MTD quarterly reporting: advice for sole traders & landlords

The first MTD quarterly reporting deadline for many sole traders and landlords is 7th August 2026.

That does not mean you need to file four full tax returns a year. However, it does mean you need to keep digital records and send HMRC regular updates from compatible software.

Making Tax Digital for Income Tax started on 6th April 2026 for individuals who are registered for Self Assessment, receive income from self-employment or property, and have qualifying income of more than £50,000. Lower thresholds will follow in later years, so more people will be brought into the regime over time.

HMRC calls these submissions “quarterly updates”. However, many people refer to them as “MTD quarterly reporting”, so that is the term we will use in this guide.

Here is what sole traders and landlords need to know.

What is MTD quarterly reporting?

MTD quarterly reporting is the process of sending HMRC regular summaries of your self-employment or property income and expenses.

Every three months, your compatible software pulls together the digital records for each business or property income source. It then creates totals for the relevant income and expense categories. These totals are sent to HMRC as quarterly updates. HMRC’s quarterly update guidance explains how this works.

This does not mean sending HMRC every invoice, receipt or bank transaction. HMRC receives totals for the relevant categories, not the details of each individual digital record.

That distinction matters. MTD quarterly reporting is not the same as filing four full tax returns each year. However, it does mean your bookkeeping needs to be kept up to date throughout the year, rather than pulled together shortly before the Self Assessment deadline.

Who needs to use MTD for Income Tax?

You need to use MTD for Income Tax from 6th April 2026 if all of the following apply:

• You are an individual registered for Self Assessment
• You receive income from self-employment, property, or both
• Your qualifying income is more than £50,000

For the first phase, HMRC looks at your qualifying income for the 2024/25 tax year. If your qualifying income is over £50,000 for that year, you need to use MTD for Income Tax from 6th April 2026. THP has separate guidance on MTD for sole traders and MTD for landlords.

The threshold then falls. If your qualifying income is over £30,000 for 2025/26, you will need to use MTD from 6th April 2027. If your qualifying income is over £20,000 for 2026/27, you will need to use it from 6th April 2028.

Qualifying income means your total income from self-employment and property before expenses. HMRC calls this gross income or turnover. If you have more than one source of self-employment or property income, those sources are added together.

For example, if you receive £28,000 from self-employment and £24,000 from rental income, your total qualifying income is £52,000. That could bring you into MTD for Income Tax, even though neither income source is over £50,000 on its own.

What do quarterly updates include?

Your quarterly updates include totals from your digital records for self-employment and property income and expenses.

They also include records already created since the start of the tax year, plus any corrections you have made. For example, a third quarterly update includes the latest period as well as earlier records already sent for that tax year, with any corrections included.

You do not need to make accounting or tax adjustments before sending a quarterly update. These adjustments take place later, before you finalise your Income Tax position and submit your tax return. GOV.UK’s quarterly update guidance gives more detail on what is sent.

In practice, your quarterly updates should be based on accurate, up-to-date bookkeeping. If your records are messy, incomplete or held outside your accounting software, quarterly reporting will be much harder.

What are the MTD quarterly reporting deadlines?

For standard update periods, the deadlines are:

These standard periods align with the tax year. HMRC also allows calendar update periods, which run to the end of the month. For example, a calendar update period can run from 1st April to 30th June, with the same 7th August deadline.

Calendar update periods may suit businesses whose accounts are kept to month-end dates. However, you need to choose the right approach in your software before sending your first update for the tax year.

Does MTD quarterly reporting replace your tax return?

No. MTD quarterly reporting does not replace your tax return.

The quarterly updates give HMRC in-year summaries of your self-employment or property income and expenses. They are not final tax calculations, and they do not settle your tax bill.

After your final quarterly update for the year, you still need to complete the year-end process through compatible software. This is where your overall tax position is finalised. HMRC says that, after the fourth update, your software will show your self-employment and property income and expenses for the whole tax year. You then need to make any necessary adjustments before you submit your Self Assessment tax return. GOV.UK explains the adjustment process here.

That may include checking your figures, making accounting adjustments, claiming allowances and reliefs, and adding other income that wasn’t included in your quarterly updates.

For example, you may still need to deal with capital allowances, private use adjustments, pension contributions, Gift Aid or the High Income Child Benefit Charge, depending on your circumstances.

So, while MTD changes the way information is reported during the year, it does not remove the need for proper year-end tax work.

What happens if you miss an MTD quarterly reporting deadline?

HMRC says there are no penalty points for late quarterly updates in the 2026/27 tax year if you are required to use MTD for Income Tax from 6th April 2026. However, you still need to keep digital records and send the quarterly updates before you can submit your tax return. Read HMRC’s MTD penalty guidance.

That first-year easement should not be treated as a reason to delay. Penalties will still apply for late tax returns or late payment of tax, and quarterly updates are part of the process needed before you can submit your final return.

It is also worth remembering that the first quarterly update deadline is 7th August 2026 for those who entered MTD from 6th April 2026.

That does not leave much time to choose software, connect bank feeds, move records across and understand the process (assuming you haven’t already done so).

What records do you need to keep?

MTD for Income Tax is built around digital records.

Affected sole traders and landlords need to keep records in compatible software. The software then uses those records to create and send the quarterly updates to HMRC. GOV.UK explains how digital records work for MTD.

Good records will usually include:

• Business or rental income
• Allowable expenses
• Bank transactions
• Sales invoices
• Purchase invoices
• Receipts
• Mileage or travel records, where relevant
• Property-specific income and costs for landlords

For landlords with jointly let properties, HMRC allows some flexibility. Quarterly updates can include either all property income and expenses for those jointly let properties, or only the individual’s property income without expenses. If expenses are not included during the year, they must be reported at the end of the tax year before finalising the tax position.

This is an area where landlords should take care. Joint ownership, multiple properties and mixed personal/property costs can all make reporting more complicated.

Can your accountant handle MTD quarterly reporting for you?

Yes. If you use an accountant, they can help you sign up for MTD and manage the reporting process for you.

However, MTD is not simply a software issue. It is a workflow issue.

Your accountant will still need timely and accurate records from you. That means agreeing how information will be captured, checked and submitted before the first reporting deadline arrives.

For many sole traders and landlords, the best approach is to set up a clear process early. That may include:

• Choosing suitable MTD-compatible software
• Setting up bank feeds
• Deciding who checks transactions
• Agreeing how receipts and invoices will be captured
• Reviewing quarterly figures prior to submission
• Planning for the year-end tax return

Once that process is in place, quarterly reporting should feel much more manageable. Without it, MTD can quickly become a series of rushed deadlines. THP can also advise on cloud accounting software if your current record-keeping system is not ready for MTD.

Common MTD quarterly reporting mistakes

MTD quarterly reporting should become routine once the right systems are in place. However, the transition might cause problems.

Common mistakes are likely to include:

• Assuming quarterly updates are optional in the first year
• Waiting until the first deadline before choosing software
• Mixing personal and business transactions without clear records
• Forgetting that property and self-employment income are added together for qualifying income
• Treating quarterly updates as final tax calculations
• Failing to deal with year-end adjustments
• Using software that is not suitable for the business or property portfolio
• Assuming landlords with jointly owned property can ignore their share of income

The safest approach is to prepare as soon as you can. That gives you more time to test the software, clean up your records and understand what needs to be reported.

How THP can help

MTD quarterly reporting will affect many sole traders and landlords. It will also change how records are kept during the year.

THP can help you prepare for MTD for Income Tax and manage the process once you are in the regime. Our MTD accountants can support you with:

• Checking when MTD applies to you
• Working out your qualifying income
• Choosing suitable MTD-compatible software
• Setting up digital record-keeping
• Handling quarterly updates
• Reviewing your figures prior to submission
• Finalising your tax position at the end of the year
• Submitting your Self-Assessment Tax Return through the correct process

Our MTD accountants can support sole traders and landlords who want to get the rules right without spending their evenings wrestling with HMRC deadlines and software.

If you are unsure whether MTD applies to you, or you are worried about MTD quarterly reporting, speak to THP. It is better to prepare before the first deadline than to rush once quarterly updates are already due.