Quarterly updates under Making Tax Digital

On 12 August 2026 HMRC confirmed that more than 436,000 sole traders and landlords had sent their first Making Tax Digital for Income Tax quarterly update.

436,000

sole traders and landlords have sent a first Making Tax Digital for Income Tax quarterly update

HM Revenue & Customs, 12 August 2026

9 min read · Altro Partners, by Equity & General

Reacting to

436,000 sole traders and landlords make their tax digital (HM Revenue & Customs, 12 August 2026)

The change for an accountant is how often a self-employed client’s figures arrive. Under Self Assessment, the picture arrived once a year, months in arrears. Profit running ahead of drawings, a new mortgage on a let property, or income climbing towards a threshold was seen in January, about something that happened the previous spring. Under Making Tax Digital the same figures arrive four times a year, within weeks of the quarter end.

The figures

HMRC published two numbers. More than 436,000 customers have sent a first quarterly update, and more than 570,000 have signed up to the service. On HMRC’s own figures, around 134,000 people signed up and did not file.

436,000

customers have sent a first quarterly update

570,000

have signed up to the service

134,000

signed up and did not file

HMRC, 12 August 2026

Making Tax Digital for Income Tax has been mandatory since April 2026 for sole traders and landlords with qualifying income over £50,000. The first update period ran from 6 April to 5 July 2026, with a calendar-quarter alternative running 1 April to 30 June, and the filing deadline for all customers was 7 August 2026. From April 2027 the threshold drops to qualifying income over £30,000. Self Assessment continues: the return deadline remains 31 January, and HMRC says quarterly updates do not replace it, though those in scope must send their updates in order to submit a return.

What a quarterly update contains

A quarterly update is a short summary of income and expenses sent through recognised software. HMRC says it takes minutes to complete and carries no adjustments, no reliefs and no final position. It does not replace the year-end conversation.

It changes when the accountant sees the figures. This example uses a made-up client. A landlord with two let properties and consultancy income adding up to £68,000 of qualifying income refinances in May 2026 and buys a third property. Under the old cycle, the practice first sees that transaction in the 2026/27 return, prepared between the following autumn and 31 January 2028, twenty months after the event. Under the new one, the extra rental stream and the changed interest cost appear in a submission due on 7 August 2026, about ten weeks after completion. The accountant can ask whether anything protects the income servicing the new mortgage while the client is still considering it.

HMRC, 12 August 2026: more than 436,000 sole traders and landlords have sent a first quarterly update, and more than 570,000 have signed up to the service.

Who is in scope

Sole traders and landlords over the £50,000 threshold have income and no employer, so no automatic enrolment into a pension. The FCA’s Financial Lives 2024 survey found that 8.6% of UK adults had taken regulated financial advice in the previous twelve months, and 13% of the self-employed. The lang cat’s State of Advice Report 2025 puts the average new client portfolio at £411,000 and the average age of an IFA client at 59, across a market of fewer than 5,000 IFA firms. A 41-year-old sole trader with £68,000 of income, no pension and a growing property interest is now filing a summary of their income four times a year to an accountant who already has their trust. The figures on who takes advice are on the advice gap.

Five things a quarterly update shows sooner

The accountant now sees them in the quarter they occur. The fuller list is in what to look for in the accounts.

Profit running ahead of drawings. Three consecutive quarters of surplus building with nothing extracting it is visible by Christmas. The same position inside a company is set out in the cash question.
A new borrowing commitment. A refinance or an additional property changes the interest line at once. Whether anything protects the income servicing it is a question to ask soon after the borrowing starts.
Income crossing a threshold mid-year. Movement towards the £100,000 personal allowance taper (GOV.UK, Income Tax rates and Personal Allowances), or towards the point where incorporation starts to make sense, becomes a decision taken in advance.
A step change in trading. A quarter well ahead of the same quarter last year is the point to raise pension capacity. The annual allowance is £60,000 (GOV.UK, Tax on your private pension contributions).
A quarter that stops. Income falling away is seen within the quarter, where an annual cycle showed it a year later.

Who does what

Four quarterly review meetings per client is not a workable practice model. The quarterly submission is already being prepared, so the check over it is a short one.

Accountancy work

Where an accountant and the Equity & General financial planner work from the same picture, the accountant can pass what the check finds to the financial planner. The accountant sees the pattern and holds the facts.

Regulated advice

The financial planner holds the permissions, the research and the regulatory responsibility for any recommendation. The division is set out in who does what. Planning on something seen in August can be completed before the tax return is started.

Two things to do this week

Find your own gap between signed up and filed. Identify every client who signed up and has not filed a first update. HMRC has confirmed no penalty points for late quarterly updates during 2026/27, and that those who have not sent one can still do so. From 6 April 2027 the points regime starts: one point per missed deadline, a fixed £200 penalty at four points, and points expiring after a period of compliance.
Sign up the in-scope clients who have not signed up, before September. HMRC has said it will begin signing up customers who should be using Making Tax Digital for 2026/27 but have not yet done so from September 2026, in stages. A client signed up by letter arrives without a chosen software package. Doing it first keeps the software choice and the timetable inside the practice.

What is not yet settled

HMRC has said new guidance will be published in late August 2026 explaining what customers need to do if they receive a letter about being signed up automatically. That will decide how much handling the September cohort needs.

The April 2027 drop to a £30,000 qualifying income threshold has a known date and an unknown size for any individual practice until the firm runs its own client list against it. Qualifying income means gross income from self-employment and property before expenses, so the count is larger than one worked from profit.

Common questions

Does a quarterly update tell us anything a tax return did not?

It shows the same kind of information, earlier. A quarterly update is a short summary of income and expenses sent through recognised software, and HMRC says it is not a tax return. It carries no adjustments, no reliefs and no final figures. For the quarter ended 5 July 2026, the deadline was 7 August 2026, so a firm reviewing that submission was looking at trading four to five weeks old. The same picture under Self Assessment would have arrived in January 2027.

Which clients are in scope, and when does that widen?

Making Tax Digital for Income Tax has applied since April 2026 to sole traders and landlords with qualifying income over £50,000. From April 2027 the threshold falls to qualifying income over £30,000. Qualifying income means gross income from self-employment and property before expenses, so a count worked from the net figure on last year’s return will be too low. HMRC lists exemptions, including for the digitally excluded. The client list to review now is the over-£30,000 one as well as the over-£50,000 one.

What happens in September if a client has not signed up?

HMRC has said that from September 2026 it will begin signing up customers who should be using Making Tax Digital for the 2026 to 2027 tax year but have not yet done so, in stages over the following months. A client signed up that way has the same obligations, but arrives at them through a letter and without having chosen their own software. HMRC has said guidance on what to do on receiving one of those letters will be published in late August 2026. Signing an in-scope client up before September keeps the software choice and the timetable inside the practice.

Is there a penalty for the clients who have missed the first update?

Not this year, for the quarterly update itself. HMRC has confirmed no penalty points will be issued for late quarterly updates during the 2026 to 2027 tax year, and that customers who have not yet sent their first update can still do so. Penalties for late tax returns and late payments still apply. From 6 April 2027 a points-based regime begins: one point for each missed quarterly deadline, a fixed £200 penalty once four points are accumulated, and points expiring after a period of compliance.

Where does the accountant stop and the financial planner start on this?

The quarterly update, the digital records, the software, the year-end adjustments and the Self Assessment return are accountancy work and stay in the practice. What the update can show, surplus building with no pension behind it, a landlord borrowing more without cover, or profit rising towards a different structure, is a prompt for a conversation. Recommending a pension, a protection policy or an investment is a regulated activity and sits with the Equity & General financial planner. The accountant describes the pattern and asks whether the client would like a conversation.

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