How accurate do MTD quarterly updates need to be?

If you’re a sole trader or landlord who’s newly signed up for Making Tax Digital (MTD) for Income Tax, filing quarterly updates to HMRC is one of the big changes in store for you. If you have qualifying income over £50,000 from a sole trade or property, your first quarterly update is due by 7th August 2026.

One of the important things to be clear about is that quarterly updates are not the same as tax returns - you will not be filing four additional tax returns a year. And you will not be asked to pay any tax straight away after submitting your quarterly updates.

But what information exactly do you need to send? How much detail should you include? And what happens if you make a mistake - or miss the deadline? 

We’ve already covered what your first year of MTD for Income Tax will look like, what you need to do, and when the key dates and deadlines are.

So let’s dive in and look at how accurate the details in your quarterly updates will need to be.

What actually is a quarterly update? 

Under MTD for Income Tax, you should be keeping digital records of your income and expenditure for any sole trade or property business(es) using HMRC-recognised software, like FreeAgent. After the end of each quarter you must send a summary of these details to HMRC. This is known as your ‘quarterly update’.

If you have connected your FreeAgent account to HMRC (and have been keeping on top of your regular admin), submitting quarterly updates should be relatively simple. Just double-check your figures for the quarter and send them to HMRC once you are as sure as you can be that your figures are correct.

In FreeAgent, getting your figures to HMRC just means pressing the green ‘Send update’ button on the relevant page. The video below shows exactly what you can expect to see. All being well, in around a minute you’ll have filed your quarterly update to HMRC.

Deadlines for filing quarterly updates are:

• 7th August
• 7th November
• 7th February
• 7th May

The periods covered by your quarterly updates will automatically default to the HMRC tax quarters (e.g. 6th April - 5th July, 6th July - 5th October). But you can choose to switch to calendar quarters instead, if that better suits your bookkeeping calendar.

So how accurate do quarterly updates need to be?

Over to FreeAgent’s Chief Accountant… “HMRC have said themselves that quarterly updates don’t count as tax returns and don’t have to be 100% accurate,” says Emily Coltman FCA.

“My recommendation would be that you make them as accurate as you can to save yourself time and unnecessary anxiety in the future, as your memory of what particular payments were for, for instance, will be more fresh as soon after the event as possible. 

“That said, if you do find yourself needing to revisit your figures and make changes, that’s perfectly OK.”

So there we have it - quarterly updates do not need to be 100% accurate. They should include all income and expenditure from your sole trade or property rental for each quarter, and you need to check those figures to ensure they are as accurate as they can be. But a quarterly update is not as detailed as a tax return, and does not include allowances, or income from other sources. You’ll still have to include that information once a year in your tax return, but for now the task is much simpler. 

Why should I try to make them accurate?

Your future self will thank you if you make your quarterly updates as accurate as possible, as this will reduce the likelihood of scrabbling around trying to find receipts or invoices, or remember what payments or receipts were for, when the end of the tax year comes around.

If you find something is wrong, has been missed out or has changed after you have sent your quarterly update to HMRC, you should correct the mistake and update your records in FreeAgent as soon as possible. Then, when you submit the next quarterly update, your correction will pull through and update automatically with HMRC.

Why might this new way of working help my business?

Once you get used to the process, you may find that accurate quarterly updates are a win for your business more broadly. In addition to saving you a lot of time later in the tax year, they are an opportunity to regularly check in on your business’s financial health.

“Think of it as doing the work through the year so you’ve got less to do at the end of the year. Leaving something in a bag until 22 months after the start of the year, or to the January after the April, that’s not a good idea,” says Craig Ogilvie, HMRC’s Director of Making Tax Digital. 

“And the use of software means that you run your business better. It fundamentally allows you to understand where your liabilities might be, and reduces the chance of nasty surprises.”

“MTD for Income Tax sounds far more intimidating than it actually is,” agrees FreeAgent customer Gemma Baxter, one of the early birds who signed up to join the MTD for Income Tax pilot scheme last year. “Once your bookkeeping is part of your regular routine, it becomes empowering rather than stressful. You gain clarity over your tax liabilities, which allows you to make better decisions throughout the year instead of scrambling in December when all you want to be doing is eating Christmas goodies.”