The Question Most People Ask Wrong

When people hear about MTD quarterly updates, the first question is usually: "Does this replace my tax return?" It is an understandable question. You are now filing four times a year instead of once, so it feels like something must have been replaced. But the answer is no - and that confusion is causing real problems for sole traders and landlords who are trying to understand what they actually need to do.

This post explains exactly what quarterly updates are, what they are not, and how they sit alongside the Self Assessment process you may already know. If you are filing your own taxes and want a clear picture of your obligations under Making Tax Digital for Income Tax (MTD ITSA), read this before you do anything else.

What Quarterly Updates Actually Are

A quarterly update is a summary of your income and expenses for a three-month period. That is it. You report what came in and what went out, split into HMRC's standard categories. No tax calculation. No final figures. Just the numbers for that quarter.

There are four quarters in each tax year. If you are within MTD, you must file an update for each one by the deadline for that quarter. The deadlines for the 2026-27 tax year are:

You can see the full picture in our MTD quarterly deadlines guide for 2026-27.

Quarterly updates are essentially a progress report. HMRC gets a sense of how your income and expenses are shaping up across the year. You are not paying tax on them directly. You are not finalising anything. You are just keeping HMRC informed in real time rather than all at once in January.

Note: If you want to understand what actually goes into a quarterly update at a practical level, this guide to what to include in your MTD quarterly update covers the bare essentials category by category.

What Quarterly Updates Are Not

This is where most of the confusion lives. Quarterly updates do not:

They are partial. They only cover the income source you are reporting - either your self-employment, your property income, or both if you have mixed income. Everything else in your tax position is handled elsewhere.

We go into more detail on common misunderstandings in our post on MTD myths explained, which is worth a read if you are unsure what MTD does and does not require.

So What Replaces the Old Tax Return?

Nothing replaces it entirely. Under MTD, the tax return is replaced in name but not in function. What was your Self Assessment tax return becomes the final declaration.

The final declaration is the step where you:

Once you submit the final declaration, HMRC calculates your tax bill for the year. That is the moment your tax position is settled.

The deadline for the final declaration is 31 January - the same date you will recognise from the old Self Assessment system. For the 2026-27 tax year, that means your final declaration must be submitted by 31 January 2028.

Warning: Filing all four quarterly updates on time does not mean you have completed your tax obligations for the year. You must still file the final declaration by 31 January 2028. Missing that deadline will result in penalties, even if every quarterly update was submitted correctly and on time.

The Full Picture: Your Filing Obligations Under MTD

If you are a sole trader or landlord who qualifies for MTD, here is the complete list of things you need to file in a tax year:

  1. Four quarterly updates - one for each three-month period
  2. One final declaration - submitted after the tax year ends, by 31 January

That is five filings in total per tax year, compared to the single tax return you may be used to. The quarterly updates are simpler individually, but the final declaration is where the full picture comes together.

If you have both self-employment income and property income, you may need to file separate quarterly updates for each income source in some cases - so the number of individual filings could be higher. Our post on multiple income sources and MTD explains how this works.

Why Does HMRC Require Both?

The logic behind quarterly updates is that HMRC wants a clearer view of how tax is building up across the year - rather than everyone filing everything in one go in January. It also helps spread the administrative load for taxpayers, so you are not scrambling to find twelve months of records in one go.

But quarterly updates are limited by design. They only capture your trading or rental figures. They cannot capture your full tax position, because that depends on things that may not be known until after the tax year ends - your total income from all sources, which reliefs apply, whether you have made pension contributions, and so on.

The final declaration is the mechanism that pulls all of that together. It is the equivalent of the old tax return but sits at the end of the MTD process rather than being the only filing.

For a deeper look at how the quarterly updates and final declaration relate to each other, see our post on quarterly updates vs final declaration.

What Stays the Same as Before

Despite the new quarterly requirement, several things remain unchanged:

MTD changes how you report your income during the year. It does not change what you are taxed on or the core rules around what counts as income and what you can deduct.

What Changes in Practice

The main practical change is timing. Under the old system, you could wait until after 5 April and then gather twelve months of records for a single filing. Under MTD, you need to have your records in reasonable shape every three months.

That is not necessarily harder - it is just different. Many people find that keeping on top of records quarterly is actually less stressful than the January rush. But it does require a change in habit.

You will also need to use HMRC-recognised software to file. You cannot file quarterly updates manually or through the HMRC website in the same way you might have used the old Self Assessment online portal. Bridging software is one option that works well for people who want to keep their existing spreadsheets or simple records and simply use the software to send those figures to HMRC.

A Quick Recap: MTD Quarterly Updates vs Self Assessment Tax Return

Here is a side-by-side comparison to make this concrete:

The quarterly updates feed into the final declaration. Think of them as drafts. The final declaration is the version that counts.

Note: If you are preparing for your final declaration and want to know what to pull together, our post on preparing for your MTD final declaration runs through exactly what you will need.

Common Situations That Catch People Out

You have employment income as well as self-employment or rental income

Your quarterly updates only cover your self-employment or property income. Your employment income (the PAYE income from a job) does not appear in the quarterly updates at all. It gets added at the final declaration stage. If you only file quarterly updates and assume that covers everything, you will be missing a significant part of your tax picture.

You think filing four updates means you do not need to do anything in January

This is one of the most common misunderstandings. The January deadline does not go away under MTD. You still need to file the final declaration by 31 January each year. The quarterly updates do not replace that obligation.

You have multiple income sources

If you earn from both self-employment and property, your quarterly updates may need to be filed separately for each source. Your final declaration then brings them together. Our post on mixed income and MTD for landlords with self-employment covers this setup in more detail.

You assume quarterly filing means quarterly tax payments

Quarterly updates do not trigger automatic quarterly tax payments. Your tax is settled through the normal payment mechanisms - balancing payments and payments on account - which are tied to the final declaration, not the quarterly updates. For more on how payments on account interact with MTD, see our post on MTD quarterly updates vs payments on account.

Do Quarterly Updates Have Any Benefit Beyond Compliance?

Yes, potentially. Because you are recording income and expenses more regularly, you get a clearer picture of how your tax liability is building up during the year. That means you can set aside an appropriate amount as you go, rather than facing a surprise bill in January.

Some people find that the discipline of quarterly reporting also means their records are tidier and less likely to contain errors by the time the final declaration comes around. If your quarterly figures are accurate, the final declaration is much less work.

Where to Go From Here

If you are just getting started with MTD, the best first step is to check whether you are actually within scope. The MTD eligibility checker is a good starting point. If your gross income from self-employment, property, or both exceeds £50,000, you are likely required to comply from 6 April 2026.

Once you know you need to file, the next step is getting your records in shape. Our MTD bookkeeping setup guide is a practical starting point for building a simple system that works for quarterly filing.

And if you want to understand the full MTD process from start to finish in plain terms, our plain-English explanation of MTD ITSA covers the whole picture.

Summary

MTD quarterly updates are not a replacement for the Self Assessment tax return. They are a new, additional filing requirement that sits alongside it. You file four quarterly updates during the year to keep HMRC informed of your income and expenses in real time. Then you file a final declaration by 31 January to settle your full tax position for the year. Both are required. Neither replaces the other. If you only focus on the quarterly updates and ignore the final declaration, you will miss a legal deadline and face penalties. Understanding this distinction early is the most important thing you can do to stay on top of your MTD obligations.

File Your MTD Quarterly Updates Without the Confusion

AffordableMTD is HMRC-recognised bridging software built for sole traders and landlords who file their own taxes. Enter your figures, check them, and send directly to HMRC - no accountant needed.

Get Started Free