MTD quarterly reporting: how to prepare before your first HMRC submission

Making Tax Digital for Income Tax applies from 6 April 2026 to sole traders and landlords with qualifying income over £50,000, then from 6 April 2027 for those over £30,000, and from 6 April 2028 for those over £20,000. If you are affected, you will need to keep digital records, use compatible software and send quarterly updates to HMRC before submitting your final tax return.

This is not something to leave until the week your first update is due. If you are in the first MTD group and use standard update periods, your first quarterly update covers 6 April to 5 July 2026 and must be sent by 7 August 2026. Preparing early gives you time to clean up your records, choose software, understand your responsibilities and avoid avoidable mistakes.

If you need support from accountants Nottingham, FHP Accounting can help you move from once-a-year tax return habits to a more regular and reliable reporting routine.

What is MTD quarterly reporting?

MTD quarterly reporting is part of Making Tax Digital for Income Tax. Instead of only preparing your Self Assessment figures after the tax year has ended, you will keep digital records throughout the year and send quarterly updates to HMRC using compatible software.

The updates show totals for income and expenses based on your digital records. HMRC does not receive every individual receipt or invoice through the quarterly update, but your software will send totals for the relevant income and expense categories.

You will still need to submit a final tax return after the end of the tax year using compatible software. This is where you check your figures, add adjustments, claim reliefs or allowances, include other income or gains, and finalise the tax due.

MTD does not change the 31 January deadline for submitting your tax return and paying tax due.

FHP Accounting’s guide to Making Tax Digital: Quarterly Update Returns is a useful starting point if you want a simple overview of how the quarterly update system works.

Who needs to prepare for MTD?

You need to prepare for MTD for Income Tax if you are an individual registered for Self Assessment and you receive qualifying income from self-employment, property, or both.

Qualifying income means your total income from self-employment and property before expenses are deducted. HMRC also calls this gross income or turnover. Other income, such as employment income, dividends, pensions and an individual partner’s share of partnership profit, does not usually count towards qualifying income for MTD.

For example, if you have £35,000 of rental income and £18,000 of sole trader income, your combined qualifying income would be £53,000 before expenses. That could bring you into MTD earlier than expected.

HMRC says it will review your Self Assessment tax return and write to you if your income is above the relevant threshold. However, even if you do not receive a letter, you are still responsible for checking whether MTD applies to you.

If you are a landlord, FHP Accounting’s Making Tax Digital for Landlords guide explains how the rules affect rental income, property expenses and digital record keeping.

If you are still growing a new business, working with an accountant for startup business can help you set up records properly before MTD becomes part of your routine.

What your first quarterly update will include

Your quarterly update will include income and expense totals for your self-employment and property income sources.

You do not need to make every year-end tax adjustment before sending a quarterly update. For example, you do not usually need to finalise allowances, private use adjustments or full tax calculations at this stage.

The purpose is to give HMRC a regular digital update of your income and expenses during the year. Your software may also help you see an estimated tax position, which can make it easier to plan ahead.

Your first update will depend on whether you use standard update periods or calendar update periods.

For standard update periods, the first period runs from 6 April to 5 July and is due by 7 August.

For calendar update periods, the first period runs from 1 April to 30 June and is also due by 7 August.

If you already work with bookkeepers Nottingham, now is the time to agree who will update the records, review categories and submit the figures.

Standard update periods and deadlines

For many taxpayers, standard update periods will follow the tax year. These are the dates set by HMRC:

The update periods are cumulative. This means later updates cover the tax year to date. If you correct an earlier transaction in your software, it can be reflected in a later update.

If your accounting year ends on 31 March, calendar update periods may be simpler. You need to select calendar update periods in your software before your first update is sent for the tax year.

FHP Accounting’s VAT in Xero article is useful if you already use MTD for VAT and want to understand how digital records, submissions and adjustments work in practice.

MTD does not remove the need for good bookkeeping

MTD will not fix messy records by itself. If your income and expenses are already difficult to track, quarterly reporting will simply make the problem show up more often.

Before your first submission, you should check:

1. Whether your bank feeds are connected correctly
2. Whether sales income is being recorded in the right place
3. Whether rental income is separated from deposits or personal transfers
4. Whether expenses are being categorised consistently
5. Whether receipts and invoices are stored digitally
6. Whether personal and business spending is mixed together
7. Whether any spreadsheet process still relies on manual copy and paste
8. Whether you know who is responsible for reviewing each update

FHP Accounting’s article on Why Accurate Bookkeeping is Crucial for Your Business Success explains why reliable bookkeeping supports better tax planning and business decisions.

You may also find the Bookkeeping health check useful if your current system needs reviewing before MTD deadlines begin.

Choosing the right software

You will need software that works with Making Tax Digital for Income Tax. That could be an all-in-one accounting system or bridging software that connects existing digital records, such as spreadsheets, to HMRC.

The key point is that your records must be digital and the submission must be made through compatible software.

For many businesses and landlords, moving to cloud accounting software now is the simplest option. It gives you time to test bank feeds, create rules, tidy categories and understand reports before the first MTD update is due.

If you are moving from spreadsheets, FHP Accounting’s guide on From Spreadsheets To Xero gives a practical migration plan.

Support with xero bookkeeping services can also help you set up a cleaner process for bank reconciliation, supplier invoices, customer invoices and quarterly reporting.

For quick improvements, 5 Quick Xero Tips for Efficient Bookkeeping is a useful read.

Digital links matter

MTD is not just about storing numbers on a computer. If you use more than one system, your records and submissions need to follow the digital record keeping rules.

In practical terms, you should avoid relying on manual copying and pasting between systems once records are part of the MTD process. Digital links can include linked spreadsheet cells, CSV imports, API transfers and other electronic transfers.

This matters if you currently use a spreadsheet, property management system, booking platform or separate invoicing tool. You need to know how information moves from those systems into your MTD-compatible software.

FHP Accounting’s Xero controls article is helpful if you need better user permissions, approval workflows and control over who changes records.

You may also want to read Month-End in Xero if you want a more structured routine for closing each month before quarterly updates are prepared.

Why landlords need to pay close attention

Landlords are one of the groups most affected by MTD for Income Tax. If your gross property income is above the relevant threshold, you may need to keep digital records and submit quarterly updates even if your rental profit is much lower after expenses.

This distinction matters. MTD thresholds are based on qualifying income, not taxable profit.

If you own one or more properties in the UK, they are generally treated as one UK property business. You do not usually need separate quarterly updates for each UK property, but you still need clear property-level records if you want useful reporting.

If you own foreign property, HMRC says you must create separate digital records for each individual foreign property you receive income from. However, all foreign properties are treated as one foreign property business, so compatible software should bring those records together into one quarterly update for the foreign property business.

Support from an accountant landlord can help you understand what needs to be recorded, especially if you have more than one property or different types of rental income.

FHP Accounting’s guide on Filing Returns for Landlords is useful if you want to understand the wider tax return process for rental income.

Their article on Personal tax returns for landlords with overseas income is also worth reading if you have property outside the UK.

Jointly owned property can be more complicated

Jointly owned property can create practical questions under MTD. Each owner may have their own tax position, income share and reporting responsibility.

For qualifying income, your share of income from a jointly owned property counts towards your MTD threshold. For example, if a jointly owned property produces £50,000 of income and you receive an equal share, your qualifying income from that property would usually be £25,000.

There are also record keeping easements for jointly let property. These can make reporting simpler, but they do not remove the need for proper records. You still need to know your share of income and expenses, especially where costs are shared, rental statements are issued by an agent or properties are owned in different proportions.

FHP Accounting’s guide to Making Tax Digital: jointly-owned property explains this issue in more detail.

If your property records are becoming more complex, property tax accounting support can help you avoid mixing personal costs, capital costs and deductible property expenses.

For repair and improvement decisions, FHP Accounting’s article on Deductible Expenses for Landlords is also useful.

Property management businesses need cleaner systems

If you manage property, MTD can expose weak processes quickly. Rent, service charges, management fees, deposits, repairs and supplier payments all need to be recorded clearly.

Poor categorisation can create problems when quarterly updates are prepared. It can also make year-end adjustments harder because you may need to revisit months of transactions.

This is where accounting property management support can be valuable. The goal is to make reporting clearer throughout the year, not just at tax return time.

For larger property operations, property management accountants can also help you build a process that works across rent records, service charge accounts and management reports.

FHP Accounting’s Tenant Deposit Accounting For Commercial Property article is useful if you need to improve controls around deposits and client money.

You may also want to read Reconciling property client money under RICS rules if reconciliations are becoming difficult.

RTM and residential management companies

MTD for Income Tax applies to individuals with self-employment or property income, not every company. However, RTM directors and residential management companies still need strong financial systems because service charge accounting, year-end accounts and reporting often depend on accurate records.

If you are involved in an RTM company, poor record keeping can create disputes, late accounts and confusion around approvals. While MTD may not apply to the company in the same way as it applies to an individual landlord, the wider move toward digital records still matters.

Support from right to manage accountants can help directors keep finance processes organised and traceable.

FHP Accounting’s article on RTM Directors’ Finance Responsibilities is a useful guide if you need clearer approval and sign-off processes.

For service charge issues, Common service charge mistakes is also worth reviewing before year-end.

Start-ups and sole traders should not wait

If you are newly self-employed, MTD may not affect you immediately. HMRC says you do not need to start using MTD for a new source of self-employment or property income until after you have submitted your first tax return that includes that income.

Even so, it makes sense to start with digital records from day 1. That way, you do not need to rebuild your records later once your income grows.

If you are a founder, FHP Accounting’s guide on Choosing the Right Business Structure at Launch can help you think through whether a sole trader, limited company or partnership structure fits your plans.

Working with business start-up accountants can also help you set up bookkeeping, invoicing, tax reserves and reporting before habits become harder to change.

For early admin, New Limited Company Essentials is helpful if you have recently incorporated and need to understand what comes next.

MTD and cash flow planning

Quarterly updates do not mean you pay Income Tax every quarter. Your Self Assessment payment dates remain the same.

However, MTD can make your tax position more visible throughout the year. That is useful if you use the information properly.

Instead of waiting until January to find out what you owe, you can review estimated tax figures during the year and put money aside.

This can help you:

1. Avoid surprise tax bills
2. Plan payments on account
3. Make better dividend or drawing decisions
4. Understand whether rental profit is rising or falling
5. Spot high expense months earlier
6. Keep money aside for tax before it is spent elsewhere

FHP Accounting’s article on Company tax payments is useful if you run a limited company as well as having personal tax responsibilities.

For directors with more than one income stream, Personal Tax Returns for Directors with Multiple Income Streams explains why dividends, savings, property and side projects need to be reviewed carefully.

When outsourcing makes sense

MTD creates more regular admin. For some people, that is manageable. For others, especially landlords with multiple properties or sole traders with mixed income streams, it can become a burden.

If you are already struggling to keep records up to date, MTD is a sign that you may need more structured support.

An outsource financial services arrangement can help you keep monthly records, review reports and prepare submissions without relying on a once-a-year rush.

This can be particularly useful if you need management information as well as tax compliance. FHP Accounting’s guide to Management accounts that directors actually use explains how better reports can support clearer decisions.

You may also find Building management reports helpful if your current reports do not show the numbers you actually need.

How to prepare before your first submission

A simple preparation plan can make your first quarterly update much smoother.

Check whether MTD applies to you

Look at your gross self-employment and property income, not just your profit. Check which tax year HMRC will use to assess whether you are above the threshold.

Choose compatible software

Decide whether you will use all-in-one accounting software or bridging software. Make sure it can keep digital records and submit MTD for Income Tax updates.

Clean up your bookkeeping

Review bank feeds, categories, invoices, receipts and opening balances. Do this before the tax year starts where possible.

Separate income sources

Keep clear records for self-employment, UK property and foreign property where relevant. Do not mix business and personal transactions without a clear process.

Agree responsibilities

Decide who will update records, check figures, approve submissions and deal with HMRC messages.

Set reminders

Add quarterly update deadlines to your calendar. Build in time for review before the due date.

Review your first quarter early

Do not wait until August. Review April, May and June figures as you go so problems are fixed before the first update is due.

Keep supporting documents

Digital records do not remove the need for evidence. Keep invoices, receipts, agent statements and bank records.

Review estimates

Use the tax estimates from your software as a planning tool, but remember the final tax position may change after year-end adjustments.

Speak to an accountant early

If you are unsure about thresholds, software or record keeping, get help before your first submission deadline.

Common mistakes to avoid

Many MTD problems are avoidable if you start early.

Watch out for these mistakes:

Assuming MTD only applies to VAT

MTD for VAT is already in place, but MTD for Income Tax is a separate system with different requirements.

Looking at profit instead of gross income

The MTD threshold is based on qualifying income before expenses, not taxable profit.

Leaving software setup too late

Bank feeds, categories, permissions and opening balances can take time to get right.

Mixing personal and business transactions

This creates extra work and can make quarterly updates less reliable.

Ignoring jointly owned property

Your share of income and expenses still needs to be handled correctly.

Treating quarterly updates as final tax returns

Quarterly updates are not the final tax calculation. You still need to finalise your tax return after the tax year ends.

Forgetting other income sources

Employment income, dividends, pensions, savings and capital gains may still need to be included in your final tax return, even though they do not usually count towards qualifying income for MTD.

Assuming no income means no update

If you are within MTD and have no income or expenses for a quarterly period, you may still need to send an update before you can submit your final tax return.

FHP Accounting’s UK Spring Budget 2026 article is also useful if you want to understand how MTD sits alongside wider tax changes.

FAQs

What is the first MTD quarterly update deadline?

If you are required to use MTD for Income Tax from 6 April 2026 and use standard update periods, your first update covers 6 April to 5 July 2026 and is due by 7 August 2026. If you use calendar update periods, your first update covers 1 April to 30 June 2026 and is also due by 7 August 2026.

Does MTD mean I pay tax quarterly?

No. MTD quarterly reporting does not change the normal Self Assessment payment dates. You still pay tax under the usual Self Assessment rules, but your software may show estimated tax figures during the year.

Do I still need to submit a tax return under MTD?

Yes. You still need to submit a final tax return using compatible software by 31 January following the end of the relevant tax year. The quarterly updates are not the final tax return.

Can I use spreadsheets for MTD?

You may be able to use spreadsheets if they are digitally linked to compatible bridging software. You should avoid manual copy and paste once records are part of the MTD process.

What happens if I miss a quarterly update?

HMRC says there are no penalties for missing quarterly update deadlines for the 2026 to 2027 tax year. However, you still need to keep digital records and send quarterly updates before you can submit your tax return. Penalty points can apply to late quarterly updates for tax years after 2026 to 2027.

Do landlords with jointly owned property need separate records?

Yes. Each landlord still needs to understand and report their own position. Your share of jointly owned property income counts towards your MTD qualifying income, and you still need accurate records of your share of income and expenses before the final tax return is submitted.

Speak to FHP Accounting

MTD quarterly reporting is a major change, but it does not need to feel overwhelming. With the right software, clean records and a clear routine, you can move from last-minute tax return stress to a more organised way of managing your income and expenses.

FHP Accounting can help you check whether MTD applies to you, choose the right software, set up digital records and prepare for your first HMRC submission.

Get in touch through the contact page to prepare before your first quarterly update is due.

Kellee Quigley

I lead FHP Accounting, an accountancy practice specialising in Commercial and Residential Property Accounting. Our goal is to make the administration of running property portfolios easier for landlords, managers, and investors — allowing you to focus on what you do best, while we take care of everything behind the scenes.