With the 7 August 2026 deadline just days away, taxpayers who fall within the first phase of Making Tax Digital for Income Tax (MTD for IT) should ensure they are ready to submit their first quarterly update. The rules apply to sole traders and landlords with combined annual business and property income exceeding £50,000.
HM Revenue & Customs’ (HMRC’s) latest figures suggest many taxpayers are still preparing. As of 17 July 2026, more than 100,000 first quarterly updates had already been submitted, with nearly 750,000 still to be filed before the deadline.
What you need to know about your quarterly updates
Under MTD for IT, sole traders and landlords no longer wait until the end of the tax year to report their business and property income. Instead, they are required to submit quarterly updates to HMRC using compatible software.
A quarterly update is not the same as an annual tax return. It provides a summary of your income and expenses for the period and is generally much quicker to complete than the end-of-year submission.
Quarterly updates are due by:
- 7 August
- 7 November
- 7 February
- 7 May (following the end of the relevant quarter)
Each submission contains cumulative year-to-date figures. This means that if you discover an error in an earlier quarterly update, it can usually be corrected in your next submission.
Once the tax year has ended, you must still complete a final submission to confirm your income, make any necessary adjustments and calculate your tax liability. HMRC refers to this as the Final Declaration, which fulfils the same role as the current Self Assessment tax return.
Understanding the new penalty system
Alongside MTD for IT, HMRC has introduced a new points-based penalty system for late submissions and payments.
Instead of receiving an automatic £100 penalty for a late tax return, taxpayers will now receive a penalty point each time they miss a submission deadline. Once a taxpayer reaches the penalty threshold, a £200 financial penalty will apply.
Key points to be aware of include:
- The new penalty regime initially applies to taxpayers mandated to comply with MTD for IT. It will be extended to other Income Tax Self Assessment taxpayers at a later date, although HMRC has not yet confirmed when;
- To support taxpayers during the first year of MTD for IT (2026-27), HMRC will not issue penalty points for late quarterly updates. However, this concession does not apply to the end-of-year Final Declaration, which is due by 31 January 2028; and
- There is also a new penalty system for late payment of tax payable.
For a more detailed explanation of the new points-based regime and penalties on the late payment of tax, download our Making Tax Digital for Income Tax: Penalty Regime Overview.
How M+A Partners can help
MTD for IT is now a legal requirement for taxpayers within the first phase of the rollout. The regime will be extended to many more sole traders and landlords over the next two years, with the qualifying income threshold reducing to £30,000 from 6 April 2027 and to £20,000 from 6 April 2028.
If you have any questions about MTD for IT, would like to understand whether you will be required to comply in the future, or need advice on choosing compatible software, please contact your usual M+A Partners’ adviser or use the contact details below.
You can also take a look at our Making Tax Digital resources hub for further information.