First Making Tax Digital quarterly update due 7 August 2026

Who needs to act by 7 August

Making Tax Digital for Income Tax went live on 6 April 2026. The first group in scope is sole traders and landlords whose qualifying income (turnover, not profit) exceeded £50,000 in the 2024/25 tax year. Over 864,000 people fall into this category for the first year of the regime.

For a limited company contractor, the company’s income is reported through Corporation Tax — MTD for Income Tax does not apply to it. However, many contractors also have income outside the company: rental income from a buy-to-let property, freelance income taken personally, or other self-employment outside the Ltd structure. If that personal income exceeded £50,000 in 2024/25, it brings the contractor into MTD scope for the current year, and the 7 August deadline applies.

Contractors whose personal income was below £50,000 but above £30,000 are not in scope yet, but they will be from April 2027 when the threshold drops. This is the time to understand the system before it becomes mandatory.

What a quarterly update actually involves

The terminology can be misleading: a quarterly update is not a mini tax return. It does not produce a tax bill or require a tax payment. It is a digital submission via approved MTD-compatible software that sends HMRC a summary of your income and expenses for the quarter — keeping their records updated throughout the year rather than only at the end of the tax year.

The Self Assessment tax return process still applies. The annual return — due by the normal deadline — remains the mechanism through which your final tax liability is calculated and agreed. Quarterly updates feed into that process but do not replace it.

The practical requirement is that income and expenses need to be tracked digitally, in MTD-compatible software, and submitted through that software. Maintaining records in a spreadsheet and then typing figures into the HMRC portal is not compliant with MTD — the digital link between record-keeping and submission must be unbroken.

The soft landing in year one

HMRC has confirmed that penalty points will not be issued for late quarterly updates during the first year of MTD for Income Tax (2026/27). This soft-landing approach is designed to give taxpayers and their accountants time to adapt to the new system without facing immediate financial penalties for teething issues.

The soft landing covers late submission penalties only. It does not remove the obligation to submit, and it is not a permanent feature — from 2027/28 onwards, the standard late filing penalty system is expected to apply. Contractors who use the soft landing as a reason to delay setting up compliant processes are storing up a more disruptive transition for the following year.

What MTD for Corporation Tax means for the future

MTD for Corporation Tax has not yet been formally confirmed or dated, but it is widely anticipated as the next stage of HMRC’s digital-first compliance programme. The direction of travel is clear: HMRC intends to move all significant tax obligations toward real-time digital record-keeping and periodic reporting.

For limited company contractors, this means the bookkeeping infrastructure that MTD for Income Tax requires for any personal income — compatible software, digital records, periodic submissions — is also the infrastructure that MTD for Corporation Tax will eventually require. Building it now, even where it is not yet compulsory for the company, is the lowest-friction path to compliance when the corporate requirement arrives.

For background on what MTD means for contractors with Ltd company income, see MTD for Income Tax is live — what limited company contractors actually need to do. For the previous quarterly deadline context, see our earlier coverage of the 7 August 2026 quarterly deadline. Our full Making Tax Digital for Income Tax guide sets out the thresholds, quarterly obligations and penalties in detail.