The short answer
Making Tax Digital for Income Tax is now live, and the firm you file with matters more than it did a year ago. Total Books handles the whole cycle for sole traders, landlords and self-employed professionals: digital records, four quarterly updates a year and the final tax return, filed through HMRC recognised software by a registered tax agent. We work from offices in Cardiff, Newport and Bristol, and UK wide through our Virtual Finance Office, and every engagement starts with a free 15 minute call rather than a quote form.
The first quarterly deadline under the new rules fell on 7 August 2026. HMRC put more than 864,000 sole traders and landlords into that first wave, everyone with qualifying income above £50,000. A second wave joins in April 2027 at £30,000, and a third in April 2028 at £20,000. Most of the people we have spoken to since April did not find the filing hard. They found the record keeping hard, because the rules changed what counts as a record and when it has to exist.
KEY TAKEAWAYS
- MTD ITSA replaces one annual filing habit with five. Four quarterly updates plus the tax return, all from software.
- Qualifying income is turnover, not profit. HMRC adds up gross self-employment and property income from your last submitted return, before a single expense is deducted.
- Signing up is not automatic. You or your agent has to do it. HMRC will not enrol you quietly in the background.
- Quarterly updates are cumulative. Each one runs from 6 April to the end of that period, so a mistake in quarter one can be corrected in quarter two.
- Nothing is calculated quarterly. No tax is due with an update, and the payment dates of 31 January and 31 July have not moved.
- Year one carries a penalty easement. HMRC is issuing no points for late quarterly updates in 2026 to 2027. Late return and late payment penalties still bite.
START WITH A FREE 15 MINUTE CALL
Tell us your income sources and we will tell you which April you are in, what your first quarterly update needs to contain and what it would cost to have us run it. No charge for the call and no obligation afterwards. Book a free 15 minute consultation or phone 029 2002 6505.
Cardiff, Newport, Bristol and UK wide.
What does an MTD ITSA accountant actually do for you
The honest answer is that a good one removes four deadlines from your year and one argument from your life. Here is the work in order.
- Scope check. We take your last submitted return and work out your qualifying income figure the way HMRC does, then tell you which April applies to you and whether any exemption or deferral is in play.
- Sign up. As an HMRC registered tax agent we sign you up through the Agent Services Account, so you are not left guessing whether the enrolment worked.
- Software and records. We set up the digital records for each income source, connect your bank feed and receipt capture, and check the categories are the ones HMRC expects rather than the ones the software defaulted to.
- Four quarterly updates. We prepare and submit each one from the digital records, on 7 August, 7 November, 7 February and 7 May.
- Adjustments and the tax return. After the fourth update we add the accounting adjustments, bring in everything outside MTD scope such as savings interest, dividends and employment income, and file the return by 31 January.
- A conversation four times a year instead of one. The quarterly rhythm is the one genuine upside of this regime, because it turns tax into something you can plan for rather than something that arrives in January.
That last point is worth dwelling on. Our bookkeeping service and Xero cloud accounting setup existed long before MTD, and clients who already worked that way barely noticed April 2026. The clients who felt it were the ones bringing a carrier bag of receipts in December.
WHAT CLIENTS SAY ABOUT HOW WE TEACH THIS
We have been running Making Tax Digital sessions for local business owners since well before the mandate landed. One attendee wrote afterwards that it was “Invaluable knowledge and advise on today’s ‘making tax digital’ course! Everything was clearly articulated, with easy visual slides in a positive and friendly manor with practical takeaways.”
We mention it because the teaching is part of the service, not a marketing add-on. Clients who understand why the quarterly update exists make far fewer mistakes in it.
★★★★★ Mr F., in his own words, Google review, February 2026
7 August, 7 November, 7 February and 7 May, prepared and submitted from your digital records.
Are you in scope, and from which April
You are in scope where you are registered for Self Assessment and your qualifying income from self-employment, property, or both together, is above the threshold for that year. The three dates are fixed in legislation.
Two details catch people out, and both are worth reading twice.
Qualifying income is gross, not net. HMRC uses your total income from self-employment and property before expenses, which is turnover. A landlord collecting £34,000 in rent with a £19,000 mortgage interest bill has qualifying income of £34,000, not £15,000. That landlord is in the April 2027 wave.
The measurement year runs two years behind. Your position for April 2027 was set by the return you filed by 31 January 2027 covering 2025 to 2026. There is a lag built into the system, so a business that grew last year is already committed to a start date it may not have noticed. We work this out for every new client at the scope check stage, and the full threshold guide in this cluster works through the edge cases including partial years, multiple trades and joint property.
What does not count towards the figure
Employment income, pension income, dividends, savings interest, capital gains and your share of partnership profit all sit outside the qualifying income calculation. They still get reported on the tax return at the end of the year, but they do not push you into MTD and they never appear in a quarterly update. A director drawing a salary and dividends from a limited company with a small side trade is measured only on the side trade, which is why our limited company accountants page and this page describe two different regimes.
How the year runs
Four quarterly updates, then one final declaration
The same tax year you already file for, broken into five submissions instead of one.
- Quarter 1 · 6 April to 5 July, sent by 7 August
- Quarter 2 · 6 July to 5 October, sent by 7 November
- Quarter 3 · 6 October to 5 January, sent by 7 February
- Quarter 4 · 6 January to 5 April, sent by 7 May
- Final declaration · everything else, due 31 January as always
Not sure which quarter you would be starting on? One call settles your start date and the first submission you owe.
Book your free 15 minute MTD reviewWhat has to happen every three months
A quarterly update is a set of totals sent from your software to HMRC. It is not a tax calculation, it is not a payment, and it does not contain individual invoices or receipts. You send totals for each income and expense category you use, for each source of income.
Standard update periods follow the tax year, and the deadline is always the seventh of the second month afterwards.
6 April to 5 July
Deadline 7 August
6 April to 5 October
Deadline 7 November
6 April to 5 January
Deadline 7 February
6 April to 5 April
Deadline 7 May in the following tax year
Note the left column carefully. Every period starts on 6 April, because updates are cumulative. Quarter three is not the three months to 5 January, it is the nine months to 5 January. That design is deliberate and it is helpful: a category you posted wrongly in July gets corrected simply by sending the right cumulative figure in November. You do not resubmit the earlier update.
A calendar quarter election is available where your bookkeeping runs to month ends, which turns the periods into 1 April to 30 June, 1 April to 30 September, 1 April to 31 December and 1 April to 31 March. The deadlines stay the same. The election is made per income source, in the software, before the first update of the year goes, and it cannot be changed once an update has been sent for that year. We set this at the point of onboarding rather than leaving it to a default.
A nil quarter still needs an update. A landlord between tenancies with no rent and no costs still files. Our existing guide on UK quarterly tax reporting and digital records covers the record keeping side of that cycle in more depth.
What happens to your tax return
It survives, and the deadline has not moved. 31 January remains 31 January. What changes is where the return is filed from and what is already in it.
After the fourth quarterly update you make your accounting adjustments, capital allowances, private use restrictions, stock and the rest, and then complete the return inside your MTD software rather than on the HMRC website. HMRC pre-populates what it already holds, which currently includes employment income through PAYE, pension income, Construction Industry Scheme deductions, residential property Capital Gains Tax disposals and Marriage Allowance. You add what HMRC does not hold, which is savings interest, dividends including dividends from your own company, and your share of partnership profit.
You then make a final declaration confirming the information is correct and complete. Anyone who has read about an End of Period Statement in older guidance can set that aside, HMRC removed it before launch. There is one declaration, not two. Our existing walkthrough on how to prepare your Self Assessment tax return still holds for the parts of the return that have not changed.
THE HABIT THAT HAS TO CHANGE
One long-standing self assessment client summed up the old rhythm perfectly last year: “Its so easy we chat once a year its all sorted and he stores my records on the computer.” That is exactly how the annual regime worked, and for years it was enough.
It is not enough now. The records still live safely on our systems, but a once-a-year conversation cannot feed four submissions. Clients in scope moved to a quarterly review call at onboarding, and the ones who did it early found the August deadline uneventful.
★★★★★ Sidney J., in his own words, Google review, May 2025
Digital records: the part people underestimate
A digital record under MTD is a record of income or expense created and stored in compatible software. Each one needs three things: the amount, the date the income was received or the expense incurred, and a category. A photograph of a receipt is not a digital record, it is a supporting document, and supporting documents still have to be kept.
Records have to be created as close to the transaction as possible, and in any event before the quarterly update goes. Where information moves between two pieces of software it has to move by a digital link. Formula-linked spreadsheet cells, CSV or XML import and export, an API transfer or an automated transfer all qualify. Retyping a figure or copying and pasting it does not.
There are sensible relaxations. Retailers can record daily gross takings rather than every individual sale. Landlords with jointly let property can keep a single quarterly record per expense category instead of entering each cost separately. Landlords with property turnover under £90,000 can categorise transactions simply as income or expense, although residential finance costs still have to be identified separately because of the way relief on them is restricted.
This is where most of the real work sits, and it is why we set the record keeping up before the first update rather than after the first failure. Our guide to self-employed allowable expenses is a useful companion here, because a category structure that mirrors what you can actually claim makes the year-end adjustments far smaller.
MTD ITSA for landlords
Property income is treated as its own source, separate from any trade. A sole trader who also lets a flat keeps two sets of digital records and sends totals for both in the same update.
UK property and overseas property are separate sources again. A landlord with a house in Cardiff and an apartment abroad is running two property businesses for MTD purposes, and the overseas one brings the foreign pages of the return with it.
Jointly owned property is the question we get asked most. Each owner reports their own share, in their own software, under their own qualifying income test. Two people splitting £60,000 of rent equally each have £30,000 of qualifying income, so neither joined in April 2026 but both join in April 2027. That is a genuinely counter-intuitive outcome and it catches couples out constantly.
Landlords already behind on rental income have a different problem to solve first, and quarterly filing will surface it. Undeclared rent is better disclosed on your own terms through the Let Property Campaign than found by HMRC afterwards. Where the profit figure itself is the uncertainty, our guide on working out rental profit properly is the place to start.
Software, and what we provide
You need software that does three things: creates digital records, sends quarterly updates and submits the tax return. Some products do all three, some do one part and connect to another product by digital link. HMRC publishes and maintains the list of compatible products, and it changes, so we check the current position for your setup rather than working from memory.
Total Books works in Xero, with Dext for receipt capture, and files through the HMRC Agent Services Account. Buhir is a Xero Certified Advisor and the practice has run cloud bookkeeping for years, so the stack is not something we assembled for the mandate. Where a client already has software they like, we work in it rather than forcing a migration, provided it is on HMRC’s compatible list and the digital links hold up.
Detail on the platform side sits on our Xero cloud accounting service page.
Penalties, and what the first year forgives
Late submission moved to a points system. One point per missed deadline, and at four points you get a £200 penalty, with a further £200 for each subsequent miss while you remain at the threshold. Below the threshold, individual points fall away 24 months after the missed deadline. At or above it, points only clear after 12 months of filing everything on time and catching up on anything outstanding from the previous 24 months.
HMRC is not issuing points for late quarterly updates in the 2026 to 2027 tax year. That easement is real and it is generous, but read the boundary carefully: it covers quarterly updates only. A late tax return still earns a point, and late payment still costs money.
Late payment charges for 2026 to 2027 run as follows. Nothing where the tax is paid within 15 days. 3% of the outstanding amount once you pass 15 days, another 3% once you pass 30 days, then 10% a year accruing daily from day 31 until it is cleared. HMRC is applying a one-off easement to the day 15 and day 30 charges in this first year of the new regime, which is worth knowing and not worth relying on. Our guide to HMRC interest and penalty changes sets out the wider position.
FROM OUR CASEWORK
The pattern we saw through the summer was not people missing 7 August. It was people discovering in late July that their bank feed had been categorising six months of transfers between their own accounts as income. The update went in on time and the figures were wrong.
A cumulative update makes that fixable, which is the saving grace of the design. It also makes the case for having someone look at the categories in month two rather than in the week of the deadline.
Who does not have to do this
Several groups are outside the regime entirely. Partnerships are not in scope yet. Neither is anyone with qualifying income of £20,000 or less, anyone without a National Insurance number before the start of the tax year, non-resident companies filing an SA700, trusts filing an SA900 including charitable trusts, personal representatives handling the affairs of someone who has died, or Lloyd’s members filing an SA103L. Where a person cannot provide the information because of physical or mental incapacity and a power of attorney or legal deputy is in place, they are exempt too.
A further group is exempt until at least April 2027 based on what appeared on the 2024 to 2025 return: those claiming averaging relief as a farmer, market gardener or creator of literary or artistic works, those claiming qualifying care relief as a foster or kinship carer, those reporting trust or estate income on the SA107 pages, and those filing the SA109 residence pages.
Beyond those categories, an exemption can be applied for on the ground of being digitally excluded. It is a real route and HMRC does grant it, but it needs a proper explanation of the circumstances rather than a preference for paper. We prepare and submit those applications for clients where the case is genuine.
The profit figure of £43,000 is under the threshold and made no difference at all. Turnover decided it. This is the single most common misreading we correct on the phone.
Same flat, same rent, two different start dates and two separate sets of digital records. Owner B also runs two sources inside their software, property and trade, and sends totals for both in every update.
WORK OUT YOUR OWN POSITION
Bring your last tax return to a free 15 minute call and we will tell you your qualifying income figure, your start date, what your quarterly update has to contain and what our fee would be to run it.
Most calls settle the question in ten minutes.
or phone 029 2002 6505.
Two-minute check
How much of the MTD ITSA groundwork is already done for you?
Which April do you think applies to you?
Do you know your qualifying income figure?
Where do your income and expense records live today?
How many separate income sources would you be reporting?
Have you been signed up for MTD ITSA yet?
How did your last Self Assessment go?
Six questions, about two minutes. Or skip it and ask us directly.
Ask us where you standYour result
Your recommendation appears here.
How Total Books runs MTD ITSA for clients
The engagement is deliberately unexciting, because a compliance cycle should be.
- Onboarding and scope check. Qualifying income calculated from your last return, start date confirmed, exemptions considered, calendar or standard quarters chosen.
- Agent authorisation. Signed up through our Agent Services Account so submissions come from a registered tax agent.
- Records built once, properly. Bank feeds, receipt capture, a category structure that matches what you can claim, and digital links checked end to end.
- A fixed quarterly rhythm. Your figures reviewed in the month after each period end, submitted well before the seventh, and a short call so you know where your tax bill is heading.
- Year-end adjustments and the return. Capital allowances, private use, stock, and everything outside MTD scope brought in and filed by 31 January.
- Plain fees. Quoted for the year, quarterly filings included, no charge for the calls.
Buhir Rafiq founded the practice 17 years ago and has spent more than 30 years in accounting and finance. He is a full member of the AAT, an ICPA Licensed Accountant, an HMRC Registered Tax Agent, a Companies House authorised agent and a Xero Certified Advisor. You can read more about Buhir Rafiq, or work through the client reviews the practice has collected across more than 400 of them.
We do not sell aggressive schemes and we check any planning idea against HMRC Spotlight guidance before it goes anywhere near a client. On a compliance regime like this one, the value is in getting the boring parts right the first time.
WHAT NEW CLIENTS TEND TO WANT FIRST
A client who came to us at the start of his self-employed life described what he actually got from the first conversation: “He sent more than enough links to direct myself and learn on how and what I have to do.”
That is still the shape of the first call. Some people want us to run everything, some want to run it themselves with the setup done properly. Both are fine, and both start the same way.
★★★★★ Marinos K., in his own words, Google review, October 2022
Local offices, UK wide service
Total Books has offices in Cardiff, Newport and Bristol, and works with clients across the UK through the Virtual Finance Office with secure digital onboarding. Sole traders and landlords tend to want a face across a table at least once, and that is easy to arrange from our Cardiff office, our Newport office or our Bristol office. Clients further afield run the whole relationship remotely through the Virtual Finance Office, and the quarterly rhythm works just as well over a call.
Sole traders who want the wider picture of what we do beyond MTD should read the sole trader accountants page. Readers whose main concern is the personal tax return itself will find more on the personal tax service page.
One meeting across a table, then a quarterly rhythm that runs perfectly well over a call.
Cardiff, Newport and Bristol for the clients who want a face across a table, and UK wide through the Virtual Finance Office for the clients who would rather not travel.
Frequently asked questions
Do I need an accountant for MTD ITSA, or can I do it myself?
You can do it yourself with compatible software, and plenty of people will. The work an accountant removes is the category structure, the digital links, the four deadlines and the year-end adjustments that sit between your quarterly totals and your actual taxable profit. Where your affairs are simple and your bookkeeping is already clean, doing it yourself is realistic. Where you have more than one income source, jointly owned property or a history of catching up in January, the sums usually favour handing it over.
Does a quarterly update mean I pay tax four times a year?
No. Quarterly updates carry no payment and no tax calculation. Payment dates are unchanged at 31 January and 31 July, including payments on account. The software will show you an estimated position, which is useful for planning and is not a demand.
I am already using an accountant. Can Total Books take over mid-year?
Yes. We take on clients part way through a tax year regularly. What matters is that the digital records for the periods already reported are available and that the cumulative figures reconcile. Because updates are cumulative, a mid-year handover is considerably less painful under MTD than a mid-year handover used to be.
What if my income falls back below the threshold?
Once you are in the regime you generally stay in it while the business continues, even where income dips. HMRC reviews your position from your returns each year. Where a source of income ends entirely, the obligation for that source ends with it. Tell us before assuming either way, because the answer depends on which source changed.
My records are behind and I have not filed for a couple of years. Is that a problem?
It is a problem worth fixing rather than hiding. HMRC quarterly data makes gaps more visible, not less. We have taken on clients with several years outstanding and worked them back into compliance, including one client whose ten years of unfiled returns were resolved with money recovered. That is a past result for that client rather than a promise for yours, and the case study is published in full.
Can I keep using a spreadsheet?
Yes, provided the spreadsheet is linked to compatible software by a digital link and the figures are not retyped or copied and pasted between the two. Bridging software exists for exactly this. It is a workable route for a business with an established spreadsheet system and a poor route for someone starting from nothing.
What does it cost?
Fees depend on the number of income sources, transaction volume and whether you want the bookkeeping done or reviewed. We quote a fixed annual fee that includes the four quarterly submissions and the tax return, and we tell you the number on the first call rather than after a discovery process.
I am a landlord with one property. Am I really affected?
Only where your gross rent, added to any self-employment turnover, passes the threshold for that year. A single property producing £14,000 of rent with no trade is outside all three waves. The same property alongside £12,000 of freelance turnover reaches £26,000, which brings you in from April 2028.
Go deeper in this cluster
Three companion guides pick up where this page stops, one for each question people ask after the scope check.
Thresholds
Which April applies to you, how HMRC measures the qualifying income figure and what falls outside it.
MTD ITSA income threshold explainedQuarterly filing
What actually goes into an update every three months, and how cumulative totals repair an earlier mistake.
What sole traders and landlords submit each quarterThe return itself
How the final declaration differs from the Self Assessment return you have been filing for years.
What HMRC has changed about your tax returnTALK TO AN MTD ITSA ACCOUNTANT
Total Books files quarterly updates and Self Assessment returns for sole traders, landlords and self-employed professionals across Cardiff, Newport, Bristol and the wider UK.
Regulated, founder-led, and you speak to a person rather than a chatbot.
This page is general information about UK tax rules current at 10 August 2026 and is not advice for your circumstances. Figures, thresholds and penalty easements can change, and HMRC guidance on Making Tax Digital is still being updated. Any client outcome described is a past result for that client and not a promise of a similar result. Total Books Accountants Ltd is an AAT licensed practice and an HMRC registered tax agent. Please take advice before acting.
