An MTD ITSA quarterly update is a digital summary of your self-employment or property income and expenses for a three-month period, submitted to HMRC through compatible software via HMRC's API. Sole traders and landlords with qualifying income above £50,000 must submit four updates per tax year, with the first 2026/27 deadline falling on 7 August 2026.
What a quarterly update actually contains
The submission is simpler than the marketing made it sound. You're not filing a tax return four times a year — you're sending HMRC a summary of totals by category for the period. The categories are the same ones that have always sat on SA103 (self-employment) and SA105 (property), just totalled per quarter rather than per year. Your software does the totalling automatically from the transactions you've categorised; the submission itself is a single API call.
For a sole trader, a typical Q1 submission might look like:
| Category | Q1 total |
|---|---|
| Turnover | £18,400 |
| Cost of goods sold | £3,200 |
| Motor expenses | £820 |
| Premises costs | £1,200 |
| Admin (phone, software, stationery) | £340 |
| Travel & subsistence | £180 |
| Advertising | £250 |
| Other allowable | £90 |
That's it. HMRC doesn't want supporting receipts at quarterly stage. They don't want narrative explanations. They don't want to know your projected year-end profit. Just the numbers, by category, for the period.
The submission flow, step by step
- Log into your MTD-compatible software. FreeAgent, Xero, QuickBooks, Sage, FreshBooks, or whichever you're using.
- Reconcile your bank feed up to the quarter-end date. Make sure every transaction since the start of the period is categorised correctly. The software's bank balance should match your real bank balance.
- Open the MTD or Tax section of your software. Each platform names this differently — "MTD for Income Tax", "HMRC Submissions", or similar. There's usually a clear call-to-action when a quarterly deadline is approaching.
- Preview the quarterly update. The software shows the totals by category that will be sent. Sanity-check each line. Anything that looks wildly wrong probably is.
- Confirm and submit. The software calls HMRC's API. The handshake takes a few seconds. You get a submission reference back.
- Save the submission reference. Most platforms log this automatically, but it doesn't hurt to copy it into your records. If HMRC ever queries the submission, the reference is the fastest way to find it.
- Check your HMRC account 24-48 hours later. Log into your Government Gateway, navigate to MTD for Income Tax, and confirm the submission shows as received. Reassuring on the first one; routine after that.
Submission deadlines: tax-year quarters vs calendar quarters
Tax-year quarters are the default. The submission deadline is the seventh of the second month following the quarter-end. So Q1 ends 5 July 2026 and the submission is due 7 August 2026.
| Quarter | Period (tax-year) | Deadline |
|---|---|---|
| Q1 | 6 April – 5 July | 7 August |
| Q2 | 6 July – 5 October | 7 November |
| Q3 | 6 October – 5 January | 7 February |
| Q4 | 6 January – 5 April | 7 May |
Calendar quarters are an option HMRC introduced for businesses that already do their books on calendar months. The deadline structure is the same — seventh of the second month following — but the periods are 1 January to 31 March, 1 April to 30 June, and so on. You elect calendar quarters at sign-up; switching mid-year isn't allowed. Most accountants nudge clients toward tax-year quarters because it aligns with the annual Final Declaration cycle.
Cumulative figures: the maths that confuses people
Quarterly updates under MTD ITSA are cumulative, not period-isolated. That means Q2 includes Q1+Q2 totals, Q3 includes Q1+Q2+Q3, and Q4 covers the entire year so far. This avoids the situation where a Q1 mistake cascades through subsequent quarters — you simply restate the cumulative totals each time and HMRC takes the latest as the truth.
So if Q1 turnover was £18,400 and you turned over a further £22,100 in Q2, your Q2 submission shows turnover of £40,500. Your Q3 submission shows the running total. Software handles this automatically; you don't need to do the maths yourself. But it's worth understanding the underlying logic, because it's the reason switching software providers mid-year is painful: the new platform doesn't know what your previous cumulative totals were unless you carefully migrate the data.
Fixing errors after submission
You can amend a previous quarter's update at any time before the Final Declaration is filed. The mechanism: in the next quarter's submission, the cumulative totals automatically reflect the corrected figures. So if you discover in October that you missed £400 of expenses in Q1, you don't go back and amend Q1 — you simply ensure the Q1 expenses are correctly recorded in your software, and Q2's cumulative totals will pick up the corrected figure.
For substantial errors discovered close to the Final Declaration, you can submit a specific amendment to a previous quarter through the software. The HMRC API supports this and most major platforms expose it as a "Amend previous submission" button.
What if your software fails to connect to HMRC?
It happens, particularly the first time. The most common causes:
- OAuth token expired. Reconnect through the software's HMRC integration settings. Takes about three minutes.
- You haven't actually registered for MTD ITSA. The API will reject submissions from accounts not enrolled. Sign up at gov.uk/guidance/sign-up-your-business-for-making-tax-digital-for-income-tax.
- HMRC service outage. Check the HMRC service availability page. Outages are rare but happen, particularly around peak deadline windows. If HMRC's service is down on the deadline day itself, the deadline is automatically extended — but document the outage with screenshots.
- Wrong UTR or NINO. Software will surface an HMRC error code. Check the credentials in your software match your actual HMRC account.
If a submission genuinely fails on deadline day and HMRC services are up, the soft-landing period for 2026/27 protects you from penalty points. From April 2027 you'd want a documented audit trail of the failure (screenshots, error logs, time-stamped emails to your software vendor) before relying on "reasonable excuse" for a late submission.
Penalty points: how the system works
HMRC's points-based regime gives you one penalty point per missed quarterly deadline. Hit four points and a £200 penalty is charged. Each subsequent missed deadline triggers a further £200. Points expire after 24 months of clean compliance — meaning if you miss one quarter, then submit the next four on time, your point lapses and you're back to a clean slate.
The 2026/27 soft landing means no penalty points for late quarterly updates during the first year. From 6 April 2027 the points start counting. Late tax payments are not covered by the soft landing — interest accrues from the statutory due date (31 January) regardless.
What's not on the quarterly update
Lots of things, actually. Useful to know what you're not reporting at quarterly stage:
- Capital allowances — calculated only at year-end on the Final Declaration.
- Loss relief claims — annual decision, not quarterly.
- Tax adjustments (e.g. depreciation add-back if you're on accruals) — Final Declaration only.
- Income from other sources (employment, dividends, savings interest) — Final Declaration.
- Personal allowance, marriage allowance, gift aid claims — Final Declaration.
The quarterly update is genuinely just operational income and expenses. Everything that requires a strategic tax decision waits for the Final Declaration on 31 January.
The Final Declaration: where it all comes together
By the time you reach the Final Declaration deadline (31 January 2028 for 2026/27), HMRC already has four quarterly updates' worth of data. The Final Declaration adds the missing pieces: other income sources, allowances, capital matters, and any year-end adjustments. Your software pulls the four quarterly updates and prompts you for the remaining inputs. Most sole traders find the Final Declaration takes about 30 minutes once the quarterly cadence is established — far less than the historic January scramble.
Common questions in the first three weeks
The accountant forums are buzzing with the same handful of practical questions:
- "Can I submit Q1 early?" Not before 6 July 2026, the quarter-end. The API rejects submissions for periods that haven't ended.
- "What if I have no income one quarter?" You still submit. A nil return is a valid quarterly update. Don't skip it — that's a missed deadline.
- "Do I need to attach receipts?" No. HMRC has not asked for supporting documentation at quarterly stage. They expect you to keep digital records you could produce on enquiry.
- "Can I do it on a phone?" All the major MTD platforms have mobile apps. The submission flow on mobile is identical to desktop. FreeAgent and QuickBooks mobile apps are particularly polished.
The realistic time investment
For a sole trader with a single bank account, modest transaction volume (say 30-60 transactions a month), and a clean baseline, each quarterly submission consumes about 90 minutes of work — most of which is reviewing categorisation rather than the submission itself. Add a property portfolio and you're at 2-3 hours per quarter. The first quarter is always slower because you're learning the software; by Q3 most people are running through the whole flow in under an hour.
For the wider context — including who's affected, software options, and the specifics for sole traders or landlords — see the complete MTD ITSA guide or the role-specific walkthroughs for sole traders and landlords. If you haven't picked software yet, the comparison article covers the realistic options.