Compliance
Compliance with Making Tax Digital: First Quarterly Updates and What Agents Need to Know
MTD for Income Tax is now live for those with over £50,000 qualifying income. Agents face new compliance tasks including quarterly updates, digital records and meeting deadlines like 7 August 2026.
By NomadicTax Research Team • 5-8 min read • August 9, 2026
## What’s Changing Under MTD for Income Tax
As of **6 April 2026**, sole traders and landlords with qualifying income over **£50,000** from self-employment and property must use **Making Tax Digital (MTD) for Income Tax**.([gov.uk](https://www.gov.uk/government/collections/making-tax-digital-for-income-tax?utm_source=openai)) The requirement means:
- Use of **compatible software** to create, store and correct digital records.([gov.uk](https://www.gov.uk/government/collections/making-tax-digital-for-income-tax?utm_source=openai))
- Submission of **quarterly updates** summarising income and expenses—not full tax returns.([gov.uk](https://www.gov.uk/guidance/use-making-tax-digital-for-income-tax/send-quarterly-updates?utm_source=openai))
- The **first quarterly update** (covering 6 April – 5 July 2026) must be submitted by **7 August 2026**.([gov.uk](https://www.gov.uk/government/news/deadline-approaches-for-first-making-tax-digital-quarterly-update?utm_source=openai))
## Responsibilities for Taxpayers and Agents
| Role | Key Action Items | Key Things to Avoid |
|---|---|---|
| Sole Traders & Landlords | • Ensure your accounting software is compatible <br> • Keep digital records continuously from 6 April 2026 (or from 1 April for calendar accounting periods) <br> • Send your first quarterly update by 7 August 2026 <br> • Understand whether you’re exempt or can apply for exemption if digitally excluded | • Missing deadlines <br> • Relying on software that’s not approved <br> • Failing to authorise agents where necessary |
| Agents (Accountants/Bookkeepers) | • Get clients authorised via Agent Services Account (ASA) <br> • Select standard or calendar update periods by first update <br> • Assist clients in compiling and validating quarterly updates <br> • Use software’s tools to check errors before submission | • Changing update periods after first submission <br> • Letting errors in digital records accumulate <br> • Assuming no penalties—though for 2026-27, late quarterly penalties **not** applied for quarterly updates, but late returns & payments still penalised.([gov.uk](https://www.gov.uk/guidance/use-making-tax-digital-for-income-tax/send-quarterly-updates?utm_source=openai)) |
## Penalties & Reliefs
- For the tax year **2026 to 2027**, there will be **no penalty points** for late quarterly updates. However, missed deadlines will result in points from **April 2027 onwards**.([gov.uk](https://www.gov.uk/guidance/use-making-tax-digital-for-income-tax/send-quarterly-updates?utm_source=openai))
- Penalties remain in place for late submission of full Self Assessment tax returns and late payment of tax.
- Agents must help clients ensure authorisations and software setup is complete before deadlines.
## Practical Example
**Scenario:** Jane is a landlord whose 2024-25 self-employment + property income was £60,000. She must comply with MTD from April 2026.
1. From **6 April 2026**, she starts using compatible software to track income/expenses daily.
2. Also from her first quarter, she sends her **first quarterly update** by **7 August 2026**, covering = 6 April to 5 July 2026. Jane chooses the **standard update period**.
3. Jane files her full Self Assessment return by **31 January 2027**, including any allowances, other income & gains not covered by quarterly updates.
4. Jane avoids penalties in the first year if she misses the quarterly update deadline; but must still ensure return and payments make it on time.
## Actionable Steps Right Now
- If eligible, sign up for MTD for Income Tax and ensure your software is compatible.
- Check whether you use **standard or calendar** accounting periods; pick before 7 August if necessary.
- Review your bank, invoices, property receipts, expenses—set a system to capture them digitally **as they occur**.
- For agents: ensure ASA registration and client authorisations are in place.
- Keep an eye on exemptions (digital exclusion, special groups) to determine if any apply.
## Bottom Line
MTD signals a major modernisation towards real-time finance and greater transparency. For those over the £50,000 income threshold, compliance isn’t optional—it’s legal. With preparation and use of appropriate software, quarterly updates will become routine and less burdensome. Agents are key in guiding clients through these early stages and ensuring smooth adoption.