MTD quarterly update: are your clients ready?

The first quarterly update submission deadline for Making Tax Digital (MTD) for taxpayers is 7 August. If your clients need to sign up for MTD for the 2026/27 tax year and have not yet done so, now is the time to act.

It's now less than two weeks until the first quarterly update submission deadline for MTD on Friday 7 August. It is essential that affected individuals who have not yet signed up to the service, obtained MTD compatible software, and started to keep digital records of their income and expenses take immediate action in order to be compliant with their legal obligations. The latest agent update from HMRC discusses this impending deadline and specific guidance providing details of what must be included in a quarterly update. More information can be found at Making Tax Digital for Income Tax: quarterly update direction.

Penalty easement

Although a penalty easement applies to late quarterly updates for taxpayers required to sign up to MTD in 2026/27, filing on time remains a legal obligation. Members should also consider their responsibilities under Professional Conduct in Relation to Taxation (PCRT) when advising clients. 

Topical guidance covering the application of PCRT to MTD for Income Tax was produced in July 2025 and can be found on the ICAS PCRT resources section on the ICAS website. 

The penalty easement currently in place is in respect of quarterly submissions for 2026/27 only and the final tax return for MTD mandated taxpayers (not covered by the penalty easement) cannot be filed for 2026/27 until all quarterly updates are submitted. 

MTD for Income Tax is now legally required for sole traders and landlords with a turnover of over £50,000 from all qualifying sources on their self-assessment tax return for the 2024/25 tax year.  MTD will be rolled out further, to individuals with turnover above £30,000 in their 2025/26 tax return from April 2027, and above £20,000 in their 2026/27 tax return from April 2028.  

What clients need to know 

If your client needs to use MTD for Income Tax for 2026/27 but hasn’t yet taken action, there is still time to comply. HMRC has provided guidance for taxpayers at HMRC Making Tax Digital for Income Tax and information on help and support for taxpayers and agents can be found via this guidance: HMRC videos and webinars for Making Tax Digital for Income Tax.

If your clients have not yet signed up for MTD but are required to do so, HMRC recommends the following steps: 

1. Choose compatible software: Choose the right software for Making Tax Digital for Income Tax - GOV.UK (includes options for software which has no cost). 
2. Sign up: Sign up for Making Tax Digital for Income Tax - GOV.UK 
3. Keep digital records – use your chosen software to create digital records: Use Making Tax Digital for Income Tax - Create digital records - Guidance - GOV.UK 

Further MTD guidance 

Links to all HMRC MTD guidance on the gov.uk website can also be accessed via the ICAS MTD Hub.  

Let us know what you think 

We respond to tax consultations and calls for evidence and attend meetings with HMRC at which service levels, delays and other issues you raise with us are discussed. We welcome input from members to inform our work. Email us to share your insights and feedback.

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