Making Tax Digital for Income Tax went live on 6 April 2026 for sole traders and landlords with qualifying income above £50,000, and the first real test of the new regime is now only weeks away. The opening quarterly update, covering the period from 6 April to 5 July 2026, must reach HMRC by 7 August 2026. For firms that spent the last year talking about MTD in the abstract, this is the point where it becomes an actual deadline sitting on an actual client list.
The good news is that a first quarterly update is a much smaller event than the annual Self Assessment return most clients are used to dreading. The risk is that firms and clients treat it too casually, because a wrong or incomplete first quarter has a habit of contaminating everything that follows. This guide walks through what is actually required, who needs to be doing it, and how to run the first cycle without surprises.
Who is actually in scope right now
The scope test for the April 2026 start date is based on gross qualifying income, meaning turnover before expenses, from self-employment and UK property combined, as reported on the 2024/25 Self Assessment return. It is a backward-looking test: HMRC is not asking what a client expects to earn this year, it is asking what they actually reported for the year that has already been filed. That distinction matters when a client's income is volatile, because someone whose 2024/25 return sat just under £50,000 is not caught this year even if 2026/27 turns out to be a bumper year.
Income from employment, pensions, dividends and savings does not count towards the qualifying income figure, even though it still appears on the eventual final declaration. A client with £60,000 of PAYE salary and £10,000 of rental income is not in scope for April 2026; a client with £52,000 of self-employment income and no other earnings is.
- From 6 April 2026: combined qualifying income above £50,000, based on the 2024/25 return
- From 6 April 2027: combined qualifying income above £30,000, based on the 2025/26 return
- From 6 April 2028: combined qualifying income above £20,000, based on the 2026/27 return
- Exempt regardless of income: general partnerships (deferred pending a future start date), trusts, estates, and anyone granted a digital exclusion exemption by HMRC
What counts as a digital record, and what does not
The requirement is not that a client uses a particular brand of software. It is that income and expenses are recorded digitally, in functional compatible software, and that any transfer of data between systems happens through a digital link rather than by a human retyping numbers. A client who keeps a well-structured spreadsheet can stay compliant provided the spreadsheet connects to HMRC through bridging software that submits the figures without manual re-entry at that final step.
What falls outside the rules is the paper cashbook, the shoebox of receipts totalled up once a year, and the spreadsheet that gets manually copied into a separate filing tool. None of those create the digital record trail HMRC is asking for, and none of them will survive a first genuine compliance check. If a client is still working this way, the sensible move is to get them onto proper software now rather than waiting for a bridging workaround to become the permanent solution.
What actually goes into a quarterly update
A quarterly update is a summary, not a full tax computation. For a self-employed client it means totals of income and expenses by category, broadly mirroring the boxes on the existing Self Assessment self-employment pages: turnover, cost of goods sold, staff costs, motor expenses, premises costs, and so on. For a landlord it means rental income and allowable expenses by property or portfolio, depending on how the client has structured their reporting. There is no requirement to make adjustments for capital allowances, private use restrictions or other year-end reliefs at this stage; those come later, in the final declaration.
The detail that catches firms out is that updates are cumulative, not standalone. The Q2 submission does not simply add a new quarter's figures alongside Q1, it restates the year-to-date position and effectively overwrites what was submitted before. That means an error in the first quarterly update does not stay contained to that one submission. Get the opening quarter wrong and every later quarter inherits the mistake unless someone actively goes back and corrects it. This is the single biggest reason to get the first update right rather than treating it as a low-stakes trial run.
Landlord clients bring a set of complications that self-employed clients generally do not. A client with more than one let property needs their income and expenses attributed correctly across those properties from the very first quarter, because unpicking a merged figure later, if one property is sold or the portfolio changes structure, is far harder than keeping the split clean from the outset. Jointly owned property adds a further layer: where a property is held by more than one person, each owner's share of income and expenses generally needs to be reported against their own qualifying income test and their own quarterly updates, not lumped together as if the property had a single owner. Clients who mix a furnished holiday letting with standard buy-to-let property should be treated with particular care in the first quarter too, because the two categories of property income have historically been taxed differently and the digital record-keeping needs to reflect that distinction from day one rather than being reconciled retrospectively later.
A seven day routine that actually works
The deadline is the 7th of the month following the end of the quarter, which gives a firm roughly a month between quarter end and the filing date. In practice, the safest approach is to compress the internal process into the first week or two after quarter end rather than leaving it until the deadline approaches, because a queue of updates due on the same date is exactly how a small firm ends up filing several of them late.
A workable sequence: within the first few days after quarter end, chase any client whose bookkeeping is not already up to date and flag the ones who are already current. In the following week, review the categorised transactions for anything obviously miscoded, particularly personal expenses posted to a business category or property expenses posted against the wrong let. Once the figures look sound, get client sign-off, even if it is informal, before the update goes anywhere near HMRC's systems. Submission itself, through whichever MTD-recognised software the client uses, should be the fastest part of the process if everything before it has been done properly.
Mistakes and questions showing up in the first few months
A handful of errors are already recurring across early adopters. The most common is landlords with more than one property submitting updates that do not clearly separate income and expenses by property, which becomes a real problem later if one property is later sold or the portfolio needs to be split for other reasons. The second is sole traders whose bookkeeping software categorises a transaction correctly for VAT purposes but incorrectly for the Income Tax expense categories the quarterly update actually needs, because the two systems were never built with the same category structure in mind.
The third, and the one worth flagging to every affected client directly, is forgetting that the quarterly update authorisation is separate from the existing Self Assessment 64-8. A client who has authorised a firm to act on Self Assessment for years still needs a specific MTD authorisation completed before that firm can submit on their behalf. Leaving this until the week of the deadline is a common and entirely avoidable way to miss the first cycle.
A fourth pattern worth watching for is clients who run both a sole trade and a rental portfolio treating the two as one combined figure because that is how they have always thought about their overall income. Each source needs its own quarterly update with its own categorised income and expenses, even though both feed into the same eventual final declaration and the same qualifying income test. Untangling a client's mental model of "my income" into the separate reporting streams HMRC actually wants is worth doing explicitly in the first client conversation, rather than assuming it is obvious.
A handful of questions come up repeatedly with clients experiencing this for the first time, and it is worth having clear, consistent answers ready rather than improvising each time. Clients frequently ask whether they still need to keep paper receipts: the honest answer is that the underlying evidence for a transaction still needs to exist and be retrievable, digital record keeping is about how the transaction is recorded and totalled, not necessarily about eliminating every scrap of paper, though a scanned or photographed receipt attached to the digital record is far more robust than a shoebox kept separately. Clients also ask what happens if their income drops below the £50,000 threshold in a future year. The scope test looks at the qualifying income reported in a specific prior tax year, so a client whose income genuinely falls can, in principle, drop out of the requirement in a later year, though HMRC's specific rules on exiting the regime once someone has entered it should be checked at the time rather than assumed. The more common and more useful question is what happens if a client's income rises mid-year past a threshold they were previously under: because the test is based on the prior year's filed return, a rise in the current year does not pull someone into MTD immediately, it affects their position from the following April based on the return that captures that higher income.
The final declaration is a different thing, and it is still coming
It is worth being explicit with clients that the quarterly updates are not the tax return. After the fourth quarterly update for a tax year, a final declaration brings together the year's business income with everything else, employment income, dividends, pension income, and calculates the actual tax due. For the 2026/27 tax year, that final declaration is still due by the familiar 31 January deadline, in this case 31 January 2028. Clients sometimes hear "quarterly reporting" and assume the annual return has disappeared. It has been renamed and restructured, not removed.
Where practice management software earns its keep
The mechanics of any single quarterly update are simple. The operational challenge is running dozens or hundreds of them on a rolling quarterly cycle without losing track of who is due what and when. This is squarely a job-tracking problem rather than a tax problem, and it is where a platform like Accupe is built to help: a Smart Board can hold every affected client as a card moving through records requested, records received, review, client approval and submitted, with the 7 August deadline visible against every open card at once rather than buried in individual client files.
The Client Hub is a natural place to request the underlying records from clients who are not yet fully digital, with a clear audit trail of what was asked for and when it arrived, and deadline tracking that flags the quarter coming up before it becomes urgent rather than after. Accupe does not file the quarterly update itself, that happens in the MTD-recognised software the client's bookkeeping runs on, but it is a sensible place to hold the operational view of a process that now touches every affected client four times a year instead of once.
What to do before 7 August
Confirm which clients are actually in scope based on their 2024/25 return, not a guess about current-year income. Make sure every one of them has completed the specific MTD authorisation, separate from any existing 64-8. Chase digital records now rather than the week before the deadline, and build a short internal review step into the process so a first-quarter error does not quietly roll forward into every later submission. None of this is complicated on its own. What it needs is a routine that survives being repeated four times a year for every affected client, and that routine is worth building properly before the second deadline arrives in November.
It is also worth using the first cycle as a genuine learning exercise rather than simply getting through it and moving on. Note down, client by client, what went smoothly and what caused friction: which clients supplied records without chasing, which needed several reminders, which had bookkeeping errors that took real time to unpick. That record becomes the basis for a more accurate fee review for the affected client group, and a more realistic staffing plan for the November deadline, which will arrive with three months of quarterly experience behind it rather than none.
