MTD Quarterly Update Example for UK Businesses

A quarterly update is not a second tax return and it is not a demand for tax every three months. This MTD quarterly update example shows what HMRC needs to see, what your software sends, and why keeping records up to date makes the process far less stressful.

What an MTD quarterly update is actually for

Making Tax Digital for Income Tax requires affected sole traders and landlords to keep digital records and send HMRC regular summaries of their income and expenses through compatible software. The update gives HMRC a running picture of the business or property income received during the tax year.

It does not normally mean you must finalise every figure by the quarterly deadline. A missed receipt, a bank charge that appears later, or an expense that needs checking can usually be corrected in a later update or when you finalise the year. The key point is to submit a fair and accurate summary from the records available at the time.

For the first phase, MTD for Income Tax applies from April 2026 to people with qualifying income above £50,000 in the 2024-25 tax year. This threshold is based on gross income from self-employment and property, before expenses, not on profit. It is due to extend to qualifying income above £30,000 from April 2027 and above £20,000 from April 2028.

If you have a trade and rental income, HMRC considers the relevant income together when deciding whether you need to join. A taxi driver with a rental flat, for example, should not look at each income source in isolation.

MTD quarterly update example: a self-employed driver

Imagine Sam is a self-employed private-hire driver. In the first MTD quarter, from 6 April to 5 July, his digital records show £12,400 of fares and incentives paid into his business account. His records also show £2,990 of allowable running costs for the period.

Those costs include app commission and booking fees of £1,150, vehicle costs of £950, phone and data costs of £180, and other business expenses of £710. The exact categories shown in software can vary, but the principle is the same: income and expenses are recorded digitally as they happen, then the software totals them for the quarterly update.

Sam’s first update could look like this:

| Period | Business income | Business expenses | Running profit shown in records | | — | —: | —: | —: | | 6 April to 5 July | £12,400 | £2,990 | £9,410 |

The figure of £9,410 is useful for budgeting, but it is not Sam’s final taxable profit or his final tax bill. His position could still change. He may have private-use adjustments for the vehicle, capital allowances, pension contributions, CIS deductions, payments on account, or other personal tax information to include later.

Sam submits the update through compatible software by 7 August. HMRC receives a summary for the quarter, while Sam keeps the detailed evidence behind it: invoices or fare statements, receipts, mileage records where relevant, and bank transactions. He does not need to post every receipt to HMRC individually.

The same approach works for a landlord. A landlord would record rental income received and allowable property expenses, such as letting-agent fees, repairs, insurance and service charges. However, improvements are not always treated in the same way as repairs, so it is worth checking larger property costs before categorising them. Getting that distinction right early can prevent a difficult year-end correction.

The standard MTD quarterly deadlines

Most businesses will use the standard quarterly periods below. The update is due by the seventh day of the following month.

| Quarterly period | Deadline to submit the update | | — | — | | 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 |

These dates are submission deadlines, not dates when income tax is automatically due. Your final tax position is dealt with after the end of the tax year through the final declaration, with any tax due normally payable by 31 January following the end of that tax year.

That difference matters. Quarterly updates are about keeping HMRC informed and keeping your records current. The final declaration is where the complete picture is confirmed.

What to do after each quarter

The easiest way to manage MTD is not to leave it until the deadline week. Set aside a short monthly routine to match bank transactions, upload or photograph receipts, check sales income and query anything unusual. By the end of the quarter, the update should be a review rather than a rescue job.

Before submitting, check that business and personal spending have not been mixed up. This is particularly common for sole traders using one bank account for everything. It can still be managed, but clear notes and regular checks become essential. A separate account used only for business income and costs makes the process simpler.

If you are a landlord, check that rent has been recorded when received and that major works have not been entered automatically as repairs. If you are a CIS worker, make sure income and deductions are supported by your payment statements. If you are a contractor or consultant, make sure invoices that remain unpaid are treated consistently with the accounting method you use.

Small errors are far easier to resolve when you spot them in the same quarter. Waiting until January can mean searching through months of statements, messages and faded receipts at the busiest time of year.

Common mistakes this example helps avoid

The first mistake is treating the quarterly update as an estimated tax calculation. It is a record of business figures, not a final personal tax calculation. You should still put money aside for tax, but do not assume the running profit in your software is the amount you will pay to HMRC.

The second is submitting figures from memory. Whether you are driving, working on construction sites, managing rental property or running a small service business, digital records need to be supported by real transactions and evidence. A tidy spreadsheet alone may not be enough for MTD unless it is connected to compatible software in the required way.

The third is forgetting that separate income sources may need separate records. A sole trade and a property business are different activities, even when both belong to the same person. Keeping them separate gives you clearer figures and reduces the risk of claiming an expense against the wrong source of income.

Finally, do not ignore a quarter because income was lower than expected. A quieter period may still need an update. Filing on time keeps you compliant and gives you a more reliable view of the year ahead.

Make the quarterly routine simple

A good MTD process should give you control, not create extra admin. The right setup depends on how you work. A landlord with a handful of properties needs a different record-keeping routine from an Uber driver with daily fares or a tradesperson buying materials across several jobs.

If you are unsure whether MTD applies to you, or you want help turning bank transactions and receipts into clean quarterly figures, our team can explain the next steps in plain English. We support sole traders and landlords across Wallington, Sutton, Croydon, Carshalton, Mitcham and Cheam with practical systems, timely reminders and real human support.

Start before the first deadline arrives. A calm, regular routine now gives you cleaner records, fewer surprises and more time to focus on earning rather than chasing paperwork.