Making Tax Digital for Income Tax: what does quarterly reporting involve?

A key part of complying with Making Tax Digital for Income Tax (MTD IT) is reporting your qualifying income and expenses to HMRC every quarter. There has been some confusion about what this involves, so here the TaxNav team answer some frequently asked questions.

Making Tax Digital for Income Tax (MTD IT) comes into force in April 2026 for self-employed people and landlords with a gross annual income of over £50,000. From April 2027, it will also be mandatory for those with a gross annual income of over £30,000. Once you move into MTD IT, it will gradually take the place of the current self-assessment system.

A key part of complying with the new regulations is reporting your qualifying income and expenses to HMRC every quarter. There has been some confusion about what this involves, so here the TaxNav team answer some frequently asked questions.

As a reminder, MTD IT generally involves three main obligations:

  • keeping digital records
  • submitting quarterly updates
  • completing a final year-end tax return

All this must be done using HMRC-recognised software, such as TaxNav.

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What is a quarterly update?

Every three months you’ll send HMRC a summary of your income and expenses for each of your qualifying income sources (see below). A key point to note (and one that is often misunderstood) is that each update is a cumulative total of your year-to-date figures, not just the income and expenses for that quarter.

These quarterly updates aren’t tax returns. They’re simply four smaller snapshots of your business across the year, pulled from your digital records.

If you’re logging information regularly, even on spreadsheets, producing a quarterly update in your MTD IT software will be as easy as the touch of a button.

After each update, you’ll also be able to see an estimate of your tax bill, which can help you plan ahead.

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What information is included in the quarterly report?

For self-employed income, the information is likely to include (depending on your circumstances):

  • turnover
  • other business income
  • tax taken off trading income
  • consolidated expenses (such as cost of goods, car, van, or travel expenses)

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For property income, it is likely to include (depending on your circumstances):

  • rents received (including rent-a-room) and premiums on leases
  • reverse premiums and other property income
  • tax deducted
  • residential finance costs and consolidated allowable expenses
  • residential finance costs carried forward
  • rent-a-room tax relief claimed

If your total income is below the VAT threshold (currently £90,000), you can submit expenses as a single consolidated figure rather than providing a full breakdown.

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When do I need to submit?

You can choose either the standard HMRC quarterly periods or calendar quarters. You elect your preference when setting up your MTD IT account.

HMRC’s standard periods are:

1. 6 April – 5 July

2. 6 July – 5 October

3. 6 October – 5 January

4. 6 January – 5 April

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The submission deadlines are:

Quarter 1: 7 August

Quarter 2: 7 November

Quarter 3: 7 February

Quarter 4: 7 May

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How many quarterly submissions do I need to make?

If you have one or more self-employed trades or businesses, you must submit a cumulative total for each one every quarter.

If you own multiple UK properties, you only need to complete one submission for the combined property income every quarter.

For any foreign properties, you must complete a separate quarterly submission for the combined income from each country every quarter.

With TaxNav, all of this can be done within a single account - provided all businesses and property are linked to your personal HMRC tax account.

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Is HMRC providing free software?

No, HMRC will not be providing free software. You must use software recognised by HMRC that is able to integrate with its systems. TaxNav is one such option – it is simple to use, affordable, and fully HMRC-compliant.

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What does HMRC do with the quarterly figures?

HMRC uses your year-to-date figures to give you an estimate of your annual tax bill, including non-trade related items. This helps you budget ahead of the final payment due by 31 January after the end of that tax year.  

Because the updates are cumulative, the HMRC estimate will adjust each quarter to reflect changes in your income – for example, if you have a busy period followed by a quieter one. These figures will be visible in your HMRC dashboard in the TaxNav software.

You won’t be paying tax four times a year. At the end of the tax year, you submit your year-end tax return, and your payment deadline remains 31 January. You’ll pay by signing in to your HMRC online account or using the HMRC app, just as you do now.

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Can I correct information in later updates?

Yes. If you miss something in a quarterly update, you can add it or adjust it in the next one.

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What is included in the final declaration?

Your MTD IT software will combine your quarterly updates to create an end-of-year tax summary. This reduces the amount of manual form filling.

By 31 January following the end of the tax year, you must submit a final declaration (year-end tax return) that confirms your income and expenses. This is also where you declare:

  • employment income
  • dividends and savings interest
  • pensions and insurance policy income
  • foreign income
  • capital gains and losses

You can also claim any relevant reliefs and allowances at this stage.

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Do I need to file multiple final returns?

No. You make any adjustments in your final quarterly returns, then complete one final year-end tax return covering all income sources and annual declarations (such as bank interest or dividends).

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Can I still use spreadsheets?

Yes. Spreadsheets remain acceptable as long as they link to HMRC using recognised bridging software, such as TaxNav. Alternatively, if you do not wish to use a spreadsheet, manual entry is allowed if you are using TaxNav for your bookkeeping - as this complies with storing your data in a digital format.

If you’re not using TaxNav or another HMRC-recognised MTD IT software, manual entry of total calculations or copy-and-paste submissions are not allowed.

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In summary

Quarterly reporting under MTD IT may sound daunting, but in practice it breaks your record-keeping into manageable chunks and helps you budget for tax. You won’t be filing four tax returns a year – just four simple updates and one final declaration.

Using HMRC-recognised software is essential. TaxNav is designed to make this process straightforward, whether you prefer direct digital entry or using spreadsheets with bridging functionality. It gives you confidence that your quarterly updates and final declaration will be compliant, accurate, and stress-free.  

Find out more via HMRC’s overview and TaxNav

Also, look out for our forthcoming article on HMRC’s penalties for MTD IT.

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