've earned (your income) are recorded electronically on a computer or phone, rather than on paper.  This could mean that the figures are typed into a spreadsheet or that you have an app or computer program that stores the information.

'Approved software' are computer programs or apps that the government has approved to be used to submit your Quarterly Updates and self-assessment tax return.

There are two types of software: 

1. Full software: These are finance apps where you can enter details of your income and expenses. In many cases, these apps can also create and send invoices for you, build reports (like Profit and Loss, or Balance Sheets), track and monitor your spending and income, scan your receipts, record customer details and much more. 
   
   
2. Bridging software: If you currently keep your records on spreadsheets, there is software that can connect your spreadsheet to HMRC. This is called 'Bridging' software, in much the same way that a bridge connects two things in real life.

You can search for approved software on the HMRC website.

It's up to you!

In January 2026, I independently reviewed 33 of the 'approved software' programs listed on the HMRC website to see how easy they would be to use for regular, everyday sole traders and business owners that didn't already have a system in place. I found two products that will make the quarterly updates very easy.

• Kletta - Full software. I loved this - it is simple, uses everyday language, has a great app for mobile phones and will easily scan the information from your receipts. It also works well for recording CIS payments. Ideal for self-employed tradesmen, hairdressers, sole traders or small business owners.
  
  
• VitalTax - Bridging software - the easiest bridging software I tried by far. It will submit the figures from your spreadsheet in just a few clicks. (You'll need MicroSoft Excel for this)
  
  

A lot of the approved software has versions you can try for free for 14-30 days. I would definitely recommend trying before buying! I found some of the approved software didn't work very well or was too complicated.

There are free versions of some software, but they're usually not great. Paid-for software can be as little as £20 per year, but some companies charge much more. It's worth shopping around.

I can help you find, install and use your preferred software.

PS - I have no vested interest in either of the products listed above. I just looked at all software from an everyday user's perspective and found these the easiest and nicest to use.

HMRC just need to know that you are keeping your records digitally. When HMRC receive the figures from your update, they will estimate your tax bill that will be due when your full self-assessment tax return is made at the end of the year. This will be available for you to see in your HMRC Gateway account.

All the figures you've submitted in each quarter will be saved with HMRC and in your approved software.

You do NOT need to pay this each quarter and the figures can be adjusted before your self-assessment is sent at the end of the year.

As well as the quarterly updates, you will still need to do your self-assessment tax return at the end of the year. This part hasn't changed, although the return will also have to be done using approved software.

There will be certain things that cannot be reported with the Quarterly Updates, but that will form part of your final end-of-year self-assessment tax return. These include things like reliefs or allowances, or other income from pensions or dividends. These detailed adjustments can be made at the end of the year on your usual self-assessment return.

If you are confident in doing your own self-assessment, you may be able to use the same software as your Quarterly Updates, but you can use something different if you wish.  Alternatively, your accountant can use approved software to submit your self-assessment on your behalf.

I can also help with:

• Zoho Books
• Intuit Quickbooks
• "untied"
• !Coconut
• Kletta
• Quickfile
• Clearbooks
• Accounting from Sage
• Bridging software such as TaxNav or Vitaltax

If your software isn't listed, I may still be able to help.