Jun 8
The first Making Tax Digital for Income Tax quarterly deadline is 7 August 2026. It covers the first update period of the 2026/27 tax year and applies to sole traders and landlords whose qualifying income was over £50,000 in 2024/25.
If you are in that group and you have not yet signed up for MTD, chosen compatible software and started keeping digital records, you need to act now. HMRC has confirmed that it will not apply penalty points for late quarterly updates in 2026/27, but the filing obligation still exists. The soft landing does not cover late tax returns, late payment of tax or poor records.
This article explains who is in scope, what the first update involves, what mistakes to avoid and what landlords and sole traders with cross-border income need to handle carefully.
For Phase One, HMRC looks at qualifying income reported on your 2024/25 Self Assessment tax return. Qualifying income is your gross income from self-employment and property before expenses. For UK tax residents, this can include UK and foreign property income. It does not include employment income, dividends, interest, pensions or capital gains.
Common examples include:
If HMRC has reviewed your 2024/25 return and found qualifying income above £50,000, it should write to you. Even if you have not received a letter, you are still responsible for checking whether you need to use MTD.
Our guides on Making Tax Digital and what UK and Irish businesses need to know and Making Tax Digital explained cover the wider framework.
The first quarterly update is due by 7 August 2026. For standard update periods, it covers 6 April to 5 July 2026. For calendar update periods, it covers 1 April to 30 June 2026. The deadline is still 7 August.
The update is not a full tax return. It is not a tax payment. It is a digital summary of income and expenses submitted through MTD-compatible software.
Your software will add together the digital records for each self-employment or property business and submit totals by category. HMRC will not receive every receipt or invoice. You also do not need to make final accounting or tax adjustments before sending a quarterly update.
Each update is cumulative from the start of the tax year to the end of the update period. This means Q2 replaces and updates the position to 5 October or 30 September, depending on the update period chosen. If you spot an error in Q1, you can correct your records and the next update will reflect the corrected year-to-date totals.
For example, a landlord might submit rent received, mortgage interest, letting agent fees, insurance and repairs for the relevant period. The difficult part is not the submission itself. It is having clean digital records ready. Our piece on how management accounts help SME owners explains the discipline behind good reporting.
If you are not ready, work through these steps now:
Spreadsheets can still be used, but not on their own. They must be digitally linked to compatible software. Manual copying or retyping figures between systems breaks the digital link requirement.
Our guide on switching to cloud accounting for SMEs explains what to consider when choosing a platform, and our digital bookkeeping team can help if you need to get set up quickly.
For Phase One taxpayers using standard update periods, the deadlines are:
| Update | Period covered | Submission deadline |
|---|---|---|
| Q1 | 6 April to 5 July 2026 | 7 August 2026 |
| Q2 | 6 April to 5 October 2026 | 7 November 2026 |
| Q3 | 6 April 2026 to 5 January 2027 | 7 February 2027 |
| Q4 | 6 April 2026 to 5 April 2027 | 7 May 2027 |
| MTD tax return | Whole 2026/27 year | 31 January 2028 |
Calendar update periods run from 1 April to 30 June, 1 April to 30 September, 1 April to 31 December and 1 April to 31 March. The deadlines remain 7 August, 7 November, 7 February and 7 May.
You must select calendar update periods in your software for each income source before sending your first quarterly update. Once an update has been sent, you cannot change the update period for that tax year.
HMRC will not apply penalty points for late quarterly updates during 2026/27. This gives taxpayers and agents time to adjust.
The soft landing covers late quarterly updates only. It does not cover:
You will still need to send your quarterly updates before you can submit your MTD tax return. After 2026/27, missing quarterly update deadlines can lead to penalty points. Once the points threshold is reached, a £200 penalty can apply.
The soft landing is breathing space, not permission to wait until 2027. Our piece on the key financial KPIs every SME owner should be monitoring monthly explains the regular financial habits that make MTD easier.
The most common MTD mistakes include:
Digital exclusion exemptions are available only where a taxpayer cannot reasonably use digital tools, for example because of disability, age, remoteness of location or another genuine barrier. Preference for paper records is not enough.
Our article on how tax accountants help small businesses explains why early professional support can prevent these problems. Our self-assessment tax returns guide is useful for the 2025/26 return that still needs to be filed by 31 January 2027.
Landlords need to track income and expenses digitally and submit property updates under MTD.
Furnished holiday lets are now treated as ordinary property businesses for UK tax purposes following the abolition of the FHL regime from April 2025, so they sit within the normal property reporting framework.
For jointly let property, HMRC allows quarterly updates to include either income and expenses or income only. If you choose not to include expenses during the year, you must report them after the tax year by resending the fourth quarterly update before submitting your MTD tax return.
If you own some properties personally and others through a company, only the personally owned property income is within MTD for Income Tax. Limited company property income remains within Corporation Tax.
Trustee returns are currently outside MTD for Income Tax, although income received directly by certain beneficiaries may still need checking.
For landlords with overseas property, the UK position depends partly on tax residence. For UK tax residents, foreign property income reported through Self Assessment can count towards qualifying income and may need to be reported through MTD.
For NI landlords with property in the Republic of Ireland, read our guides on managing overseas property, UK tax rules for individuals with income in multiple countries and how to report foreign dividends and interest in the UK. Irish rental income may also need reporting to Revenue in Ireland, and our Cross-border tax specialists team can help with the interaction. Our guide on VAT compliance for businesses operating across the UK to Ireland border covers the indirect tax side.
For sole traders, the disruption depends on how organised your bookkeeping already is.
The cash basis is now the default for most sole traders, so income is generally recorded when received and expenses when paid, unless the accruals basis is used.
If you have more than one separate trade, each trade needs its own records and figures. Employment income is not included in quarterly updates and is dealt with in the MTD tax return. CIS deductions for subcontractors are credits against the final liability and are dealt with at the year-end stage rather than as ordinary business expenses.
Our guides on HMRC PAYE issues and salary sacrifice pension changes cover employment-related issues that can sit alongside a sole trader’s tax position.
MTD for Income Tax applies in Northern Ireland on the same basis as in Great Britain. The thresholds, deadlines, software rules and penalty approach are all HMRC-wide.
For NI employers also dealing with employment law and payroll changes, our article on the Employment Rights Act and what NI and GB employers need to do covers the payroll layer. For broader governance, read why internal audit supports business growth and how management accounts help SME owners.
After Q1, the rhythm continues. Q2 is due by 7 November 2026, Q3 by 7 February 2027 and Q4 by 7 May 2027. The MTD tax return for 2026/27 is due by 31 January 2028.
Phase Two starts from 6 April 2027 for sole traders and landlords with qualifying income over £30,000 in 2025/26. Phase Three starts from 6 April 2028 for those over £20,000 in 2026/27.
For related tax planning, read our pieces on dividend tax and the April 2026 rises, Making Tax Digital for cross-border businesses and common tax mistakes expats and cross-border businesses make. For reliefs, see R&D tax credits in the UK and Ireland, land remediation relief explained and the business owner’s guide to capital allowances.
For many taxpayers, MTD is simply a process change. For others, quarterly digital reporting may reveal missing records, undeclared income, inconsistent treatment or old bookkeeping gaps.
If that happens, address the issue early. Voluntary disclosure is usually better than waiting for HMRC to identify an inconsistency.
Where records need reconstruction or detailed review, our forensic accountants Northern Ireland team can help. Our guides on what a forensic accountant does and when you need one and red flags of financial fraud in SMEs explain when this level of support is needed.
Where a business or landlord is under financial pressure, our company recovery accountants team can help alongside MTD compliance. Read more in how recovery accountants help improve cash flow, what an insolvency accountant does in business distress cases and what happens to creditors during company insolvency.
For longer-term planning, see the future of financial planning, protecting the family business with a family charter and how to prepare your business for sale. Our tax compliance, specialist tax and SME business solutions teams can help keep the wider position joined up.
The first quarterly update deadline is 7 August 2026. It applies to Phase One taxpayers using MTD for Income Tax from 6 April 2026.
You need to submit cumulative income and expense category totals for each self-employment or property business through MTD-compatible software.
HMRC will not apply penalty points for late quarterly updates in 2026/27, but the obligation still applies. You will need to send the updates before submitting your MTD tax return.
Yes, but only with a digital link to compatible submission software. Manual copying or retyping does not meet the digital link requirement.
Yes. MTD for Income Tax is not devolved. It applies to Northern Ireland taxpayers on the same basis as the rest of the UK.
For UK tax residents, gross rents from Irish property can count towards UK MTD qualifying income. Irish tax filing may also be required separately through Revenue in Ireland. The two regimes need to be managed together.
If you are in Phase One and have not yet prepared your Q1 update, you have until 7 August 2026. If you are in Phase Two, April 2027 is close enough that preparation should start now.
As northern ireland accountants and advisers that sole traders and landlords across the UK and Ireland rely on, SCC Chartered Accountants can help you get MTD-ready quickly. Our digital bookkeeping team handles software and records, our tax compliance team covers quarterly updates and the MTD tax return, and our specialist tax team makes sure reliefs are properly reflected at year end.
Get in touch with the SCC team for an MTD setup review before the 7 August deadline.
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