The first major Making Tax Digital for Income Tax deadline is fast approaching.
Sole traders and landlords who were required to begin using Making Tax Digital from 6 April 2026 must send their first quarterly update to HMRC by 7 August 2026.
For many people, this will be the first time they have submitted an MTD quarterly update. Understandably, this may lead to confusion, last-minute bookkeeping and concern about whether the correct information has been recorded.
If your first MTD submission is due in August and you are not yet ready, now is the time to act.
This guide explains who is affected, what must be submitted, how quarterly updates work and what to do if you are worried about meeting the deadline.
What Is Making Tax Digital for Income Tax?
Making Tax Digital for Income Tax is HMRC’s new digital reporting system for sole traders and landlords.
Under the new rules, those within scope must use compatible accounting software to:
- create and maintain digital records of their income and expenses;
- send quarterly updates to HMRC;
- correct or update their digital records when necessary;
- submit their tax return through compatible software; and
- continue paying any Income Tax due by the relevant payment deadline.
Making Tax Digital does not mean that taxpayers will pay Income Tax four times a year.
The quarterly updates provide HMRC with information about income and expenses recorded during the tax year. They help build an estimated tax position, but they are not four separate tax returns or four separate tax bills.
Who Must Use Making Tax Digital From April 2026?
From 6 April 2026, Making Tax Digital for Income Tax became mandatory for qualifying sole traders and landlords whose combined gross income from self-employment and property was more than £50,000.
This may include:
- sole traders;
- self-employed professionals;
- freelancers and consultants;
- tradespeople;
- individuals running more than one self-employed business;
- UK landlords;
- individuals with both self-employment and property income; and
- people with multiple qualifying income sources which collectively exceed the threshold.
The threshold is based on qualifying gross income before expenses are deducted, rather than taxable profit.
For example, someone with £35,000 of gross self-employment income and £20,000 of gross rental income may have combined qualifying income of £55,000 and could therefore fall within the 2026 requirements.
Limited company income is not included in an individual’s qualifying income for MTD for Income Tax. However, a company director may still be affected if they also receive qualifying income from self-employment or property.
What Is the First MTD Submission Deadline?
The first quarterly update deadline for the 2026 to 2027 tax year is:
7 August 2026
For taxpayers using the standard update periods, the first update broadly covers digital records created between:
6 April and 5 July 2026
The remaining quarterly deadlines for the tax year are:
- 7 November 2026;
- 7 February 2027; and
- 7 May 2027.
Your compatible software should show the relevant update periods and confirm when each submission is due.
What Does the First Quarterly Update Include?
Your quarterly update is based on the digital records maintained in your MTD-compatible software.
It will generally include totals for:
- self-employment income;
- allowable business expenses;
- UK property income;
- qualifying property expenses; and
- each relevant source of self-employment or property income.
The update is generated from the information recorded in your software.
You do not usually need to make all of the accounting or tax adjustments that would be required when preparing a final tax return before sending a quarterly update. However, the underlying records should still be complete and accurate enough to give a meaningful picture of the income and expenses recorded so far.
Is an MTD Quarterly Update the Same as a Tax Return?
No.
An MTD quarterly update is not a complete tax return. It is a summary of the income and expenses recorded in your digital accounting system during the relevant period.
You will still have end-of-year responsibilities.
Your final tax position may need to include information not covered by the quarterly updates, such as:
- other taxable income;
- personal allowances;
- pension contributions;
- savings and investment income;
- capital gains;
- student loan information;
- tax reliefs;
- accounting adjustments; and
- other information relevant to your final tax calculation.
This is why it is important not to assume that sending four quarterly updates completes all of your annual tax obligations.
Do I Have to Pay Tax by 7 August?
No. The August deadline is for sending the first quarterly update, not for paying the Income Tax shown in the estimate.
The existing Self Assessment payment timetable continues to apply, including the usual January payment deadline and any applicable payments on account.
However, once an update has been submitted, compatible software may provide an estimated tax calculation based on the information available.
This estimate can help with budgeting, but it may change as further income, expenses and tax adjustments are added throughout the year.
What Digital Records Do I Need to Keep?
Those required to use Making Tax Digital must maintain digital records of their qualifying self-employment and property income and expenses.
Depending on the nature of your business, these records may include:
- sales invoices;
- customer payments;
- rental income;
- supplier bills;
- business expenses;
- property expenses;
- mileage records;
- bank transactions;
- receipts;
- credit notes; and
- other relevant financial transactions.
Digital records should be created and stored within compatible software or transferred through an acceptable digital process.
Leaving everything until the quarterly deadline can make the submission more stressful and increases the risk of missing transactions or recording expenses incorrectly.
Can I Continue Using Spreadsheets?
In some circumstances, spreadsheets can still form part of an MTD-compatible process.
However, the spreadsheet must be connected to HMRC through compatible bridging software, and the required digital links must be maintained.
Manually copying figures between disconnected systems may not meet the relevant digital record-keeping requirements.
Businesses that prefer a simpler and more integrated approach may choose cloud accounting software such as Xero, QuickBooks or Capium.
The right system depends on the complexity of your income, the number of transactions you process and whether you manage the bookkeeping yourself or use an accountant.
What Happens If My Bookkeeping Is Not Up to Date?
If your first MTD deadline is approaching and your records are incomplete, do not ignore the situation.
Start by gathering:
- business and property bank statements;
- sales invoices;
- purchase invoices;
- expense receipts;
- rental statements;
- mileage records;
- details of income received in cash;
- information from payment providers; and
- access to your existing bookkeeping software.
The sooner the missing information is reviewed and entered, the easier it will be to identify gaps before the submission is due.
An accountant or bookkeeper can help reconcile your accounts, check that transactions have been categorised appropriately and prepare the update through compatible software.
Common Making Tax Digital Mistakes
Assuming HMRC Will Sign You Up Automatically
Being required to use Making Tax Digital does not necessarily mean every part of the setup process will happen automatically. You or your accountant may need to complete the sign-up process and authorise compatible software.
Waiting Until August to Start Digital Bookkeeping
The first update is based on records from the beginning of the tax year. Starting bookkeeping just before the deadline may mean several months of transactions must be entered and checked at once.
Looking Only at Profit
The qualifying income threshold is based on gross qualifying income rather than profit after expenses. A business may therefore fall within MTD even when its taxable profit is substantially lower.
Forgetting to Combine Income Sources
Income from self-employment and property may need to be considered together when determining whether the threshold has been exceeded.
Using Non-Compatible Software
Standard bookkeeping software is not automatically MTD compatible. The software must support the relevant Making Tax Digital for Income Tax requirements.
Assuming Quarterly Updates Replace the Tax Return
Quarterly updates are only one part of the MTD process. A final tax return and year-end information will still be required.
Missing Allowable Expenses
Poor record-keeping may result in legitimate business or property expenses being overlooked, potentially increasing the eventual tax liability.
What If I Have More Than One Business or Property?
If you have more than one sole-trader business or receive income from different property sources, your reporting requirements may be more complex.
You may need to maintain appropriate digital records for each relevant source and ensure that the required updates are submitted through compatible software.
For example, someone operating a consultancy business while also receiving rental income must ensure both income sources are correctly recorded and dealt with under the MTD rules.
Professional support can be particularly valuable where several income streams, properties or bookkeeping systems are involved.
Are There Penalties for Missing the August 2026 Deadline?
HMRC has confirmed that penalty points will not be applied for late quarterly updates during the first mandatory tax year, 2026 to 2027.
However, this does not mean the quarterly updates can simply be ignored.
Digital records must still be kept, and the required quarterly updates need to be sent before the final tax return can be submitted through the MTD system.
Penalties may still apply for other failures, including submitting the final tax return late or paying tax after the relevant deadline.
It is therefore sensible to treat 7 August as a firm working deadline and use the first year to establish a reliable quarterly bookkeeping process.
Can I Apply for an Exemption?
Some people may be able to apply for an exemption where it is not reasonable or practical for them to use digital tools.
Possible circumstances may include digital exclusion due to age, disability, location, religious beliefs or another genuine barrier to using compatible software.
An exemption is not automatic simply because someone prefers paper records or is unfamiliar with accounting software.
HMRC must normally consider and approve the application. Until an exemption has been confirmed, taxpayers should not assume that the MTD requirements do not apply.
What Should I Do Before 7 August?
If your first Making Tax Digital quarterly update is due, work through the following steps:
Confirm That You Are Within Scope
Check your qualifying gross income and the tax year from which MTD applies to you.
Make Sure You Are Registered
Confirm that the MTD sign-up process has been completed and that HMRC recognises your obligation.
Check Your Software
Ensure your software supports Making Tax Digital for Income Tax and has been correctly authorised to communicate with HMRC.
Bring Your Records Up to Date
Record all relevant income and expenses from the start of the reporting period.
Reconcile Your Bank Transactions
Check that transactions in the software agree with the relevant bank statements and payment accounts.
Review Missing Information
Look for gaps such as cash income, unpaid invoices, mileage, property expenses or transactions paid personally.
Submit the Update
Use your compatible software, or ask your accountant to prepare and send the update on your behalf.
Put a Quarterly Routine in Place
Do not wait until November to repeat the process. Regular monthly bookkeeping will make each future update significantly easier.
How Can JSR Management Help With MTD?
JSR Management supports sole traders, landlords and self-employed individuals in Southampton and across the UK with the transition to Making Tax Digital for Income Tax.
Our team can help you:
- establish whether and when MTD applies to you;
- complete the appropriate sign-up process;
- select and configure compatible accounting software;
- move from paper or spreadsheet records to a compliant digital system;
- bring overdue bookkeeping up to date;
- review and reconcile income and expenses;
- submit quarterly updates;
- identify legitimate allowable expenses;
- prepare your final tax return;
- monitor future MTD deadlines; and
- provide ongoing bookkeeping and tax support.
Rather than facing a last-minute rush before every deadline, ongoing support can give you a clear, repeatable process for maintaining records and submitting information throughout the year.
Frequently Asked Questions About the August MTD Deadline
When is the first MTD for Income Tax quarterly update due?
The first quarterly update for people required to use MTD from April 2026 is due by 7 August 2026.
Who is affected by the August 2026 MTD deadline?
The first mandatory phase broadly applies to qualifying sole traders and landlords with more than £50,000 in combined gross self-employment and property income.
Is the £50,000 threshold based on profit?
No. It is based on qualifying gross income before business or property expenses are deducted.
Is the August update a full tax return?
No. It is a quarterly summary generated from your digital income and expense records. You will still have end-of-year tax reporting obligations.
Do I have to pay my tax in August?
No. The 7 August deadline relates to the quarterly update, not an Income Tax payment deadline.
What if I have not completed my bookkeeping?
You should gather your records and bring the bookkeeping up to date as soon as possible. An accountant or bookkeeper can help identify missing transactions and prepare the update.
Can my accountant submit the update for me?
Yes. An authorised accountant can help manage your digital records and submit MTD updates through compatible software.
Can landlords be affected by Making Tax Digital?
Yes. Landlords with qualifying property income may need to use MTD, either because their property income exceeds the threshold or because it combines with self-employment income to exceed it.
Do limited companies use MTD for Income Tax?
MTD for Income Tax is aimed at individuals with qualifying self-employment and property income. Limited companies have separate accounting and Corporation Tax requirements.
What happens after the first update?
Further quarterly update deadlines follow on 7 November 2026, 7 February 2027 and 7 May 2027, followed by the relevant end-of-year tax reporting process.
Do Not Leave Your First MTD Submission Until the Last Minute
If your first Making Tax Digital submission is due on 7 August 2026, delaying action may leave you trying to organise several months of records immediately before the deadline.
Getting support now gives you time to:
- confirm whether you are affected;
- correct gaps in your bookkeeping;
- connect compatible software;
- prepare the first update; and
- create a better system for future quarters.
Book a Free Making Tax Digital Consultation
Concerned about your first MTD quarterly update or unsure whether the new rules apply to you?
Book a free, no-obligation consultation with JSR Management.
Our experienced accountancy team will review your circumstances, explain what you need to do and help you prepare for the 7 August deadline.
Use the online booking calendar HERE to select a convenient time and take the stress out of Making Tax Digital.
Alternatively you call us on 02380 323846 or drop us an email HERE
