The Biggest Misconception About MTD Quarterly Updates
One of the biggest misunderstandings about Making Tax Digital for Income Tax Self Assessment (MTD ITSA) is the quarterly update requirement.
Many sole traders and landlords assume quarterly updates are like submitting a full tax return four times a year—complete with tax calculations, adjustments, and detailed scrutiny from HMRC.
They’re not.
Understanding what quarterly updates actually are (and what they’re not) will save you significant time, stress, and potentially costly mistakes when MTD ITSA becomes mandatory for your business.
What Is a Quarterly Update?
According to HMRC, a quarterly update is simply a summary of your income and expenses for a three-month period, sent digitally from your compatible software.
Here’s what happens:
- You keep digital records of your business income and expenses throughout the quarter
- Your MTD-compatible software totals these records into HMRC’s required categories
- These category totals are submitted to HMRC as your quarterly update
That’s it. No complex calculations. No tax adjustments. Just totals.
HMRC source: Send quarterly updates – Use Making Tax Digital for Income Tax
What You Don’t Need to Do Before Sending a Quarterly Update
This is where many businesses overcomplicate things. HMRC is clear about what you don’t need to do:
You Don’t Need to Calculate Tax
Quarterly updates don’t require you to work out how much tax you owe. Tax calculations happen at the end of the tax year when you submit your actual tax return.
You Don’t Need to Make Accounting Adjustments
Things like capital allowances, private use adjustments, or disallowable expenses? Those come later, at year-end. Your quarterly updates are based on the straightforward income and expenses recorded in your digital records.
You Don’t Need to Worry About Every Transaction Being Scrutinized
HMRC receives totals by category—not the details of individual transactions. For example, they’ll see “Travel expenses: £850” rather than a line-by-line breakdown of every train ticket and mileage claim.
HMRC source: Send quarterly updates – Use Making Tax Digital for Income Tax
When Are Quarterly Updates Due? Understanding the Deadlines
HMRC uses standard quarterly periods aligned with the tax year. Here’s how it works:
| Quarter Period | Deadline |
|---|---|
| 6 April to 5 July | 7 August |
| 6 July to 5 October | 7 November |
| 6 October to 5 January | 7 February |
| 6 January to 5 April | 7 May |
Key Points About Deadlines:
- One month buffer – You have approximately one month after each quarter ends to submit
- Fixed dates – Unlike VAT, which varies by your return period, MTD ITSA quarters are the same for everyone
- No rolling over – Miss a deadline and you can’t just add those figures to the next quarter; you still need to submit the late update
HMRC source: Send quarterly updates – Use Making Tax Digital for Income Tax
What Happens If You Miss a Quarterly Update Deadline?
HMRC has introduced a penalty points system for late submissions under MTD ITSA, but there’s important temporary relief to know about:
The 12-Month “Soft Landing” Period
For businesses mandated from 6 April 2026, HMRC will not apply penalty points for late quarterly updates during the first 12 months of being in MTD ITSA.
However, this soft landing does not apply to your annual tax return. If you miss the 31 January deadline for your tax return, penalty points will still apply.
After the Soft Landing Period
Once the soft landing ends, late quarterly updates will trigger penalty points in the same way as other MTD submissions. The points accumulate, and after reaching a threshold, financial penalties kick in.
HMRC source: Send quarterly updates – Use Making Tax Digital for Income Tax
Common Questions About Quarterly Updates
Can I submit quarterly updates early?
Yes. As long as your software is ready and your records are up to date, you can submit updates before the deadline. In fact, many businesses find it easier to submit shortly after each quarter ends while the records are fresh.
What if I have no income or expenses in a quarter?
You still need to submit an update—it will just show zeros or minimal activity. HMRC needs to see that you’ve checked and confirmed there’s nothing to report for that period.
Can I correct a quarterly update after I’ve submitted it?
Yes, but the process depends on what needs changing. Minor errors can often be corrected in the next quarter’s update. More significant corrections may require adjusting your figures before final submission at year-end. Your accountant or software provider can guide you on the best approach.
Do I need different software for quarterly updates and my tax return?
Not necessarily. Many MTD-compatible software products handle both quarterly updates and year-end tax return submission. However, some businesses use bridging software that connects their record-keeping system (like spreadsheets) to HMRC for submissions.
How to Make Quarterly Updates Simple (Not Stressful)
Based on our experience helping businesses transition to MTD ITSA, quarterly updates become straightforward when you have three things in place:
1. Consistent Bookkeeping Throughout the Quarter
Don’t wait until deadline week to enter three months of receipts and invoices. Regular weekly or monthly bookkeeping means your quarterly update is just a few clicks rather than a scramble.
2. Correct Category Mapping From Day One
Your income and expenses need to be assigned to the right HMRC categories. Get this right at the start, and every quarterly update will be accurate. Get it wrong, and you’ll be recategorizing transactions for months.
3. A Clean Digital Trail
Your records need to flow digitally from creation to submission. Manual copying and pasting between systems breaks the digital link that HMRC requires and creates compliance risk.
How AA&R Certified Accountants Can Help
We help sole traders and landlords set up MTD ITSA processes that make quarterly updates routine, not chaotic:
- Software setup and configuration – We’ll help you choose the right software and map your income/expense categories correctly
- Digital record-keeping workflows – We’ll design a process that fits how you actually run your business
- First-year support – We’ll handle your first few quarters with you to make sure everything runs smoothly
- Year-end preparation – We’ll manage the adjustments and tax return submission so nothing falls through the cracks
The goal isn’t just compliance—it’s building a system that gives you better visibility of your business finances throughout the year.
Conclusion: Quarterly Updates Are Simpler Than You Think
MTD ITSA quarterly updates aren’t mini tax returns. They’re not complex. They’re not designed to catch you out.
They’re simply totals of your income and expenses, sent four times a year to give HMRC (and you) a better real-time picture of your business.
Get the basics right—consistent bookkeeping, correct categories, and a proper digital process—and quarterly updates become one of the least stressful parts of running your business.
Ready to Get MTD ITSA-Ready?
If you want help setting up quarterly updates and keeping everything compliant without the stress, we’re here to help.
Contact AA&R Certified Accountants
Disclaimer: This article provides general information about MTD ITSA quarterly updates based on current HMRC guidance. It is not tailored tax advice for your specific circumstances. MTD requirements can change, and you should always verify current obligations with HMRC guidance and your professional adviser.
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