Making Tax Digital quarterly filing is the central obligation of MTD ITSA. Four times per year, UK sole traders earning over £50,000 must submit a summary of their income and expenses to HMRC. This guide walks you through the entire process — from the records you need to keep, through the categories you'll use, to clicking submit and receiving your HMRC confirmation.
Start with the MTD Readiness Checker to confirm whether MTD ITSA applies to you. Then come back to this guide for the filing walkthrough.
What a Quarterly Update Actually Is
A quarterly update is a summary of your business income and expenses for a specific three-month period. It is not a detailed list of every transaction — it's the totals by category, submitted digitally to HMRC's systems.
Think of it as a condensed version of the income section of your Self Assessment — but filed four times per year instead of once, and based on categorised totals rather than the full return you used to file in January.
The quarterly update does not calculate or pay your tax. It simply reports what you earned and spent. Your actual tax liability is calculated at year end through the End of Period Statement and final declaration.
Step 1: Keep Digital Records Throughout the Quarter
The foundation of MTD quarterly filing is up-to-date digital records. You cannot file a quarterly update from a pile of receipts — your transactions need to be recorded in MTD-compatible software before the submission window opens.
Best practice is to reconcile your records regularly throughout the quarter — weekly or monthly — rather than doing everything in the final week. This approach means:
- Transactions are fresh in your memory for categorisation
- You catch data errors early, before they compound
- Filing becomes a 15-minute review, not a multi-hour project
- Unexpected large expenses are noticed in real time, helping you plan for your tax bill
HMRC requires that your digital records capture: the date of each transaction, the category (expense type or income type), the amount, and ideally a reference or description. Records stored in MTD-compatible software that connects directly to HMRC's API satisfy this requirement automatically.
Step 2: Categorise Your Transactions
HMRC requires expenses to be reported using specific categories. When you submit a quarterly update, you're not listing individual transactions — you're submitting the total spend per category for the quarter. Here are the main expense categories for self-employed sole traders:
| Category | What it includes |
|---|---|
| Cost of goods sold | Stock, materials, and direct costs of delivering your service |
| Car, van and travel | Business mileage, fuel, train fares, parking (not commuting) |
| Wages and salaries | Staff costs, subcontractors, employer NI contributions |
| Premises costs | Rent, business rates, utilities for business premises |
| Professional fees | Accountant, solicitor, architect fees |
| Repairs and maintenance | Maintenance of business equipment and premises |
| Office costs | Stationery, postage, phone (business proportion), software subscriptions |
| Advertising and marketing | Website, ads, promotional materials |
| Financial charges | Bank charges, interest on business loans, hire purchase interest |
| Depreciation / capital allowances | Annual Investment Allowance, writing down allowances on equipment |
| Other expenses | Any allowable business expense not covered above |
Neatly automatically suggests the correct HMRC category for each bank transaction, learning from your corrections. Most transactions are categorised correctly on the first pass — you just review and confirm.
Income reporting is simpler: you report your total turnover (gross income before expenses) for the quarter. If you have multiple income streams (e.g., self-employment plus rental income), these are reported separately.
Step 3: Understand the Quarterly Submission Timeline
The MTD tax year runs from 6 April to 5 April. Each quarter covers a three-month period, and you have approximately one month after the quarter end to submit your update:
Q1: 6 April – 5 July 2026 → Due 7 August 2026
Your first MTD submission. Covers the first quarter of the 2026/27 tax year.
Q2: 6 July – 5 October 2026 → Due 7 November 2026
Second quarterly update. Your software should be in a routine rhythm by now.
Q3: 6 October 2026 – 5 January 2027 → Due 7 February 2027
Third update. Covers the Christmas and New Year period — plan ahead for holiday disruption.
Q4: 6 January – 5 April 2027 → Due 7 May 2027
Final quarterly update of the tax year.
EOPS + Final Declaration → Due 31 January 2028
End of Period Statement and final declaration. Confirms the year's totals and crystallises your tax liability. This replaces the existing Self Assessment deadline of 31 January.
Step 4: Review and Submit via Your MTD Software
With your records current and your transactions categorised, the submission itself is straightforward. Here's the process in Neatly:
Open the quarterly filing view
Neatly shows you the current open quarter — the period dates, the deadline, and your current categorised totals based on the transactions imported from your bank.
Review uncategorised transactions
Any transactions that haven't been categorised yet appear highlighted. Review these and assign each one to the correct HMRC expense category. For recurring items, you can set rules so they're categorised automatically in future.
Confirm the quarterly totals
Review the summary — total income and the breakdown of expenses by category. These are the figures that will be sent to HMRC. If anything looks wrong, drill down to the individual transactions and correct the categorisation.
Submit to HMRC
Click submit. Neatly sends the quarterly update directly to HMRC's MTD API. You receive a confirmation reference within seconds, which Neatly stores automatically as your filing record.
Save your confirmation
HMRC returns a submission reference. Keep this — it's your proof of filing. Neatly stores it in your account automatically, but it's also worth noting it down or screenshotting as a backup.
Step 5: What Happens After You Submit
Once you submit a quarterly update, HMRC's systems process it and update your tax account. HMRC does not issue a bill or confirmation of tax owed at this stage — the quarterly updates are informational. Your tax is calculated at year end.
However, you can view an estimated tax liability in your HMRC online account after each submission. This is a running estimate based on the quarterly data received so far. It can help you budget for your January payment — one of the key practical benefits HMRC promotes for MTD.
If you discover an error after submitting — a transaction categorised incorrectly, or an expense missed — you can submit an amended quarterly update for the same period. There's no penalty for amendments made within the filing window or within a reasonable period after the deadline.
Common Questions
What if I have no income or expenses in a quarter?
You still need to submit a quarterly update — even if all figures are zero. HMRC requires four submissions per year regardless of trading activity. Missing a submission counts as a late filing and earns a penalty point.
Do I need to keep paper receipts?
You need to keep records of all your income and expenses, but they don't need to be paper. Digital records — photos of receipts, bank statements, invoices as PDFs — are acceptable. What matters is that the records are accessible for at least 5 years after the relevant 31 January deadline, and that they support the figures in your quarterly submissions.
What if I miss a deadline?
Submit as soon as possible. Under the points-based system, one missed deadline earns one penalty point. Points do not accumulate into fines until you reach four. But don't treat this as a buffer — the points system is designed to be invisible until it suddenly isn't.
Can my accountant file on my behalf?
Yes. If you use an accountant, they can be authorised through HMRC's Agent Services portal to submit quarterly updates and the end-of-year declaration on your behalf. You will still need MTD-compatible software for the underlying record-keeping — the accountant submits from your digital records, not instead of them.