What are quarterly updates and when do I need to submit them?

Making Tax Digital (MTD) for Income Tax requires quarterly updates to be submitted to HMRC every three months for each self employment and property income source. This process is one of the most talked about aspects of HMRC's new system for reporting income and is perhaps the one that is most critisised. After reading this article, you'll realise quarterly updates are quick and simple to complete using Easy MTD and will soon become a natural process in fulfilling your Making Tax Digital for Income Tax obligation.

Each quarterly update must contain the income and expenses figures (zero or otherwise) for an income source from the start of the tax year to the end of the three month period. Basically, it is an accumulation of these figures throughout the year with the latest quarterly update figures replacing the previous ones. For example, the first quarterly update income for a business is £15,000. During the following three months a further £17,000 of income is received. Therefore, the income for the second quarterly update is £32,000.

The date when a quarterly update needs to be submitted depends on whether the update period held by HMRC is set to "standard" or "calendar". Easy MTD will show you what update period you have set for each income source and will allow you to change it if necessary prior to the submission of the first quarterly update.

If the accounting period for an income source is 6 April to 5 April, then you should use the standard update period. If the accounting period is something else such as 1 April to 31 March then use the calendar update period.

The table below indicates the period and due date for each type of update period. Take note of the due date because if you're late submitting, you may get a late submission penalty from HMRC.

Easy MTD allows you to submit a quarterly update after the end of the associated period up to and including the due date (always the 7th of the following month). This can be done any number of times during this timeframe so if you notice a mistake or an ommission you can correct it in the Excel, text or CSV file then use Easy MTD to resubmit the quarterly update. However, because the next quarterly update supercedes the previous this is not normally necessary. If the final quarterly update is in error and the due date has passed it can be corrected using the Accounting Adjustment functionality of Easy MTD.

For further information about quarterly updates, refer to the following HMRC web page:

https://www.gov.uk/guidance/use-making-tax-digital-for-income-tax/send-quarterly-updates