At MyIVA we completely understand the complexities of dealing with the ever-changing waters of tax laws for any small business owner or property owner in the UK. Making Tax Digital (MTD) for Income Tax Self Assessment (ITSA) is the biggest change to the UK tax system in a generation. The traditional annual self-assessment is now being replaced by the digital-first system with MTD Quarterly Updates. With nearly half a month to go, sole traders and landlords need to be aware of the new requirements to ensure they are compliant with HMRC’s digital regime by 7 August 2026. This blog post will help you break down all the information you need to know about your first submission and how to make a smooth transition to it.
Are You Affected by the 7 August Deadline?
MTD for Income Tax applies to self-employed people and landlords with over £50,000 of qualifying income – the first phase is targeted at those with higher earnings. If you have an accounting period that runs in the regular tax year beginning 6 April 2026, the first set of MTD Quarterly Updates will be due by 7 August 2026. This is for many people who dealt with HMRC just once a year till previous years.
It is important to note that “qualifying income” refers to the gross income (before expenses) from all your self-employed businesses and property rentals combined. If you fall into this bracket, you are legally required to keep digital records and submit MTD Quarterly Updates using functional compatible software. If your income is between £30,000 and £50,000, your start date will be April 2027, and if your income is between £20,000 and £30,000, your start date will be April 2028, but preparing for MTD Quarterly Updates now is highly recommended to avoid a last-minute scramble.
What Exactly Is Due on 7 August?
The 7 August deadline marks the submission of your first quarterly summary to HMRC. MTD Quarterly Updates will be ongoing and involve giving a digital summary of your business income and expenses every three months – instead of once at the end of the tax year, as in the old system.
Your updates need to be made through the software of your choice by the 7th of the following month (6 April to 5 July, due by 7 August). These updates are intended to provide a real-time view of your tax position. Crucially, they do not require you to make complex accounting adjustments, claim capital allowances, or provide a final tax calculation at this stage. They are simply a digital transmission of your raw income and expenditure data.
What to Include in This Quarterly Update
When you prepare your MTD Quarterly Updates, the information required is a summary of your digital records for the specific three-month period. HMRC expects to see totals for various categories of income and allowable expenses.
Key information to include:
- Business Income: All turnover from sales or professional services.
- Rental Income: Gross rent received from residential or commercial properties.
- Allowable Expenses: This covers costs such as office supplies, travel, insurance, and interest on business loans.
- Property Expenses: Maintenance, repairs, and management fees.
Your software will typically categorise these for you as you record your transactions throughout the quarter. The goal is to ensure that the data held by HMRC is consistent with your day-to-day bookkeeping.
How to Submit Your Quarterly Update
One of the most significant changes under the new regime is that you can no longer manually type your figures into the HMRC website. Instead, MTD Quarterly Updates must be submitted via “MTD-compatible software”. This software must have the capability to connect directly to HMRC’s systems via an Application Programming Interface (API). You can check whether your software meets these requirements against HMRC’s own list of recognised MTD software on GOV.UK.
There are two primary ways to handle these submissions:
- Full Accounting Software: Using platforms like Sage, Xero, or QuickBooks to manage all your invoicing and expenses. These platforms feature built-in tools to send MTD Quarterly Updates at the click of a button.
- Bridging Software: If you prefer using spreadsheets, you must use “bridging software” to create a digital link that transmits the data from your spreadsheet to HMRC without manual copying and pasting.
Ensuring your software is correctly authorised to interact with your HMRC tax account is a vital step in filing on time.
Running Out of Time? What to Do If You’re Not Ready
If the 7 August deadline is approaching and you haven’t yet digitised your records, you must act immediately. The transition to MTD Quarterly Updates is not optional for those above the threshold.
Steps to take if you are behind:
- Immediate Software Adoption: Choose a compatible software package and begin importing your bank statements from 6 April onwards.
- Digital Record Conversion: If you have been using paper records, you must digitise them for the first quarter.
- Seek Professional Help: If you are struggling with the technology, an accountant or a financial advisor like MyIVA can help bridge the gap.
Even though penalty points do not apply to late quarterly updates in this first year (see below), you still need all four updates filed before you can submit your final tax return, so falling behind now creates a bottleneck later rather than avoiding one.
What Happens If You Miss the 7 August Deadline?
HMRC has confirmed a soft landing for the 2026/27 tax year. This means no penalty points will be issued for late MTD Quarterly Updates during your first year in the regime. This easement applies only to the four quarterly updates and does not extend to your final declaration, which is still due by 31 January 2028 and can still attract a penalty point if missed.
From the 2027/28 tax year onwards, the standard points-based system applies in full. HMRC is introducing this points-based penalty system for late MTD Quarterly Updates so that occasional slip ups are treated more leniently than persistent late filing. For every deadline you miss from that point, you will typically receive one penalty point. Once you reach the points threshold, which is four points for quarterly filers, a financial penalty of £200 is issued, with a further £200 for each additional missed deadline after that.
There is a separate, and more immediate, consideration for late payment. If you pay your tax after the deadline, a late payment penalty can apply once you are more than 15 days late. For the first year of MTD for Income Tax, this grace period is extended to 30 days, giving you a little more breathing room while you get used to the new system. This late payment penalty is separate from the late submission points system described above.
While a single missed deadline for your MTD Quarterly Updates during the 2026/27 soft landing year will not cost you a penalty point, the same is not true from 2027/28 onwards. From then, points persist and consistently late filing will add up to real financial cost. Furthermore, late submissions can lead to interest charges if any eventual tax payments are delayed as a result of inaccurate record-keeping.
Correcting a Mistake After Submission
HMRC acknowledges that errors can happen, especially in the early stages of a new system. If you realise you have made a mistake in one of your MTD Quarterly Updates, the process for correction is generally straightforward. You do not need to file a formal amendment immediately in most cases.
Instead, you can usually correct the error in your next submission or adjust your digital records in your software, which will then reflect the change in the cumulative data sent to HMRC. The software is designed to ensure that by the time you reach the end of the year, the total figures across all your MTD Quarterly Updates are accurate.
What Comes After 7 August: The Rest of Your MTD Year
The 7 August deadline is just the beginning of your new reporting cycle. To stay compliant, you must submit MTD Quarterly Updates every three months.
The standard filing calendar for most will be:
- Update 1: Due 7 August (for period 6 April – 5 July)
- Update 2: Due 7 November (for period 6 July – 5 October)
- Update 3: Due 7 February (for period 6 October – 5 January)
- Update 4: Due 7 May (for period 6 January – 5 April)
Consistency is key. Managing these updates as a routine part of your business administration will prevent the January rush that has historically plagued the self-assessment system.
Quarterly Update vs Final Declaration — What’s the Difference?
It is vital to distinguish between MTD Quarterly Updates and the Final Declaration. While you file MTD Quarterly Updates four times a year to provide summary data, these are not your final tax returns.
The Final Declaration (which replaces the old Self-Assessment tax return) is submitted after the tax year ends, by 31 January. This is where you:
- Finalise your business profit or loss.
- Claim capital allowances and reliefs.
- Include other sources of income (like interest or dividends).
- Confirm that the information provided in your four MTD Quarterly Updates is correct.
How MyIVA Can Help
Managing new tax obligations like MTD Quarterly Updates can be incredibly stressful, especially if you are already navigating financial difficulties or are currently in an Individual Voluntary Arrangement (IVA). At MyIVA, we specialise in providing comprehensive support to ensure your financial obligations do not overwhelm you.
How we assist with the MTD transition:
- Budgeting for Tax Liabilities: We help you interpret the estimated tax figures generated by your MTD Quarterly Updates so you can set aside the necessary funds without impacting your IVA contributions.
- Integrated Financial Planning: We ensure that your business accounting practices align with your debt management goals.
- Stress Reduction: By helping you stay on top of deadlines like the 7 August update, we prevent the accumulation of HMRC penalties that could jeopardise your financial recovery.
- Liaison Support: If the costs of software or the administrative burden of MTD Quarterly Updates impact your ability to meet IVA terms, we can provide the professional guidance needed to communicate this to your creditors.
FAQs: Frequently Asked Questions
Can I still use my accountant to file my MTD Quarterly Updates?
Yes. You can authorise an agent (accountant) to submit MTD Quarterly Updates on your behalf, provided they use MTD-compatible software.
What if my business income fluctuates above and below £50,000?
HMRC looks at your “qualifying income” from previous tax years. Once you are in the MTD system, you generally remain in it unless your income stays below a lower threshold for a sustained period.
Do I need to keep digital copies of my receipts for MTD Quarterly Updates?
While you must keep digital records of the data from the receipts (date, amount, category), HMRC does not strictly require you to store a digital image of the receipt within the software, though it is considered best practice.
Are there any exemptions for the 7 August deadline?
Exemptions exist for those who are “digitally excluded” due to age, disability, or remote location. You must apply to HMRC for an exemption from filing Quarterly Updates.
How do I handle joint property income in my updates?
For landlords with jointly owned property, each individual must report their share of the income and expenses in their own respective Quarterly Updates.
Can I change my quarterly periods to match my business month-end?
Yes, HMRC allows you to apply for “calendar quarter-end” reporting (e.g., ending 30 June instead of 5 July) to make your MTD Quarterly Updates easier to manage alongside other business accounting.
Is there a soft landing period for penalties?
Yes. For the 2026/27 tax year, HMRC will not issue penalty points for late MTD Quarterly Updates. This does not apply to your final declaration, and all four updates still need to be filed before you can submit it. From 2027/28 onwards, the standard points-based penalty system applies, so it is still worth building the habit of filing on time from day one.
What is “Digital Linking” and why does it matter?
Digital linking means that data must move between software programs without manual intervention. For your MTD Quarterly Updates, you cannot copy a total from a spreadsheet and type it into a submission form; the data must be linked digitally.
Does MTD for Income Tax change when I actually pay my tax?
No. The payment deadlines remain 31 January and 31 July. However, your MTD Quarterly Updates will provide you with a much more accurate estimate of what those payments will be throughout the year.
Conclusion
The 7 August 2026 deadline represents a fundamental shift in how sole traders and landlords interact with the tax office. By requiring MTD Quarterly Updates, HMRC is pushing for a more transparent and efficient digital tax environment. While the initial setup of software and digital record-keeping requires an investment of time, the long-term benefits of real-time financial oversight are significant.
Staying proactive and ensuring your first set of MTD Quarterly Updates is accurate and on time will set the tone for your future compliance. If you feel that these changes are adding undue pressure to your financial situation, remember that MyIVA is here to support you. We can help you integrate these new requirements into a stable financial plan, ensuring that your journey toward debt freedom remains on track while you meet your obligations. Don’t wait until 6 August to get started—begin your digital transition today.
