How to Submit Your First MTD Quarterly Update: Step-by-Step

How to Submit Your First MTD Quarterly Update: Step-by-Step

Your first quarterly update under Making Tax Digital for Income Tax is due by 7 August 2026, covering the period 6 April to 5 July. If you've never done this before, the process can feel opaque. Here's a step-by-step walkthrough of what you actually need to do.

Step 1: Make Sure You're Signed Up

Before you can submit anything, you need to be registered for MTD for ITSA with HMRC. If you're a sole trader or landlord with qualifying income above £50,000, you should receive a notification from HMRC. However, don't wait for the letter — you can sign up through your Government Gateway account.

You'll need:

• Your Government Gateway user ID and password
• Your National Insurance number
• Your business start date and accounting period

If you use an accountant, they can sign you up through their agent services account.

Step 2: Choose Your Software

HMRC doesn't accept quarterly updates directly through its website. You must use MTD-compatible software that connects to HMRC's API. Your options are:

• Full accounting software (FreeAgent, Xero, Sage, QuickBooks) — these handle record-keeping and submission in one package
• Bridging software (123Sheets, AbsoluteTax, VitalTax) — these take data from your spreadsheet and submit it to HMRC

If you already keep records in a spreadsheet, bridging software lets you continue your existing workflow. HMRC maintains a list of compatible software on GOV.UK.

Step 3: Prepare Your Data

This is where most people underestimate the work involved. Your quarterly update needs to include:

• Total income for the quarter (sales, fees, rental income, other receipts)
• Total expenses broken down by HMRC-recognised categories
• Year-to-date figures (for Q1, these are the same as the quarter figures)

The data must flow digitally from your records to HMRC — no manual retyping allowed. If you use a spreadsheet, this means:

• Your categories need to match what the bridging software expects
• Transactions must be properly dated within the quarter
• Duplicates and uncategorised items need to be resolved before submission
• Income and expense totals must reconcile

This preparation step is often more time-consuming than the actual submission, especially if your spreadsheet has grown organically over time.

Step 4: Submit the Quarterly Update

Once your data is prepared:

• Open your chosen software or bridging tool
• Import or connect your prepared data
• Review the summary figures the software generates
• Authorise the submission to HMRC

The software sends your figures to HMRC via their MTD API. You'll receive a confirmation with a submission reference. Save this reference — it's your proof of timely filing.

The actual submission takes minutes. It's the data preparation that takes hours.

Step 5: After Submission

After submitting:

• Check HMRC's records — log into your MTD account to confirm the update appears
• Keep your source data — HMRC can enquire into any quarterly update, so retain your spreadsheets and bank statements
• Note any corrections needed — if you spot an error after submitting, you can amend it in a subsequent quarterly update

Quarterly updates are provisional, not final. Errors in Q1 can be corrected in Q2. The final declaration at year-end is where everything must be accurate.

Common Errors to Avoid

• Submitting uncategorised transactions. Bridging software may accept them, but HMRC expects proper categorisation. Submitting a lump sum as "other expenses" will likely trigger queries.
• Mixing personal and business transactions. If your spreadsheet includes both, separate them before submission. Bridging tools won't do this for you.
• Leaving it to the last day. If your software throws an error on deadline day, you have no buffer. Test your submission workflow at least a week early.
• Forgetting this is year-to-date. Q2 includes Q1 figures. If Q1 was wrong, the errors compound.

Making the Process Smoother

The biggest bottleneck for spreadsheet users is Step 3 — getting messy data into the format bridging software expects. If you find yourself spending hours cleaning categories, resolving duplicates, and reformatting columns, tools like TaxPrepUK automate that preparation step so you can go straight from raw spreadsheet to bridging-ready data.

For background on how the whole system works, see our plain English guide to MTD for Income Tax. If you're a sole trader, our dedicated sole trader guide covers the specific requirements for your situation.