The first Making Tax Digital quarterly update deadline has passed: what sole traders and landlords do next
The first deadline of the Making Tax Digital era came and went on Friday 7 August 2026. For the first time, sole traders and landlords with qualifying income above £50,000 had to send HMRC a summary of their business income and expenses partway through the tax year, rather than waiting to report everything on one annual tax return. More than 436,000 of them did it.
That number carries two messages at once. It is a real milestone, and it is also well short of the 864,000 people HMRC counts as being within scope of Making Tax Digital for Income Tax, usually shortened to MTD. If you are in the second group, nothing has gone irreparably wrong. The period in which HMRC leaves you to your own devices is closing, though, and the change that closes it happens in September rather than on any of the published deadlines.
The short version: the first quarterly update was due on 7 August 2026 and there are no penalty points for missing it during the 2026 to 2027 tax year. From September 2026 HMRC begins signing up eligible taxpayers itself. Your second quarterly update, covering 6 April to 5 October, is due on 7 November 2026, and your Self Assessment tax return for 2025 to 2026 is still due on 31 January 2027.
What actually happened on 7 August 2026
On 12 August, HMRC confirmed that more than 436,000 sole traders and landlords had successfully sent their first quarterly update for the 2026 to 2027 tax year, and that more than 570,000 customers had signed up to the service in total. Measured against the 864,000 people HMRC says are in scope, fewer than half of the affected population met the first deadline.
Craig Ogilvie, HMRC's Director of Making Tax Digital, called it "an important milestone in the move to a more modern tax system", and said that many customers had reported the process being straightforward through their chosen software.
The update itself is worth describing plainly, because much of the anxiety beforehand came from people expecting something far heavier than what arrived. A quarterly update is not a tax return. It is a summary of your business income and expenses by category, sent from MTD-compatible software, and for most people it takes minutes. HMRC receives category totals, not individual invoices, receipts or bank transactions. It triggers no tax calculation and creates nothing to pay.
That is the part worth holding on to if the first deadline went past you. The mechanics of MTD are not difficult. Getting set up is the work, and sending the update is the easy bit at the end.
The date that matters more than 7 August
Set out in the same announcement is the change that belongs on every affected taxpayer's calendar. From September 2026, HMRC will begin signing up customers who should be using Making Tax Digital for the 2026 to 2027 tax year but have not yet done so. It will happen in stages over the following months, and HMRC said it would publish guidance in late August explaining what to do if one of those letters arrives.
Being signed up is not the same as being ready. HMRC can place you in the service, but it cannot choose your software, connect that software to your records, or reconstruct months of bookkeeping you have not done. If the letter reaches you before those things are in place, the 7 November deadline arrives with it.
Ogilvie framed it as an invitation rather than a warning: "Taking action now means you stay in control, can make sure your Making Tax Digital for Income Tax details are correct from the start, and have time to choose the software that works best for you, rather than waiting for HMRC to sign you up from September."
One practical detail is easy to trip over. HMRC has scheduled maintenance from 5pm on Friday 11 September 2026 until 1pm on Tuesday 15 September 2026, and the sign-up service is unavailable throughout. If you intend to sign up in early September, do it before that window opens.
If you missed the first quarterly update
The position is gentler than the headlines suggest and stricter than a quick reading of them implies.
HMRC will not issue penalty points for late quarterly updates during the 2026 to 2027 tax year. That is a deliberate easing for the first cohort, and it means a missed update on 7 August carries no direct financial cost. What it does not mean is that the update disappears. All four quarterly updates for a tax year must be submitted before the tax return for that year can be filed, so a skipped first quarter turns into a blockage at the end of the process instead of a penalty at the start. You can still send it now, through your software, in the same few steps it would have taken in August.
| Situation | Position for the 2026 to 2027 tax year |
|---|---|
| Late quarterly update | No penalty points |
| Quarterly updates not sent at all | No penalty points, but your tax return cannot be filed until they are |
| Late Self Assessment tax return | Penalties apply as normal |
| Late payment of tax | Penalties and interest apply as normal |
| Not signed up yet | No penalty, but HMRC begins signing people up from September 2026 |
The next deadlines, and why quarter two is bigger than quarter one
The remaining deadlines for the 2026 to 2027 tax year are fixed dates set out in the regulations. They do not shift for weekends, and two of them land on one.
| Quarterly update | Period covered (standard periods) | Deadline |
|---|---|---|
| Quarter 1 | 6 April to 5 July 2026 | 7 August 2026 (now passed) |
| Quarter 2 | 6 April to 5 October 2026 | 7 November 2026 |
| Quarter 3 | 6 April 2026 to 5 January 2027 | 7 February 2027 |
| Quarter 4 | 6 April 2026 to 5 April 2027 | 7 May 2027 |
| Tax return for 2026 to 2027 | The full tax year | 31 January 2028 |
Quarterly updates are cumulative, and this is the detail people get wrong. Your second update covers 6 April to 5 October, not 6 July to 5 October. Every update restates the year to date, so quarter two repeats quarter one's figures with three further months added, and quarter four covers the whole year. Sending only the second three months understates your position and is the single most common error in a first year.
There is a real advantage buried in that design. Because each update restates the year to date, a mistake in quarter one needs no separate correction. You fix the underlying digital records and the corrected totals flow through into quarter two automatically. If your first update was rushed, the November submission is where you put it right.
If you elected to use calendar update periods instead, your quarters end on 30 June, 30 September, 31 December and 31 March. The deadlines are identical to the ones above, so only the period end dates change. That election has to be made before the first update of a tax year is sent, which means it is now fixed for 2026 to 2027.
Your 2025 to 2026 tax return has not gone away
This is where a surprising number of people in the first wave have gone wrong. Making Tax Digital did not replace the Self Assessment tax return, and it certainly did not replace the one you owe for last year. Your tax return for the 2025 to 2026 tax year is still due by 31 January 2027, filed the way you have always filed it. The quarterly updates you have been sending since April 2026 belong to a different tax year, and the first return that runs through Making Tax Digital is the one for 2026 to 2027, due on 31 January 2028.
That return decides something else as well. The threshold for Making Tax Digital falls to £30,000 from 6 April 2027, and the figure HMRC tests is your qualifying income for the 2025 to 2026 tax year. That is the figure on the return you file by 31 January 2027. If you are not in Making Tax Digital yet, the return you submit this coming January is what puts you in, or keeps you out, next April.
The same mechanism runs a year further out, so the return due in January 2028 decides the April 2028 wave in exactly the same way.
| Mandatory from | Qualifying income over | Tax year HMRC tests | The return carrying that figure |
|---|---|---|---|
| 6 April 2026 | £50,000 | 2024 to 2025 | Filed by 31 January 2026 |
| 6 April 2027 | £30,000 | 2025 to 2026 | Due 31 January 2027 |
| 6 April 2028 | £20,000 | 2026 to 2027 | Due 31 January 2028 |
Qualifying income is measured as gross income. It is your combined turnover from self-employment and property income before a single expense is deducted, which is why people are routinely pulled in at a level of profit they would not expect. Employment income taxed through PAYE, dividends and pensions are not counted towards it. Two people taking home the same amount can sit on opposite sides of the threshold purely because of how their business is structured.
Six things the first quarter taught us
- One update per business, not one per person. If you run a trade and also let out a property, those are two separate sources of income and they need two quarterly updates on the same deadline. An overseas property business adds a third. The deadline is shared, the submissions are not.
- You are sending totals, not records. The update carries your income and expense category totals, which your software produces from the digital records you have already kept. The work is in the record-keeping during the quarter, not in the submission at the end of it.
- Records have to be kept as you go. Keeping digital records is the obligation. The quarterly update is only the visible part of it, and a quarter reconstructed in the week before a deadline is where the errors come from.
- Nothing became payable in August. Quarterly updates do not accelerate tax. The payment dates are unchanged at 31 January and 31 July, and your tax bill is still settled after the end of the tax year.
- An agent needs authorising for this service specifically. If you want your accountant to handle the updates, existing Self Assessment authorisation is not automatically enough. That authorisation is worth sorting out well before November rather than during the week of the deadline.
- You do not have to abandon your spreadsheet. Digital records can stay in a spreadsheet as long as it connects to HMRC through bridging software, so that no figure has to be typed in twice anywhere along the chain. Plenty of people move to full accounting software because it is easier, but that is a choice rather than a requirement.
Penalties: what applies now, and what starts in April 2027
The easing on quarterly updates lasts exactly one year. From 6 April 2027 a points-based system applies: one penalty point for each missed quarterly deadline, and a £200 penalty once four points have built up. Points attach to the deadline rather than to each submission, so somebody running three businesses does not collect three points for one missed date.
Late payment is a separate regime and it is already running. There is no penalty if you pay within 15 days of the due date, or agree a time to pay arrangement on proposals made inside that window. After that, a charge applies at day 15 and a second at day 30, with further interest accruing daily from day 31. The percentages changed during 2025, so check the current figures on GOV.UK rather than working from an older article.
Exemptions, and who sits outside this timetable
Income above the threshold does not always mean an obligation. Exemptions exist for people who are digitally excluded, whether because of age, disability, location or religious belief, and for a number of defined groups including ministers of religion, underwriting members of Lloyd's, people without a National Insurance number, and those entitled to Married Couple's Allowance or Blind Person's Allowance. Partnerships sit outside this timetable altogether, and limited companies are not part of the income tax rollout at all.
Some exemptions expire, and that is easily missed. A group of exemptions covering trust and estate income, visiting performers, providers of qualifying care, the residence and foreign income and gains regime, and averaging claims applies to the 2026 to 2027 tax year only. Anyone relying on one of those whose qualifying income for 2025 to 2026 was above £30,000 becomes mandated on 6 April 2027 with no change at all in their own circumstances.
What to do between now and 7 November
If you filed in August, the next quarter is mostly a matter of keeping your records current so the November submission is a short job. If you did not file, the order of work is straightforward: sign yourself up rather than waiting for HMRC to do it, choose compatible software and connect it, bring your records up to date from 6 April 2026, send the outstanding first update, then send the second one covering the year to 5 October.
We cover the wider picture in two companion guides: Making Tax Digital for Income Tax: a guide for sole traders and landlords and from Self Assessment to Making Tax Digital: thresholds, costs and the essential steps to 2028. Construction subcontractors will also want the CIS guide, because gross CIS income counts towards the threshold before any deductions are taken off.
Emilia Accountancy handles Making Tax Digital for sole traders and landlords across the UK. We sign clients up, set up the software, keep the digital records, and send every quarterly update on time, on fixed and transparent fees. Get in touch with our team if you missed the first deadline or want November handled for you.
Frequently asked questions about Making Tax Digital quarterly updates
What is a quarterly update for HMRC Making Tax Digital?
It is a short summary of your business income and expenses, broken down into categories and sent to HMRC from compatible software. It is not a tax return and it does not create a tax bill. HMRC receives the category totals only, not your individual invoices, receipts or bank transactions, and for most people the submission takes a few minutes.
What happens if I miss a Making Tax Digital deadline?
For the 2026 to 2027 tax year there are no penalty points for a late quarterly update. You still have to send it, because all four updates for the year must be submitted before you can file that year's tax return. From 6 April 2027 each missed quarterly deadline earns one penalty point, and a £200 penalty is charged once you reach four points. Penalties for filing a tax return late or paying tax late apply throughout, including in 2026 to 2027.
Do I still need to file a Self Assessment tax return?
Yes. Quarterly updates do not replace the tax return, they sit alongside it. Your return for the 2025 to 2026 tax year is due by 31 January 2027 in the usual way, and the first return covering a year of Making Tax Digital is the one for 2026 to 2027, due 31 January 2028. The declaration you make in your software before submitting that return is what HMRC calls the final declaration.
Do you have to pay tax quarterly under Making Tax Digital?
No. Making Tax Digital changes how often you report, not how often you pay. Your payment dates are unchanged: the balancing payment and first payment on account on 31 January, and the second payment on account on 31 July. A quarterly update produces no tax to pay, although many software packages will show you a running estimate of your tax bill, which is useful for setting money aside.
Does the second quarterly update cover only July to October?
No, and this is the most common misunderstanding. Quarterly updates are cumulative. The second update covers 6 April to 5 October, restating the first quarter's figures with the next three months added. The third covers 6 April to 5 January and the fourth covers the whole tax year. If you elected to use calendar update periods, the same applies with periods ending 30 June, 30 September, 31 December and 31 March.
When is the next Making Tax Digital quarterly update deadline?
7 November 2026, for the period from 6 April to 5 October 2026. After that the deadlines are 7 February 2027 and 7 May 2027, then the tax return for 2026 to 2027 on 31 January 2028. These dates are set in the regulations and they do not move when they fall on a weekend, so 7 November 2026 remains the deadline despite being a Saturday.
What happens if HMRC signs me up in September?
From September 2026 HMRC will start signing up people who should be using Making Tax Digital for 2026 to 2027 but have not registered, in stages over the following months, and it will write to you if that happens. Being signed up puts you in the service, but it does not give you software or bring your records up to date. Signing yourself up first is the better route, because you control the timing, check that your details are right from the start, and choose your own software.
Am I in scope of Making Tax Digital for Income Tax?
For the 2026 to 2027 tax year you are in scope if your qualifying income for 2024 to 2025 was over £50,000. Qualifying income is your combined gross turnover from self-employment and property income before expenses, so it is not the same as your profit. The threshold falls to £30,000 from April 2027, tested on your 2025 to 2026 income, and to £20,000 from April 2028, tested on 2026 to 2027. Your MTD start date is always 6 April, so nobody is brought in partway through a tax year.
Can I sign up for Making Tax Digital early?
Yes. Signing up voluntarily is allowed and encouraged, provided you are registered for Self Assessment and have filed a return in the last two years. Joining before you are required to gives you a year to get used to the software and the rhythm of quarterly reporting without the penalty regime that applies to mandated taxpayers. If you know the £30,000 threshold will catch you in April 2027, there is a good case for starting sooner.
Are there exemptions from Making Tax Digital for Income Tax?
Yes. You can apply for an exemption if you are digitally excluded, which covers age, disability, location and religious belief among other reasons, and HMRC aims to respond within 28 days. Some groups are exempt automatically, including people without a National Insurance number and ministers of religion. A separate set of exemptions, covering things like trust income and qualifying care, applies only to the 2026 to 2027 tax year and then lapses, so it is worth checking which category applies to you rather than assuming an exemption is permanent.
The first quarter of Making Tax Digital is done, and for most of the people who filed it turned out to be smaller than the build-up suggested. The next one is due on 7 November 2026, and the return that decides who joins them in April 2027 is due in January. If either of those is on your mind, contact Emilia Accountancy and we will take it from here.