Quick Summary
Under MTD for ITSA, you submit four quarterly updates and one final declaration each tax year. Each quarterly update summarises your income and expenses for that period. Updates are due by the 7th of the month following each quarter end.
Quarterly Reporting Deadlines
The tax year (6 April to 5 April) is split into four quarters. Each quarter has a submission deadline one month and two days after the quarter ends:
| Quarter | Period | Submission Deadline |
|---|---|---|
| Q1 | 6 April – 5 July | 7 August |
| Q2 | 6 July – 5 October | 7 November |
| Q3 | 6 October – 5 January | 7 February |
| Q4 | 6 January – 5 April | 7 May |
Final Declaration
After your fourth quarterly update, you submit a final declaration by 31 January of the following year. This is similar to a Self Assessment tax return — it confirms your total income, expenses, allowances, and tax due for the year.
What's Included in Each Quarterly Update
Each quarterly update is a summary — not a line-by-line list of every transaction. You report:
- Total income for the quarter (all invoices issued or income received)
- Total expenses by category (e.g., travel, materials, office costs, subcontractor payments)
Your MTD software calculates an estimated tax position after each update, giving you a running picture of what you'll owe at year end.
How to Prepare Quarterly Updates
Preparation is the difference between a 5-minute submission and a stressful scramble. Here's how to stay on top of it:
Step-by-Step Preparation
1. Keep Records Up to Date Throughout the Quarter
Don't wait until the deadline. Record income and expenses as they happen — ideally weekly. If you're invoicing through software like Experi, your income records are created automatically.
2. Reconcile Your Records
Before submitting, check your records against your bank statements. Make sure all income and expenses are accounted for and correctly categorised.
3. Categorise Expenses Correctly
HMRC expects expenses in standard categories. Consistent categorisation throughout the year prevents errors and reduces time spent on each quarterly update.
4. Review the Summary Before Submitting
Your software will generate a summary of income and expenses. Review the figures and check they look reasonable before hitting submit. Does total income match what you expect? Are any expense categories unusually high or low?
5. Submit Before the Deadline
Don't leave it to the last day. Submit a few days early to avoid technical issues or last-minute problems. Set calendar reminders for a week before each deadline.
Common Mistakes to Avoid
These are the errors that most commonly trigger penalties or create problems:
Missing Deadlines
The most obvious mistake but the most common. Each late submission earns a penalty point. Set reminders for every deadline — don't rely on your memory for five submissions per year.
Leaving Everything to Quarter End
If you haven't recorded transactions during the quarter, you'll spend hours reconstructing your records. This leads to errors, missing transactions, and late submissions.
Mixing Personal and Business Expenses
Only claim allowable business expenses. Mixing personal spending into your quarterly updates can trigger HMRC inquiries. Use a separate business bank account to keep things clear.
Incorrect Categorisation
Putting expenses in the wrong category won't necessarily change your tax, but inconsistent categorisation makes it harder to spot errors and may raise questions from HMRC.
Forgetting Unpaid Invoices
Whether you report on a cash basis (when paid) or accruals basis (when invoiced) affects which invoices to include. Know your accounting basis and be consistent.
Cash Basis vs Accruals Basis
How you report income in quarterly updates depends on your accounting basis:
Cash Basis
Report income when received and expenses when paid.
- • Invoice sent in March, paid in April → report in Q1
- • Simpler for most sole traders
- • Default method for small businesses
- • Available if turnover is under £150,000
Accruals Basis
Report income when invoiced and expenses when incurred.
- • Invoice sent in March, paid in April → report in Q4 of previous year
- • Better for complex businesses
- • Required if turnover exceeds £150,000
- • More accurately matches income to work done
How Good Invoicing Practices Make Quarterly Reporting Easier
Your invoicing habits directly affect how smooth quarterly reporting is:
Invoice Promptly
Sending invoices as soon as work is completed means your income records are always up to date. No scrambling to remember unbilled work at quarter end.
Use Consistent Descriptions
Clear, consistent invoice descriptions make categorisation straightforward. If your invoices clearly state the type of work or product, classifying income becomes automatic.
Track Payment Status
Knowing which invoices are paid and which are outstanding is essential — especially if you use the cash basis. Software that tracks payment status saves you cross-referencing bank statements manually.
Use Software, Not Paper
Digital invoicing software creates the records MTD requires automatically. Every invoice is timestamped, stored, and searchable — ready to export for quarterly reporting.
Setting Up a Quarterly Routine
Build a simple routine to stay on top of quarterly reporting:
Record any income and expenses not already captured by your invoicing software. File receipts for business expenses.
Reconcile your records against your bank statement. Check for any missing invoices or unrecorded expenses.
Review your summary, check categorisation, and submit your quarterly update at least 3–5 days before the deadline.
Review the full year, make any adjustments, claim allowances, and submit your final declaration by 31 January.
Make Quarterly Reporting Effortless
Experi keeps your income records up to date automatically. Every invoice you send is stored digitally with the details you need for quarterly reporting. Spend less time on admin, more time on your business.
Start Free — No Credit Card RequiredFrequently Asked Questions
What are the MTD quarterly reporting deadlines?
The deadlines are: Q1 (6 April – 5 July) due by 7 August, Q2 (6 July – 5 October) due by 7 November, Q3 (6 October – 5 January) due by 7 February, Q4 (6 January – 5 April) due by 7 May. The final declaration is due by 31 January of the following year.
What happens if I submit a quarterly update late?
You receive one penalty point for each late submission. Once you reach 4 points (the threshold for quarterly obligations), you receive a £200 penalty. Every subsequent late submission also triggers a £200 penalty. Points expire after 24 months of on-time submissions.
Do quarterly updates need to be exact?
Quarterly updates are summaries of income and expenses, not full tax returns. HMRC has confirmed that reasonable estimates are acceptable if exact figures aren't available, as long as you correct any inaccuracies in later updates or the final declaration. However, the closer to accurate your figures are, the fewer corrections you'll need.
Can I correct a quarterly update after submitting?
Yes. You can amend a submitted quarterly update. Any corrections or adjustments can also be made in subsequent quarterly updates or in your final declaration. The final declaration is where your overall tax position is confirmed and any discrepancies are resolved.