Making Tax Digital (MTD) is one of the biggest changes to the UK tax system in recent years. One area that is causing the most confusion is quarterly reporting. Many taxpayers believe they will suddenly need to submit four tax returns a year, but that is not always the case. Understanding whether MTD quarterly reporting applies to you is essential so you can prepare properly and avoid unnecessary stress.

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What Is MTD Quarterly Reporting?

MTD quarterly reporting means certain taxpayers must keep digital records and submit updates to HMRC every three months using compatible software. These updates provide HMRC with a summary of income and expenses throughout the year.

It is important to understand that quarterly updates are not full tax returns. They are simply snapshots of your financial activity. A final declaration is still required at the end of the tax year to confirm your overall tax position.

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Who Will Need to Submit Quarterly Updates?

MTD for Income Tax is being introduced gradually. It mainly affects:

Self employed individuals

You may need to submit quarterly reports if your total self employment income meets the MTD threshold.

Landlords with rental income

If you receive income from UK property, you may also be included if your rental income meets the required threshold.

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Current MTD Income Thresholds

MTD for Income Tax is being introduced in stages:

• From April 2026 – Individuals with qualifying income over £50,000
• From April 2027 – Individuals with qualifying income over £30,000

Qualifying income generally includes combined self employment and property income before expenses.

If your income is below these levels, MTD quarterly reporting does not currently apply to you. However, future expansions are possible, so it is still sensible to stay informed.

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Who Does MTD Quarterly Reporting NOT Apply To?

At present, MTD quarterly reporting does not apply to:

• Employees with only PAYE income
• Individuals whose self employment and property income is below the thresholds
• Partnerships (for now, although changes are expected later)
• Companies submitting Corporation Tax returns

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What Will You Need to Do If MTD Applies to You?

If you fall within MTD, you will need to:

Maintain digital records using MTD compatible software
Submit quarterly income and expense updates
Submit a final declaration confirming your tax position
Keep records throughout the year rather than just at year end

This means moving away from spreadsheets or paper records that are not linked to approved software.

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Will Quarterly Reporting Increase Your Tax?

No. MTD quarterly reporting does not increase the amount of tax you pay. It simply changes how and when financial information is reported to HMRC. Your tax liability will still be calculated based on your annual profit.

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Why HMRC Is Introducing Quarterly Reporting

HMRC believes digital reporting will:

Reduce errors in tax returns
Improve record keeping
Help taxpayers track their financial position more regularly
Encourage better business planning

While it requires adjustment, many businesses find it gives better visibility over profits and tax liabilities.

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How to Prepare Now

Even if MTD does not apply to you yet, preparing early can make the transition easier. You can start by reviewing your record keeping process, exploring compatible accounting software, and understanding your income levels.

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Final Thoughts

MTD quarterly reporting will affect many landlords and self employed individuals over the next few years, but it will not apply to everyone. Understanding your income level and business structure is key to knowing whether you need to comply.

If you are unsure whether MTD applies to you, getting professional advice early can save time, stress, and potential compliance issues later.


Need Help Preparing for MTD?

Taxes Done Right helps landlords, self employed individuals, and small businesses prepare for Making Tax Digital with clear guidance and practical support.