864,000 Sole Traders Owe HMRC an Update by 7 August. One Choice In It Is Irreversible

If you are a UK sole trader or landlord whose 2024 to 2025 Self Assessment return showed more than £50,000 of qualifying income, you owe HMRC a submission by 7 August 2026 covering 6 April to 5 July 2026. It is not a tax bill and it is not a return. It is a set of summary totals from your digital records, sent through recognised software. If you have both a trade and a rental property, you owe two of them, not one. And there is one choice inside the first submission that you cannot change afterwards for the rest of the tax year.

Are you in scope? Three questions, and the year each answer comes from

The scope test is mechanical, and the common mistake is checking the wrong tax year. HMRC's eligibility guidance is explicit that it reviews a past return: "to check if you needed to use Making Tax Digital for Income Tax from April 2026, we reviewed your 2024 to 2025 Self Assessment tax return."

1. Is your income from self-employment or property? Employment income, dividends and pensions are outside this regime.
2. Which return applies to you? More than £50,000 on the 2024 to 2025 return brings you in from 6 April 2026. More than £30,000 on the 2025 to 2026 return brings you in from 6 April 2027. More than £20,000 on the 2026 to 2027 return brings you in from 6 April 2028.
3. Have you claimed an exemption? Exemptions exist, digital exclusion among them, but they are applied for rather than assumed.

HMRC's press notice puts "more than 864,000 sole traders and landlords" in scope for this first year. Craig Ogilvie, HMRC's Director of Making Tax Digital, called it "a landmark moment for the tax system" and noted that those people "will be sending their first quarterly update in the coming weeks."

The calendar

HMRC's service guide sets the standard quarters and states the deadline rule as one month and two days after the period ends.

The calendar column is the decision you cannot undo. HMRC requires software to offer the election "before they submit their first quarterly update", and states that "after submitting the first quarterly update for a tax year, the customer cannot change the quarters for that tax year." If your bookkeeping, your invoicing and your bank statements all run on calendar months, elect calendar quarters before you press submit on 7 August. Doing so once saves you four reconciliations a year, every year. Missing the moment costs you a year of splitting July into two halves.

What actually goes in the submission

Less than people fear. HMRC describes the quarterly update as "a short summary sent directly to HMRC through recognised software" covering "income and expenses for the first three months of the tax year". The service guide adds three details worth knowing before you open the software:

• The figures are cumulative for the tax year to date, not standalone period totals.
• They are summary totals of your digital records, broken into income and expense categories.
• Whether you report consolidated or detailed categories depends on turnover.

There is no tax calculation, no adjustment, no capital allowances claim and no payment attached to a quarterly update. Reliefs, allowances and the final tax position all sit at the end of the year, not here. Getting the categories roughly right and submitting on time beats getting them perfect and submitting late.

Two income sources means two submissions

This is the detail that catches people who think of themselves as running one business. HMRC's service guide states that software calls different endpoints depending on income source type, with self-employment, UK property and foreign property handled separately. So a freelance developer who also lets a flat files:

• One quarterly update for the self-employment source, by 7 August.
• One quarterly update for the UK property source, by 7 August.

Add a holiday let abroad and it is three. Four quarters times three sources is twelve submissions in a year, all through software, which is why the software choice below matters more than it looks. If you invoice internationally, the currency conversions feeding those totals need a consistent basis, and the fee side of that is in our comparison of what getting paid from abroad costs.

Read the penalty concession narrowly

HMRC's announcement says: "No penalty points will be issued for late quarterly updates during the first year of MTD for Income Tax."

That sentence covers penalty points, for late quarterly updates, in the first year. It does not say anything about your tax payment, your final return, or the year after. Treating it as a general amnesty is the expensive reading. Treat it as what it is: the first submission is a rehearsal where the cost of getting the mechanics wrong is low, which is a reason to do it early rather than a reason to skip it.

Software, and the honest state of the guidance

HMRC does not supply the software. It also no longer publishes a table of products: the guidance page records that "the table of software listings has been removed" as of 31 July 2025, replaced by a software finder tool that asks about your circumstances first. Two things from HMRC's software guidance are worth carrying into that tool:

• Free products exist for simple tax affairs, but "there may be limits on how the product can be used, for example they could have a limited number of transactions". Check the transaction cap against your invoice volume before you commit, because migrating mid-year is worse than paying.
• Bridging software connects records you already keep in spreadsheets. If your bookkeeping is a working spreadsheet you trust, you do not have to abandon it.

We are not naming products here because HMRC withdrew its own list and we have not tested the alternatives against the finder's criteria. The filter that matters when you run it: does the product support every income source type you have, or will you end up paying twice.

Before 7 August

1. Pull your 2024 to 2025 return and confirm the qualifying income figure that put you in scope.
2. Count your income sources: self-employment, UK property, foreign property. That is your submission count per quarter.
3. Run the software finder and pick a product that covers all of those sources.
4. Decide standard or calendar quarters, and set it in the software before your first submission.
5. Get 6 April to 5 July into digital records, categorised, with bank feeds reconciled.
6. Submit, then diary 7 November, 7 February and 7 May.

The cadence change is the real story here. A business that only had to be accurate once a year now has to be accurate four times, which quietly turns bookkeeping from an annual panic into a monthly habit. That is not a bad trade if you also use the new rhythm to look at what you are owed, which is where our piece on what the late-payment data says actually works is more useful than another tax article.