The MTD Clock Is Ticking: What Sole Traders Need To Do Before August
Since 6 April 2026, sole traders and landlords with qualifying income over £50,000 have been required to keep digital records and report to HMRC through MTD-compatible software.
The deadline for the first quarterly update will be on 7 August 2026 and for many businesses, this will be the first time they have had to submit anything to HMRC under the new rules. It’s worth being clear about what is required and what’s not, here’s what you need to know.
What is a quarterly update?
A quarterly update is not a tax return, but more of a digital check-in with HMRC. There are no capital allowances to calculate or reliefs to claim at this stage, it’s a summary of income and expenses for the relevant period, submitted through your chosen software.
The first reporting period covers 6 April to 5 July 2026, and the update covering that period is due by 7 August 2026. That gives a window of just over a month between the quarter closing and the submission deadline, which is considerably tighter than the timescales most sole traders are used to under the old Self Assessment system.
Who needs to act now
You fall into this first phase of MTD for Income Tax if you are a sole trader or landlord registered for Self Assessment, and your qualifying income from self-employment or property (or both) was over £50,000 for the 2024 to 2025 tax year. If that applies to you, you should already be keeping digital records and using compatible software.
Real-time Bookkeeping for SME’s
Under the new rules, transactions need to be recorded digitally close to the time they happen, rather than reconstructed from a folder of receipts at year end.
In practice, that means:
- Using MTD-compatible software, such as cloud accounting platforms, rather than relying on a basic spreadsheet (bridging software can work, but most businesses find dedicated software easier to manage)
- Keeping business and personal finances in separate bank accounts, so transactions do not need to be manually filtered
- Capturing receipts and invoices as they happen, so your digital records stay current rather than building up a backlog
Businesses that get this right tend to find the quarterly update itself takes very little time, because the groundwork has already been done.
What if you miss the deadline
HMRC has acknowledged that this is a significant change for a large number of taxpayers, and there is a first-year easement in place for the 2026 to 2027 tax year. Missing a quarterly update deadline during this period will not result in immediate penalty points.
It’s worth mentioning that this breathing room doesn’t stretch to your final declaration or to settling up with HMRC. There’s also a bigger shift coming from April 2027 when the points based penalty system kicks in fully. Miss a deadline and you pick up a point, and once you’ve racked up enough of them (four is the usual cap) you’re looking at a £200 fine.
Get organised now
If you have not yet submitted a quarterly update under MTD for Income Tax, the priority now is making sure your software is set up correctly and your records for the April to July quarter are complete and accurately categorised. Leaving this until the days immediately before the deadline increases the risk of technical issues or errors.
How Mitchell Charlesworth can help
Getting the systems and processes right at the start of MTD makes every quarter that follows considerably more straightforward. We can help you choose and set up the right MTD-compatible software, review your records ahead of submission to make sure everything is categorised correctly, and manage your quarterly updates on your behalf so the August deadline and those that follow, are one less thing to think about.
If you would like to discuss your MTD obligations or want a second opinion on whether your records are ready for the August deadline, get in touch with the team at Mitchell Charlesworth today.
