MTD ITSA Quarterly Updates: How They Actually Work (2026)

Making Tax Digital for Income Tax (MTD ITSA) is the biggest change to how the self-employed report their figures in a generation. From April 2026, anyone with qualifying income above 50,000 pounds must keep digital records and, crucially, send HMRC a quarterly update four times a year instead of just one annual return. From April 2027 the threshold drops to 30,000 pounds, pulling in many more sole traders and landlords. The phrase "quarterly updates" makes a lot of people nervous, so let us break down exactly what one is and how the new rhythm works.

Who is in, and when

MTD ITSA is being introduced in phases based on qualifying income, which is your gross income from self-employment and property before expenses are deducted:

If your gross self-employment and property income sits above the relevant threshold, you must comply from that point. Below it, you continue with the existing annual Self Assessment until a future phase brings you in.

Note that the threshold uses gross income, not profit. A landlord with 55,000 pounds of rent but only 8,000 pounds of profit is still in from April 2026, because the test looks at income before expenses.

What a quarterly update actually is

This is the part people most misunderstand. A quarterly update is not a mini tax return and it does not trigger a tax payment. It is a summary of your business income and expenses for the period, sent to HMRC straight from MTD-compatible software.

Three things are worth knowing:

1. It is cumulative. Each update is a running total for the year so far, not a standalone quarter in isolation. If you correct a figure later, you simply submit updated cumulative totals.
2. It is light-touch. You are sending summarised figures by category, not a fully finalised, adjusted tax computation.
3. No tax is calculated or due from it. It is a reporting checkpoint, nothing more.

In practice, if you keep your bookkeeping current, generating a quarterly update is close to a button-press in your software.

The quarterly rhythm

Under MTD ITSA you report four times a year, then finalise once. The standard quarterly periods run from 6 April, with submission deadlines roughly a month after each quarter ends. The shape of the year looks like this:

There is an option to use calendar-quarter periods aligned to month-ends if your software supports it, which many people find simpler. Either way, the principle is the same: four summaries through the year, spaced roughly three months apart.

The year-end final declaration

After the four updates, you complete a year-end process, often called the final declaration. This is where the real tax work happens. You:

• Confirm your business income and expense figures
• Make any accounting adjustments
• Add other income such as employment, dividends, savings interest or capital gains
• Claim allowances and reliefs
• Finalise and confirm your tax position

The final declaration replaces the single annual Self Assessment return for those inside MTD ITSA. Its deadline is 31 January following the tax year, exactly the same date the old return used. So although you report four times during the year, the moment you actually finalise everything is still the familiar January deadline.

What does not change

It is just as important to know what stays the same:

• Payment dates are unchanged. Income tax and Class 4 NI are still due by 31 January after the tax year, with payments on account on 31 January and 31 July if your bill exceeds 1,000 pounds. Quarterly updates do not bring your tax forward.
• What is taxable is unchanged. The same income is taxable, the same expenses are allowable, and the same allowances apply. MTD ITSA is about the mechanics of reporting, not the rules of what you owe.
• Class 4 NI is unchanged. For 2026/27 it remains 6% on profits from 12,570 to 50,270 pounds and 2% above.

What you need to get ready

If you will be in from April 2026, three things matter:

1. Digital records. You must keep your income and expense records digitally, in software or through a bridging tool. Paper notebooks and ad-hoc spreadsheets without a digital link no longer meet the requirement.
2. MTD-compatible software. Your records must connect to software that can send quarterly updates and the final declaration to HMRC. Choose this before April rather than scrambling later.
3. A regular bookkeeping habit. The quarterly rhythm rewards people who keep records current. If you update weekly, each quarterly submission is trivial. If you leave it all to the deadline, four catch-ups a year is far more painful than one.

The mindset shift

The biggest change is psychological. For decades, self-employed reporting meant one frantic push before 31 January. MTD ITSA spreads the work across the year. That sounds like more effort, and four submissions is more than one. But if you embrace the rhythm and keep records current, each quarterly update is a quick summary rather than a reconstruction, and the year-end declaration becomes a review rather than a marathon.

The traders who struggle will be those who treat quarterly updates as four annual returns. The traders who thrive will be those who use the regular checkpoints to stay on top of their figures all year round. Set up compatible software, build a weekly habit, and the new system can actually make your tax life calmer, not harder.

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