HMRC Quarterly Reporting: How It Works Under MTD
Under Making Tax Digital for Income Tax, you no longer file a single annual tax return. Instead, you send HMRC a summary of your business income and expenses four times a year — once per quarter. This is known as quarterly reporting, and it is the core requirement of the new MTD regime.
If you are a sole trader or landlord with qualifying income above £50,000 (from April 2026) or £30,000 (from April 2027), quarterly reporting is now part of your tax life. This article explains exactly how it works: the periods, the deadlines, what you need to include, and how the process fits into the wider MTD framework.
The Four Quarterly Periods
The tax year runs from 6 April to 5 April the following year. Under MTD, this is divided into four standard quarters:
| Quarter | Start Date | End Date | Submission Deadline |
|---|---|---|---|
| Q1 | 6 April | 5 July | 7 August |
| Q2 | 6 July | 5 October | 7 November |
| Q3 | 6 October | 5 January | 7 February |
| Q4 | 6 January | 5 April | 7 May |
You have one month and two days after the end of each quarter to submit your update. For example, Quarter 1 ends on 5 July, and your submission is due by 7 August.
These dates are fixed. Unlike the old Self Assessment system where you had until 31 January to sort everything out, quarterly reporting means four firm deadlines throughout the year.
What Do You Report Each Quarter?
A quarterly update is a summary, not a full tax return. You are reporting:
- Total income received during the quarter (broken down by category if your software requires it)
- Total expenses incurred during the quarter (again, categorised)
You are not calculating your tax liability at this stage. The quarterly update simply gives HMRC (and you) a running picture of how your business is performing financially throughout the year.
Categories of Income and Expenses
HMRC requires income and expenses to be reported under standard categories. For a sole trader, typical categories include:
Income: - Turnover (sales/fees) - Other business income
Expenses: - Cost of goods sold - Office and administrative costs - Travel and vehicle expenses - Staff costs - Advertising and marketing - Professional fees (accountancy, legal) - Phone, internet, and technology - Premises costs (rent, utilities) - Other allowable expenses
Your MTD software will map your transactions to these categories. You do not need to memorise them — but you do need to categorise your transactions as you record them, rather than dumping everything into a single "expenses" bucket.
How Quarterly Updates Fit Into the Annual Cycle
Quarterly reporting is one part of a three-stage annual process under MTD:
1. Quarterly Updates (x4)
Summaries of income and expenses for each quarter, submitted throughout the year.
2. End of Period Statement (EOPS)
After the tax year ends on 5 April, you submit an End of Period Statement. This finalises your business income for the year. It is your chance to make adjustments — for example, adding capital allowances, correcting earlier quarter figures, or accounting for items that span multiple quarters.
3. Final Declaration
The Final Declaration replaces your Self Assessment tax return. It brings together all your income sources (not just business income) and confirms your overall tax position for the year. The deadline is 31 January following the end of the tax year.
So the full cycle for the 2026-27 tax year looks like this:
- 7 August 2026 — Q1 update
- 7 November 2026 — Q2 update
- 7 February 2027 — Q3 update
- 7 May 2027 — Q4 update
- 31 January 2028 — End of Period Statement and Final Declaration
Can You Amend a Quarterly Update?
Yes. Quarterly updates are not set in stone. If you realise you made an error — perhaps you forgot to include an expense or miscategorised a transaction — you can amend a previous quarter's update before you submit your End of Period Statement.
This is important because it means quarterly updates do not need to be perfect. They should be as accurate as possible, but you have the opportunity to correct mistakes before your annual figures are finalised.
What Happens If You Miss a Quarterly Deadline?
HMRC has introduced a points-based penalty system specifically designed for recurring obligations like quarterly reporting. Here is how it works:
- Each late submission earns you one penalty point
- For quarterly obligations, the penalty threshold is four points
- Once you hit four points, you receive a £200 penalty
- Every subsequent late submission after reaching the threshold triggers another £200 penalty
Points expire after a period of good compliance (typically 24 months of on-time submissions once you have reached the threshold), but it is far better to avoid accumulating them in the first place.
For more detail on the penalty regime, see our guide on MTD penalties for late submission.
Practical Tips for Staying on Top of Quarterly Reporting
Record Transactions as They Happen
The biggest shift with quarterly reporting is that you cannot leave your bookkeeping to the end of the year. If you record income and expenses as they occur — even just once a week — each quarterly submission becomes straightforward. Leave it to the last minute and you will be scrambling to find receipts and reconcile bank statements.
Set Calendar Reminders
Put the four quarterly deadlines in your calendar at the start of the tax year. Better yet, set a reminder a week before each deadline so you have time to review your records and submit without pressure.
Use Software That Makes It Easy
The right software turns quarterly reporting into a five-minute task. If your records are up to date, generating and submitting a quarterly update should be as simple as reviewing a summary and clicking "submit."
ClearMTD is designed specifically for this workflow. You record your income and expenses throughout the quarter, and when the deadline approaches, your quarterly update is ready to send. No complex accounting knowledge required. Try it free.
Do Not Overthink It
Quarterly updates are summaries, not final accounts. They do not need to be perfect — you can make adjustments later. The purpose is to keep HMRC informed of your approximate income throughout the year. Accuracy matters, but do not let perfectionism cause you to miss a deadline.
How Is This Different From VAT Returns?
If you are VAT-registered, you are already used to quarterly reporting under MTD for VAT (which has been mandatory since 2019). The MTD for Income Tax process is conceptually similar — you report figures quarterly using compatible software — but there are key differences:
- VAT returns deal with VAT charged and reclaimed. Income Tax updates deal with business income and expenses.
- They are separate obligations with separate deadlines (VAT quarters may not align with Income Tax quarters).
- You need software that covers both if you are registered for both schemes.
Do You Need an Accountant for Quarterly Reporting?
Not necessarily. Many sole traders and landlords with straightforward affairs can handle quarterly reporting themselves using MTD software. The process is designed to be manageable without professional help.
However, if your affairs are complex — multiple income sources, capital allowances, property portfolios — working with an accountant can save time and reduce the risk of errors, especially when it comes to the End of Period Statement and Final Declaration.
If you want to learn more about what MTD means in practice, read our guide on MTD for Income Tax 2026.
Frequently Asked Questions
Do I have to submit exactly on the deadline?
No. You can submit your quarterly update any time during or after the quarter, as long as it is before the deadline. Submitting early is fine — and means one less thing to worry about.
What if I have no income in a quarter?
You still need to submit a quarterly update, even if your income and expenses are zero. A nil return is quick to file but must still be done to avoid penalty points.
Can I change the quarterly periods?
HMRC allows some flexibility around calendar quarters versus standard quarters in certain circumstances, but for most taxpayers the standard periods (aligned to the tax year) apply. Check with your software provider or HMRC for details.
Do I need to submit receipts with my quarterly update?
No. You do not need to send receipts or invoices to HMRC with your quarterly update. However, you must keep your records (including receipts) for at least five years in case HMRC asks to see them.
How long does a quarterly submission take?
If your records are up to date, the actual submission takes just a few minutes. The time investment is in keeping your records current throughout the quarter — which is why recording transactions regularly (weekly or even daily) is so valuable.