If you're a sole trader or landlord earning over £50,000, you've probably heard a lot of noise about Making Tax Digital over the past year. You might have waved it off with a nonchalant ‘eh we have time’, but now it's almost August, which means your first deadline is literally here. Here’s everything you need to know.
Making Tax Digital for Income Tax (MTD for ITSA) replaces the old annual tax return system. Instead of filing once a year in January, you're now sending HMRC four quarterly updates throughout the year, plus a final declaration in January 2028.
What this looks like for the full 26/27 tax year:
Q1 (1 Apr 26 - 30 Jun 26) - due to be filed by 7 Aug 26
Q2 (1 Jul 26 - 30 Sep 26) - due to be filed by 7 Nov 26
Q3 (1 Oct 26 - 31 Dec 26) - due to be filed by 7 Feb 27
Q4 (1 Jan 27 - 31 Mar 27) - due to be filed by 7 May 27
Final declaration - due to be filed by 31 Jan 28
That's it. You're not paying tax on August 7th; you're not submitting receipts. You're just sending HMRC a summary of what you earned and what you spent during each three-month period.
You can no longer manually type your summary into HMRC's website (that’s the big change). You now require certified accounting software - such as Xero, QuickBooks, FreeAgent, or Sage - that connects directly to HMRC.
If spreadsheets are your current system, you've got a problem. HMRC won't accept them. You need certified software or bridging software that can translate your data and send it securely to HMRC.
This is where professional support becomes critical. Migrating your historical data from spreadsheets or older systems into compliant software can be a significant undertaking. The process demands careful attention to detail, and transferring this data securely can take considerable time depending on the current state of your records.
While HMRC is providing a "soft landing" for the first four quarterly updates so you will not face immediate points-based fines if you are late, your final declaration in January 2028 will be strictly penalised if delayed. Because this final declaration is where HMRC calculates your actual tax bill, it is the submission they care about most.
Don’t wait until the week of the deadline when professionals are inundated with panicked emails. Partnering with a qualified accountant ensures your data is accurately migrated and your software is set up correctly from day one, allowing you to remain consistently compliant.
Partner with our experts to securely migrate your data to HMRC-certified software and guarantee your compliance. Get in touch with our team today.
The first quarterly update for MTD for ITSA is due by August 7th, and covers your earnings and spending for the period from April 1st to June 30th.
You must use HMRC-certified accounting software to submit your quarterly updates, such as Xero, QuickBooks, FreeAgent, and Sage. You can also continue to use spreadsheets, however submissions must be made via MTD compliant bridging software.
HMRC is offering a "soft landing" for the first four updates. This means you will not face an immediate fine under their points-based penalty system if your quarterly update is late. However, the final declaration in January 2028 is strictly penalised if late, as this is when your actual tax bill is calculated.
Transitioning typically requires translating and migrating historical data from spreadsheets into certified software. An accountant ensures this complex data migration is handled accurately so your records meet HMRC's strict compliance standards.