MTD quarterly updates have become one of the most discussed parts of Making Tax Digital for Income Tax. As the system moves towards full implementation, many taxpayers and businesses continue to question whether the deadlines are practical.
Under current rules, quarterly updates must be submitted just over one month after the end of each quarter. For example, the update covering 6 April to 5 July is due by 7 August. Some groups have suggested extending this deadline to three months, but HMRC has confirmed it will not make this change.
Quarterly Updates Are Not Tax Returns
One of the biggest misconceptions is that quarterly updates are mini tax returns. In reality, they are simple digital summaries of income and expenses submitted through compatible software.
Taxpayers do not need to finalise accounts, complete year-end adjustments or ensure every figure is perfect each quarter. Instead, the system aims to reduce the last-minute rush of gathering records at the end of the tax year.
When taxpayers complete the annual tax return, information from quarterly updates will already sit alongside PAYE and Construction Industry Scheme data held by HMRC. This should make the final return easier to prepare.
Quarterly updates are also cumulative. Each submission includes information from the start of the tax year to date, allowing taxpayers to correct missed transactions or errors in the next update.
Why Timing Matters
A major aim of Making Tax Digital is improving record keeping.
HMRC believes poor or incomplete records cause many self-assessment errors, especially when taxpayers recreate records months after transactions took place. Quarterly updates encourage businesses and landlords to maintain records closer to real time as part of their normal routine.
The system does not expect perfection every quarter. HMRC accepts that some updates will be more complete than others. The wider goal is to improve accuracy and record keeping standards over time.
Alignment With VAT
Many businesses already submit quarterly VAT returns, so HMRC has aligned MTD deadlines with existing VAT processes where possible.
Following feedback from agents and businesses, HMRC moved the deadline from the 5th to the 7th of the following month. The extra two days help businesses manage VAT and MTD obligations together more efficiently.
Penalties and the Soft-Landing Period
Concerns about deadlines often relate to penalties. To help businesses adjust, HMRC introduced a soft-landing period for the first year of MTD for Income Tax in 2026/27.
During this first year, taxpayers will not receive penalty points for late or missed quarterly updates. From the second year onwards, the points-based system will apply, although financial penalties only arise once four points have accumulated.
HMRC believes this approach gives taxpayers time to adapt while still encouraging long-term compliance.
The Wider Purpose of MTD
Making Tax Digital does not increase record keeping requirements. Instead, it changes how and when taxpayers maintain records.
Quarterly updates aim to improve accuracy, reduce errors and encourage better bookkeeping habits throughout the year. Many MTD-compatible software packages can also automate invoices, provide real-time cash flow information and estimate tax liabilities, helping businesses make better financial decisions.
Viewed in this context, the one-month submission window supports more accurate and timely record keeping rather than creating additional pressure.
If you would like support preparing for MTD quarterly updates or understanding your reporting obligations, get in touch with our team today.