MTD's first quarterly update is due 7 August: here's what to actually do

MTD is no longer "coming", it's here

If you've been putting off Making Tax Digital because it felt like a future problem, that window has closed. MTD for Income Tax became mandatory from 6 April 2026 for self-employed people and landlords with gross income over £50,000 (based on your 2024/25 figures). If that's you, you're already in your first MTD quarter, and the first real deadline is closer than you think.

This isn't another "what is MTD" explainer. This is what to actually do before 7 August.

Am I definitely in scope?

Check your gross income, that's total self-employment and UK property income combined, before expenses and tax, for the 2024/25 tax year. Over £50,000 means you're in from this April. Under it, for now, you can carry on with annual self assessment, but the threshold drops to £30,000 from April 2027 and £20,000 from April 2028, so most working freelancers will be swept in eventually.

Partnerships and limited companies are excluded from this rollout. If you trade as a sole trader or landlord, individually, you're the one in scope.

Your first deadline: 7 August 2026

Your first quarterly update covers income and expenses from 6 April to 5 July 2026, and it's due by 7 August 2026. The full-year pattern looks like this:

• Quarter 1 (6 April – 5 July), due 7 August
• Quarter 2 (6 July – 5 October), due 7 November
• Quarter 3 (6 October – 5 January), due 7 February
• Quarter 4 (6 January – 5 April), due 7 May

A quarterly update is a running summary of income and expenses for that period, submitted through MTD-compatible software. It is not a tax payment, and it's not a full return. Think of it as keeping HMRC's picture of your year up to date as you go, rather than reconstructing twelve months of activity every January.

What actually has to happen by 7 August

1. Get MTD-compatible software in place, if you haven't already. Spreadsheets only work if they connect to HMRC-recognised bridging software; most freelancers find purpose-built software simpler.
2. Make sure April to July is fully recorded: every invoice raised, every payment received, every business expense, categorised the way HMRC expects (travel, professional fees, office costs, and so on, the same categories used in self assessment).
3. Submit the update through your software before 7 August. Your accountant can do this for you, but they still need your digital records to be current, you can't hand over a shoebox of receipts once a quarter instead of once a year.

None of this replaces your annual Final Declaration, still due by 31 January, where you confirm the full year's figures, claim any remaining reliefs, and settle what you owe. The quarterly updates are progress reports that build toward that.

What happens if you're late

2026/27 has a penalty-free soft landing specifically for late quarterly updates, HMRC isn't handing out fines for a missed 7 August deadline in this first year while everyone adjusts. That grace does not extend to late payment or a late Final Declaration, both of which still carry the usual interest and penalties.

From 2027/28, the soft landing ends and a points-based penalty regime applies HMRC-wide: each late submission adds a point, and hitting 4 points triggers a £200 fine, with a further £200 for each additional late submission after that. It works like a driving licence, a few slip-ups won't sink you, but a consistent pattern will.

The soft landing is a reason to get your process right now, not a reason to ignore August. The habits you build for this first quarter are the ones you'll be running for years.

The payments on account trap, if you're newly self-employed

If MTD has coincided with your first year of proper self-employment income, watch out for payments on account. Once your tax bill crosses £1,000, HMRC asks you to pay not just what you owe for the year just gone, but 50% of the following year's estimated bill on top, twice. That first combined bill can land at around 150% of your actual annual liability, which catches a lot of newly self-employed people off guard. It's not a penalty, it's HMRC collecting next year's tax in advance, but budgeting for it early avoids a nasty surprise in January.

The bottom line

MTD for Income Tax isn't a future headache to prepare for anymore, it's a live obligation with a deadline in weeks, not months. If you're over the £50,000 threshold, get your April to July records finalised, categorised, and submitted through compatible software before 7 August. Do that once, properly, and every quarter after it gets easier, because you'll already be in the habit of keeping clean digital records as you go rather than catching up after the fact.