When do I have to start filing MTD quarterly updates?

If your self-employment income is over £50,000 in 2024-25, you are in from 6 April 2026. Over £30,000 — you are in from 6 April 2027. Below £30,000 you are outside MTD ITSA for now, but HMRC has signalled the threshold may drop further, so the prep work is the same.

Does MTD replace the annual Self Assessment?

Not entirely. You still file an End-of-Period Statement and a Final Declaration once a year — those replace today's tax return. But the heavy lifting moves to four quarterly updates, so the January cliff edge becomes four smaller steps spread across the year.

Can my accountant file the quarterly updates for me?

Yes — and many will. But your accountant can only file from MTD-compliant digital records. If you are still on a notebook or shoebox, your accountant has to digitise everything first, which they will bill you for. The cheaper route is to keep digital records as you go (voice note, photo of receipt) so the quarterly filing is a 5-minute job.

What counts as a "digital record" for MTD?

Structured data stored in MTD-compatible software: supplier name, amount, VAT, date, category. A photo of a receipt on its own is not enough — the data inside the photo must be captured into software that can submit to HMRC. Tools like FreeAgent, Xero, QuickBooks, and Holdfort all do this.

What is the penalty for missing a quarterly deadline?

HMRC uses a points-based system: each missed deadline earns one point. Hit four points in a rolling 24-month window and you incur a £200 fine per subsequent breach. Points expire after 12 months of compliant filing. The system is more lenient than the old £100-per-late-return regime, but compounds quickly if you let multiple quarters slip.

Do landlords also need MTD?

Yes — if your combined self-employment plus UK property income crosses the threshold (£50k from 2026, £30k from 2027), you are in. A tradesperson with £45k from the trade plus £8k from a buy-to-let is at £53k combined, which mandates April 2026 entry. Keep separate records per income stream.

Can I use a spreadsheet for MTD?

Yes, but you also need bridging software that submits the spreadsheet data to HMRC's API. HMRC publishes a list of approved bridging software at gov.uk. Spreadsheet plus bridging is the cheapest compliant route (~£3-5/month), but error-prone if you forget to update a row. Purpose-built MTD software (Holdfort, FreeAgent) is more forgiving.

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MTD for self-employed: what sole traders actually need to do (April 2026)

By The Holdfort team · 18 April 2026 · 4 min read

Making Tax Digital (MTD) has been coming for years. For sole traders, the self-employed phase finally lands in April 2026. If you earn over £50,000 in self-employment income, you’re in from day one. If you earn over £30,000, you’re in from April 2027.

What actually changes

Three things:

Quarterly updates to HMRC, not one annual return. You send a summary of your income and expenses every three months.
Digital records. No more shoebox. Every invoice, every expense, every mileage claim has to be in software that can talk to HMRC.
End-of-period statement (like today’s Self Assessment) plus a final declaration. Done online.

If you’re currently writing invoices in a notebook and letting your accountant stitch it together every January — that stops working. The January rush stops being a one-off and becomes a quarterly habit.

The three things you need in place

1. A digital record of everything

Every invoice you send, every receipt you keep, every business mile you drive — HMRC wants it stored digitally. Not as a photo on your phone: as structured data (supplier, amount, VAT, date, category). You can use FreeAgent, Xero, QuickBooks, an MTD-compliant spreadsheet with bridging software, or a tool like Holdfort that captures everything through WhatsApp.

2. A way to send quarterly updates

Your chosen tool needs to be on HMRC’s list of MTD-compatible software. Your accountant can file on your behalf, but the data has to get to them in an MTD-ready format first.

3. A schedule

Quarterly deadlines: 5 August, 5 November, 5 February, 5 May. Put them in your calendar now. Miss one and HMRC starts issuing points; enough points and you get a £200 penalty.

What about if you’re under the threshold?

If your self-employment income is under £30,000 you’re outside MTD for now. HMRC may lower the threshold later — they haven’t promised either way — so "I’ll wait it out" isn’t a long-term plan. The prep work is the same whether you’re compulsory or voluntary.

Common worries

"I already use my accountant." You still will. But they can’t file MTD returns from a shoebox — they need the data in digital form first.
"I’m on a spreadsheet." Fine — you need bridging software that can submit to HMRC quarterly. HMRC-approved options are listed on gov.uk.
"I hate apps." You don’t need to learn a portal. Holdfort captures everything through WhatsApp voice notes, which you already use.

The simplest setup a tradesperson can have

Send Holdfort a voice note after every job ("Mrs Davies, boiler install, twelve hundred"). Snap photos of receipts as you go. Holdfort keeps the digital record. At quarter-end, you or your accountant pull the MTD-ready export. That’s it.

No downloads, no portal, no spreadsheet. Seven days free on the homepage.

The quarterly submission cycle in practice

Quarterly updates under MTD for Income Tax follow the same fiscal cadence as VAT. For the 2026-27 tax year, the deadlines are:

Quarter 1 (6 April – 5 July): update due by 5 August
Quarter 2 (6 July – 5 October): update due by 5 November
Quarter 3 (6 October – 5 January): update due by 5 February
Quarter 4 (6 January – 5 April): update due by 5 May
End of Period Statement + Final Declaration: due 31 January following the tax year end

Each quarterly update is a totals submission — income received and allowable expenses for the period — not a full reconciliation. If you’ve been keeping digital records as you go (voice-noting invoices, photographing receipts), the quarterly total is automatic. If you’ve been throwing receipts in a shoebox, you’ll spend the week before each deadline sorting 12 weeks of paper.

What happens if you miss a deadline

HMRC moved to a points-based penalty system for MTD. Each missed deadline earns one penalty point. Accumulate four points in a rolling 24-month period and you hit a £200 fine per subsequent breach. Points can be rescinded if you file compliantly for 12 months running.

It’s lenient by HMRC standards, but it compounds: miss a quarter, sort it, file late, then miss another — you’re suddenly two points into a four-point penalty window. A £200 fine on top of the late interest charges mounts quickly.

MTD-compatible software: what to look for

HMRC publishes a list at gov.uk/software-for-mtd-itsa. What you need:

The software must be on HMRC’s recognised list. Using unlisted software is a compliance breach regardless of how well it tracks your numbers.
Real-time digital record-keeping. This is the bit most tradespeople miss — it’s not enough to reconcile once a quarter; the records themselves must be stored digitally as transactions happen.
API submission capability — either direct from the software or via bridging software that reads a spreadsheet and sends to HMRC.

Cheapest route: an MTD-compatible spreadsheet + bridging software (a few pounds a month). Easiest route: accounting software with built-in MTD (FreeAgent at £11-£33/month; QuickBooks similar). Simplest route for tradespeople: Holdfort captures everything by voice note and photo, then produces MTD-ready quarterly summaries on demand.

What about landlords and joint property?

MTD ITSA also captures UK landlords. If you’re a tradesperson who also rents out a buy-to-let, both income streams count toward the same threshold. One property earning £8,000 plus sole-trader work earning £45,000 = £53,000, which pulls you into the April 2026 mandatory group.

Joint-owned property is split by ownership share for threshold purposes. Keep separate records per income source — HMRC expects the quarterly updates to distinguish sole-trader income from property income.

Frequently asked questions

When do I have to start filing MTD quarterly updates?: If your self-employment income is over £50,000 in 2024-25, you are in from 6 April 2026. Over £30,000 — you are in from 6 April 2027. Below £30,000 you are outside MTD ITSA for now, but HMRC has signalled the threshold may drop further, so the prep work is the same.
Does MTD replace the annual Self Assessment?: Not entirely. You still file an End-of-Period Statement and a Final Declaration once a year — those replace today's tax return. But the heavy lifting moves to four quarterly updates, so the January cliff edge becomes four smaller steps spread across the year.
Can my accountant file the quarterly updates for me?: Yes — and many will. But your accountant can only file from MTD-compliant digital records. If you are still on a notebook or shoebox, your accountant has to digitise everything first, which they will bill you for. The cheaper route is to keep digital records as you go (voice note, photo of receipt) so the quarterly filing is a 5-minute job.
What counts as a "digital record" for MTD?: Structured data stored in MTD-compatible software: supplier name, amount, VAT, date, category. A photo of a receipt on its own is not enough — the data inside the photo must be captured into software that can submit to HMRC. Tools like FreeAgent, Xero, QuickBooks, and Holdfort all do this.
What is the penalty for missing a quarterly deadline?: HMRC uses a points-based system: each missed deadline earns one point. Hit four points in a rolling 24-month window and you incur a £200 fine per subsequent breach. Points expire after 12 months of compliant filing. The system is more lenient than the old £100-per-late-return regime, but compounds quickly if you let multiple quarters slip.
Do landlords also need MTD?: Yes — if your combined self-employment plus UK property income crosses the threshold (£50k from 2026, £30k from 2027), you are in. A tradesperson with £45k from the trade plus £8k from a buy-to-let is at £53k combined, which mandates April 2026 entry. Keep separate records per income stream.
Can I use a spreadsheet for MTD?: Yes, but you also need bridging software that submits the spreadsheet data to HMRC's API. HMRC publishes a list of approved bridging software at gov.uk. Spreadsheet plus bridging is the cheapest compliant route (~£3-5/month), but error-prone if you forget to update a row. Purpose-built MTD software (Holdfort, FreeAgent) is more forgiving.

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