Arjun Kumar, co-CEO and co-founder, Taxd
The clock is now down to the final days: the first-ever MTD for Income Tax quarterly update is due on the 7th August, and for many sole traders and landlords, this is uncharted territory. The anxiety around this is normal, but the task itself is simpler than you may think. MTD isn’t a tax return, there’s no payment attached, and HMRC has built in a soft landing for exactly this reason: nobody expects the first round to be perfect. To make the run-up a little less daunting, we’ve broken down the 7 things you need to know before the 7th.
1. First things first: are you in scope?
Before anything else, it’s worth double-checking. If your gross qualifying income (self-employment plus property, before expenses) topped £50,000 on your 2024/25 return, you’re in, whether or not a letter from HMRC has landed on your doorstep. The legal responsibility to check sits with the taxpayer, not with HMRC, so this is the one to confirm first.
Employment income, properties in a Limited Company or Partnership, Pension Income or investments do not count towards your MTD Qualifying Income.
2. Once you know you’re in, it helps to know what you’re actually submitting.
A quarterly update isn’t a tax return in disguise, and it doesn’t trigger a bill. It’s a digital summary of income and expenses for the quarter, sent through compatible software in a matter of minutes. Understanding that alone tends to take the edge off most of the anxiety. HMRC also has a software finder tool that lets you filter options by income type and accounting period, which is a great starting point if you’re still debating which software to use.
HMRC will not see your backing data, but they do expect you to be keeping a digital record on an ongoing basis, not just after year-end.
3. That brings up the next question: how much time is actually left?
Less than it might feel like! Q1 covers 6 April to 5 July 2026 (or 01 April to 30 June if you prefer a cleaner quarter), and the submission deadline is 7th of August, meaning there’s no quiet weekend left to sort it in. If it hasn’t been dealt with yet, this week is.
4. Set up your software early
If you’ve been keeping your records in a spreadsheet, you don’t have to abandon it. HMRC recognises two kinds of software, products that create digital records for you, and “bridging” software that connects to records you already keep in a spreadsheet and makes the submission on your behalf. Both are valid, it’s a misconception that you must use a full accounting platform.
What does take time is everything around it. You need to choose a product, then authorise it to talk to HMRC on your behalf, then check it’s set up for the right accounting period, and all of that has to happen before you can send anything. Your digital records also need to have been running since 6 April, so if the last few months live in a shoebox rather than a spreadsheet, that’s the gap to close first. This is the step most likely to cause a scramble if it’s left until Thursday night.
5. Sometimes ‘one update’ doesn’t always mean one update.
Anyone with more than one income source (a sole trader who also lets out a flat, for example) is filing separate quarterly updates for each, not a single blended figure. It’s a detail that catches people out more often than you’d think.
6. If all of this feels like a lot for a first attempt, that soft landing is worth remembering.
HMRC has waived penalty points for late quarterly updates for the whole of the 2026/27 tax year, across all four updates. Nobody expects the first year to run perfectly.
7. Finally, what are some of the exemptions?
If you don’t have a National Insurance number before the start of the tax year, you’re exempt and in fact can’t sign up at all. Or if your 2024/25 return included the residence pages, non-residents, split-year cases, anyone claiming under the foreign income and gains regime, you’re automatically exempt for 2026/27. You may be mandated from 2027/28.
Then there are exemptions you have to apply for, and this is where people get caught. If your residence position has changed since your last return e.g. you have moved abroad this year, then you need to apply for it rather than assume it. Same if you’re digitally excluded, which covers age, a health condition or disability, religious beliefs, or genuinely not being able to get online where you live.
One thing an exemption never does is get you out of a tax return. If you’re exempt, you carry on filing a Self Assessment exactly as before.
Choosing software is where most of the anxiety actually lives
The easiest way through the choice is to work out which of four camps you’re in.
If you already run accounting software, Xero, Sage or similar: you may not need to do much beyond switching the relevant features on. If most of what you’d be recording is simply money moving through a business account, some banks have started building record-keeping and submission into their business tools; Starling is one of several going down this route, and it suits people whose income and expenses are relatively clean. If you’re a landlord, property-specific software tends to fit better than general accounting software, because it thinks in properties and tenancies rather than invoices, the NRLA’s Portfolio and Hammock both sit here. And if you’ve been keeping a spreadsheet for years and it works, bridging software connects to it and files on your behalf, with no migration required.
HMRC’s own rules allow different products for different jobs, and for a lot of people the sensible answer is to keep recording income where they already do it and bolt filing on top, rather than tearing up a system that’s working. Platforms like Taxd reflect this modular philosophy. As the NRLA’s official tax partner, Taxd offers its own software and integrates with others. The principle is simple: bridge what you already use instead of replacing it.
Parting thoughts:
The August deadline marks the moment MTD stops being a policy on paper, and starts being an afternoon task for around 800,000 people. Most of the anxiety is around taxpayers not knowing whether they’re in scope or worrying about which software to use. My advice would be to use this first quarter as a dry run: get into the digital habit now, while there’s a soft landing, because by the time the threshold drops to £20,000 in 2028, this will just be how tax works for almost every landlord and sole trader in the country.