Thousands of self-employed people are approaching a significant milestone this summer as Making Tax Digital (MTD) for Income Tax reaches its first quarterly filing deadline.
If your turnover (your sales before expenses) exceeded £50,000 on your 2024/25 Self Assessment tax return (covering 6 April 2024 to 5 April 2025), you are now part of the first wave of taxpayers required to comply with the new rules. Your first quarterly update, covering the period ending 30 June 2026, must be submitted by 7 August 2026. While many businesses are already familiar with quarterly VAT returns, this is an entirely separate reporting requirement and marks the beginning of a new way of reporting income to HMRC.
Making Tax Digital is HMRC's largest transformation of the UK tax system in decades.
The aim is to replace the traditional once-a-year Self Assessment process with more regular digital reporting. The intention is to create a tax system that is more accurate through digital record keeping, more efficient by reducing manual errors, more transparent, allowing taxpayers to understand their tax position throughout the year rather than after it has ended and better connection through accounting software, reducing reliance on paper records and manual calculations.
From HMRC’s perspective, the move should reduce mistakes, improve compliance and ultimately modernise the tax system. Rather than collecting information once a year, HMRC will receive updates throughout the year, giving a more up-to-date picture of business income.
While Making Tax Digital feels like a major change for UK businesses, the UK is actually following a path that several other countries have already taken.
For many business owners, it may feel like another administrative hurdle. However, as businesses become accustomed to keeping digital records throughout the year, quarterly reporting is likely to become part of normal business practice, much as online banking, digital bookkeeping and VAT returns have over the past decade.
For those affected, the first quarterly reporting period has now ended. If your turnover exceeded £50,000 in the 2024/25 tax year, your first quarterly submission is due by 7 August 2026.
Registering for Making Tax Digital
One point that is causing confusion is that businesses must register for Making Tax Digital before they can submit their quarterly updates. Registering for Self Assessment alone is not enough. It is not automatic and it is mandatory!
If you’ve missed the registration deadline, there is some reassurance. HMRC has indicated that businesses will not be penalised simply for registering late. However, once you are required to submit quarterly updates, missing those submission deadlines can result in penalty points. As points accumulate, they can eventually lead to financial penalties.
Further Business Owner Impacts
Another area that business owners need to be aware of is that quarterly updates are required for each qualifying source of income. For example, someone who is self-employed and also receives rental income may need to submit separate quarterly updates for each business activity. Ensuring the correct software is set up for each income source is therefore essential.
Businesses already registered for VAT may find the transition slightly easier, as quarterly submissions are already familiar. However, it is important to remember that VAT returns and Making Tax Digital for Income Tax are two completely separate obligations. Completing one does not satisfy the requirements of the other.
This is only the beginning.
Making Tax Digital is being introduced in phases. At present, it applies to self-employed individuals and landlords whose turnover exceeded £50,000 in the 2024/25 tax year. In future years, the threshold will reduce, bringing many more businesses into the regime. For many smaller businesses, quarterly reporting may feel like an additional administrative burden. There are more deadlines to remember and greater reliance on digital record keeping. However, once systems and processes are established, many businesses may begin to see some benefits.
Maintaining up-to-date bookkeeping throughout the year provides business owners with more current financial information. Rather than waiting until after the tax year has ended, they can monitor profits, cash flow and estimated tax liabilities on an ongoing basis, allowing for better planning and fewer unexpected surprises.
As with many significant changes, there is likely to be a period of adjustment before the benefits become fully apparent.
The first Making Tax Digital deadline represents more than just another filing date, it signals a fundamental shift in the way self-employed people report their income to HMRC. There will inevitably be challenges as businesses, accountants and HMRC adapt to the new system. Questions will arise, software will be tested and processes refined. That is to be expected with any reform of this scale. The UK is not breaking new ground here, it is following a global shift towards digital tax reporting. As with any major reform, there will be lessons to learn, but over time the hope is that businesses will benefit from more accurate records, better financial visibility and fewer end-of-year surprises. The first quarterly deadline is just the beginning of a new era in UK taxation.
The Bottom Line
For those affected, the key message is simple: understand your obligations, ensure you are correctly registered and don’t leave your first quarterly submission until the last minute. A little preparation now could save considerable time, stress and unnecessary penalties later.
We are here to Help – Book a Chat Today.