The first Making Tax Digital for Income Tax quarterly update is due on 7 August 2026, and by most current estimates, roughly half of the small businesses, sole traders, and landlords who fall within scope aren’t ready to file it. That’s not a small margin. It means a coin-flip chance that a business reading this right now is behind schedule.
If that’s you, this isn’t a guide explaining what MTD is from scratch. It’s a readiness check: what “ready” looks like three weeks out, why so many London businesses have stalled, and what to fix first if you are one of them.
Key Takeaways
- The first MTD for Income Tax quarterly update is due 7 August 2026, covering income and expenses from 6 April to 5 July 2026.
- MTD applies from April 2026 to sole traders and landlords with qualifying income over £50,000 in the 2024/25 tax year.
- Being “MTD ready” means digital records are current for the whole quarter, not just software installed.
- A missed deadline in 2026/27 carries no penalty point under HMRC’s soft landing, but it still has to be filed before your Final Declaration can go in.
- Businesses that treat quarter one as a trial run avoid the compounding admin problem that hits quarters two through four.
Why Half of Small Businesses Have Stalled
It isn’t that business owners haven’t heard of MTD. Awareness is high. What’s actually holding people back tends to be narrower and more specific than a simple lack of information.
The £50,000 threshold gets misread.
Landlords earning from both rental income and self-employment often aren’t sure whether HMRC combines those two income streams when testing against the threshold or assesses them separately. That uncertainty leads people to assume they’re not affected when they are, or the reverse.
Software choice has become a decision people avoid making.
With a long list of HMRC-recognised providers now competing for attention, some business owners keep comparing options rather than committing one and starting to log transactions.
“Soft landing” has been misread as “optional.”
HMRC has confirmed it won’t apply penalty points to late quarterly updates during the 2026/27 tax year. Some business owners have taken that as permission to skip the deadline altogether. It isn’t. The update still has to be submitted; only the financial penalty for lateness is being phased in gradually.
The record-keeping shift hasn’t sunk in yet.
MTD isn’t an annual filing exercise anymore. It requires digital records to be current from day one of the tax year, which means a scramble in late July to reconstruct three months of transactions is exactly the situation MTD is designed to prevent, and exactly what a lot of businesses are currently doing anyway.
There’s still time to close this gap before 7 August, but it depends on starting now rather than waiting for the deadline itself to force the issue.
What “Ready” Actually Means for the First Deadline
The first quarterly update isn’t a scaled-down tax return. It’s a cumulative summary of self-employment or property income and expenses for 6 April to 5 July 2026 (or 1 April to 30 June 2026 for businesses using calendar quarters), filed through MTD-compatible software that connects directly to HMRC.
A few specifics catch people out at this stage:
- Each business needs its own update.
Running both a self-employment activity and a rental property means filing separate quarterly updates for each. Multiple UK rental properties are combined into a single property update, but self-employment is always reported on its own.
- A quiet quarter still needs submission.
Even with no income or expenses in the period, HMRC expects a nil update rather than nothing at all.
- There’s no manual fallback.
HMRC’s standard online Self Assessment portal isn’t an option once you’re within MTD. Submissions must go through approved software.
- Provisional figures are allowed; sloppy ones aren’t.
Quarterly totals feed into your year-end Final Declaration and can be corrected there but rushed or estimated numbers now create more reconciliation to work later, not less.
Our earlier breakdown of the MTD quarterly reporting deadlines goes further into how the four submission dates and update periods fit together across the full tax year.
Confirming Whether You’re Actually in Scope
MTD for Income Tax is being phased in by qualifying income, tested against your 2024/25 Self Assessment return:
- From 6 April 2026: mandatory for qualifying income over £50,000
- From 6 April 2027: threshold drops to £30,000
- From 6 April 2028: threshold drops to £20,000
If you’re a landlord with mixed income sources and you’re not certain your combined total crossed £50,000, it’s worth confirming properly rather than assuming either way. Getting this wrong in either direction causes problems, either an unnecessary compliance burden or a missed obligation that surfaces later. Our guide to how qualifying income is calculated for sole traders and landlords walks through the calculation in detail.
A Practical Checklist for the Next Three Weeks
If you’re among the half still catching up, this is where to spend the time you have left:
- Confirm your quarterly period. Standard tax-year quarters or calendar quarters and make sure your software is set to match.
- Pick the software and commit to it. The right choice is whichever HMRC-recognised tool fits how you already keep records, not the one with the most features.
- Digitise April, May, and June now. Bank feeds, invoices, and receipts all need to be in your software before you can file, not gathered during the week of the deadline.
- Separate business and personal spending if this aren’t already the case. Mixed transactions are the single biggest source of MTD headaches for sole traders.
- File a few days early. A software glitch or HMRC connection issue is a minor problem with a week’s buffer and a serious one on a deadline day.
- Has someone checked the first submission before it goes in. A short review now is far cheaper than untangling errors at your January Final Declaration.
Our Making Tax Digital blog category is updated as HMRC’s guidance evolves and covers each new deadline as it approaches.
Why Getting Quarter One Right Matters Beyond August
The soft landing removes the immediate financial risk of a late first submission, but it doesn’t remove the practical one. Falling behind on quarter one makes quarter two, due to 7 November 2026, harder rather than easier, since you’re then reconciling two periods of records instead of one. And the soft landing itself only covers the 2026/27 tax year; standard penalty rules apply from 2027/28 onward.
Businesses that treat this first deadline as a genuine trial run, getting software properly connected, categories set up correctly, and records kept current rather than reconstructed, are the ones who find the remaining three quarters routine instead of stressful.
Get Your First MTD Submission Sorted Before 7 August
Brayan & Spencer Associates works with sole traders, landlords, and small businesses across London to make Making Tax Digital compliance straightforward rather than theoretical. That includes setting up the right software for your situation, digitising your records properly, and making sure your first quarterly submission to HMRC is accurate and on time.
If you’re still unsure whether the £50,000 threshold applies to you, haven’t settled on software, or want your first MTD update handled by people who do this daily, get in touch before the deadline.
Call 0207 183 5956 or visit www.bsassociate.co.uk to get compliant before 7 August 2026.
Frequently Asked Questions
The first quarterly update under MTD for Income Tax is due by 7 August 2026, covering 6 April to 5 July 2026, or 1 April to 30 June 2026 for businesses using calendar-quarter periods.
Sole traders and landlords with qualifying income over £50,000 in the 2024/25 tax year must comply from 6 April 2026. The threshold falls to £30,000 from April 2027 and £20,000 from April 2028.
HMRC’s soft landing means no penalty points apply to late quarterly updates during 2026/27. The submission is still legally required, though, and late payment of interest can still apply to any tax eventually found to be due.
Yes, each business needs its own quarterly update. Multiple UK rental properties are combined into a single property update, but self-employment income is always reported separately.
No. Once you’re within MTD, both quarterly updates and your Final Declaration must go through HMRC-recognised software. There’s no manual online filing route available.
No. Quarterly updates are cumulative income and expense summaries. They don’t calculate taxes owed. Your final tax position is confirmed through the Final Declaration, due 31 January following the end of the tax year.
You submit a Final Declaration, replacing the old Self Assessment return, by 31 January following the tax year end. This is where total income is confirmed; reliefs are claimed, and non-business income such as dividends is included.
