The Making Tax Digital (MTD) policy was first announced by HM Revenue & Customs (HMRC) in 2015 and has since put the tax system in the UK in a technological revolution of the greatest magnitude in decades. The initial vision of a truly digital tax authority has become a reality for more than 864,000 UK sole traders and property landlords who are now compelled to comply with the law.
As the first deadline for MTD quarterly update for Income Tax approaches on 7 August 2026, businesses and individuals in the UK will face a range of challenges and complexities related to digital record keeping, API software integration, and ongoing quarterly reporting.
If you’re self-employed, a landlord of residential properties, or an agent who manages your client’s tax accounts, this guide outlines what’s changed, important deadlines, software needs and how the team at Morgan Reach can help you stay fully compliant without the stress of administration.
What is Making Tax Digital (MTD)?
Making Tax Digital is HMRC’s long-term framework designed to eliminate manual calculation errors, reduce the UK’s annual tax gap, and replace traditional once-a-year tax returns with real-time digital reporting.
Instead of gathering physical receipts once every 12 months for a single Self Assessment filing, taxpayers within the scope of MTD must:
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Keep digital records of all business income and allowable expenses using HMRC-recognised software or spreadsheets connected via bridging software.
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Submit 4 quarterly digital updates directly to HMRC through their software.
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Submit a Final Declaration by 31 January following the end of the tax year to claim allowances, make accounting adjustments, and finalize total tax liabilities.
Who Needs to Comply? MTD Timeline & Income Thresholds
Unlike earlier proposals, MTD implementation for Income Tax Self Assessment (ITSA) is being rolled out in phased bands based on gross qualifying income (total sales revenue or rental income before expenses or tax allowances):
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Phase
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Mandatory Start Date
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Who is Affected?
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First Quarterly Deadline
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MTD for VAT
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April 2022
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All VAT-registered businesses (regardless of turnover)
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Standard VAT return cycles
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MTD for ITSA (Phase 1)
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6 April 2026
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Sole traders & landlords with gross
income over £50,000 |
7 August 2026
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MTD for ITSA (Phase 2)
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6 April 2027
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Sole traders & landlords with gross
income over £30,000 |
7 August 2027
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MTD for ITSA (Phase 3)
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6 April 2028
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Planned expansion for gross
income over £20,000 |
7 August 2028
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Need a detailed breakdown of your setup? Read our comprehensive companion guide on Making Tax Digital: What Has Changed, Who It Affects & What Needs Doing in Plain Terms to determine your exact start date and exemption criteria.
2026/27 MTD Submission Schedule & Key Deadlines
For sole traders and landlords earning over £50,000, the 2026/27 tax year is the first official MTD cycle. The submission calendar is structured into four standardized quarterly periods, followed by the annual final declaration:
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Quarter 1 (6 April – 5 July 2026): Update due 7 August 2026
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Quarter 2 (6 July – 5 October 2026): Update due 7 November 2026
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Quarter 3 (6 October 2026 – 5 January 2027): Update due 7 February 2027
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Quarter 4 (6 January – 5 April 2027): Update due 7 May 2027
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Final Declaration & Tax Payment: Due 31 January 2028
According to official press releases from HM Revenue & Customs (HMRC), quarterly updates are short digital summaries that take minutes to send through approved software and do not replace the traditional 31 January balancing tax payment.
What Happens During a Quarterly Update?
A common misconception is that a quarterly update is four “mini tax returns” a year. It is not.
Here is what actually happens:
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Digital Summaries Only: Your software calculates cumulative totals for income and expense categories (e.g., office costs, travel, premises expenses). You do not send individual receipts or invoices to HMRC.
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Nil Submissions Required: Even if you had zero transactions in a quarter, an empty digital update must still be sent to notify HMRC.
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Real-time Tax Estimates: After each quarterly update, compatible software provides an estimated tax calculation, allowing self-employed individuals to budget ahead for their January bill.
Agent Services Accounts (ASA) & Digital Readiness for Tax Practitioners
For accountants, bookkeepers, and tax advisers, MTD introduces technical administrative steps to ensure authorization and client data flow seamlessly.
To manage clients under MTD for ITSA, agents must establish digital readiness:
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Set Up an Agent Services Account (ASA): Separate from traditional HMRC Online Services accounts, the ASA is required to link agent software to HMRC’s MTD API system.
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Digital Authorisation Links: Clients must give digital consent or be linked through the ASA before an agent can submit quarterly updates or view pre-populated tax data on their behalf.
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Software Interoperability: Agents and clients do not need to use the exact same software. Client record data can be exported via digital links or spreadsheet bridging software into the agent’s central platform.
How Morgan Reach Simplifies MTD Compliance
Adapting to five digital filings per year can feel overwhelming if you are accustomed to annual paperwork. At Morgan Reach, we offer a structured range of digital accounting services tailored to your needs:
1. Cloud Software Implementation & Training
We migrate your manual records onto top-tier HMRC-recognised software, including Xero, QuickBooks, and Free Agent, or configure secure bridging software for existing spreadsheet systems.
2. Quarterly Review & Filing
Our team conducts pre-submission checks to identify errors or mis categorisations before sending your quarterly updates directly to HMRC.
3. End-of-Year Adjustments & Tax Optimization
We claim all eligible allowable expenses, relief allowances, and capital allowances during the year-end process before submitting your Final Declaration.
4. Dedicated Agent Services
We link your profile to our HMRC Agent Services Account, taking full ownership of compliance deadlines so you can focus on running your business.
Meet the Experts Guiding You Through MTD
Navigating changing UK tax legislation requires reliable, expert advice. Our chartered accountants and digital tax advisers manage MTD onboarding every day for sole traders, property landlords, and corporate entities.
Visit our Meet Our Team page to discover the dedicated specialists who will help you transition seamlessly into MTD compliance.
Stay Ahead of HMRC Deadlines Today
Whether you need assistance choosing MTD-compatible software, reviewing your gross income thresholds, or outsourcing your quarterly update submissions, Morgan Reach is here to help.
Don’t wait for HMRC compliance notices or penalty points to accumulate. Contact the Morgan Reach Team today to book your MTD consultation with a qualified tax specialist.
Quick Reference
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What is the first MTD for ITSA deadline? August 7, 2026 (covering the period 6 April to 5 July 2026).
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Who must comply in 2026? Sole traders and landlords with gross qualifying income over £50,000.
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When does the £30,000 threshold start? April 6, 2027 (Phase 2).
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Are tax payment dates changing? No. Tax balancing payments remain due by 31 January.
