MTD quarterly updates explained: what sole traders need to submit

What is a quarterly update?

A quarterly update is a summary of your business income and expenses for a three-month period, submitted to HMRC through MTD-compatible software. Think of it as a progress report — HMRC gets a running picture of how your year is going, rather than finding out everything at once in January.

Crucially, a quarterly update is not a tax payment and not a tax return. You're simply reporting your figures. Your actual tax liability is calculated and settled at the end of the year through your Final Declaration.

All quarterly updates must be submitted through HMRC-recognised software — you cannot file them directly on the HMRC website or by post.

The four quarters and their deadlines

The quarters follow the tax year, which runs from 6 April to 5 April:

What do you actually submit?

Each quarterly update contains a summary of your income and allowable expenses for that period, broken down by HMRC's prescribed categories:

• Income: Turnover (total business receipts)
• Expenses: Cost of goods sold, employee costs, premises costs, repairs and maintenance, admin and business entertainment, advertising, travel, interest and finance charges, professional fees, depreciation, and other business expenses

You are not required to attach individual invoices or receipts to your quarterly update. The software submits totals per category — the underlying records stay in your software for your own reference and in case of an HMRC enquiry.

What happens after you submit?

Once you submit, HMRC uses your figures to update your estimated tax liability, which you can view in your Personal Tax Account. This gives you a running idea of what you might owe at year end — useful for planning your cash flow.

Nothing is due immediately. No payment is triggered by a quarterly submission. Your bill is settled after you file your Final Declaration in January.

The End of Period Statement

After your fourth quarter, you'll submit an End of Period Statement (EOPS). This is your confirmation that the figures you've submitted across all four quarters are complete and accurate.

The EOPS is also where you make any final adjustments — for example, correcting errors in your quarterly submissions, or (if you're on the accruals basis) claiming capital allowances on equipment. If you're on the cash basis, equipment costs are already captured as expenses in your quarterly updates and no further adjustment is needed.

The Final Declaration

The Final Declaration is the MTD equivalent of the old Self Assessment return. It's due by 31 January following the end of the tax year — the same deadline as before.

In your Final Declaration, you'll include:

• Confirmation of your self-employment figures (already submitted via quarterly updates and EOPS)
• Any other income sources — employment, rental income, savings interest, dividends
• Any other reliefs or allowances you're claiming

Because you've already submitted quarterly updates throughout the year, the Final Declaration is typically quicker and less stressful than the old single annual return.

The penalty system

HMRC uses a points-based penalty system for late MTD submissions. Each missed quarterly deadline earns you one penalty point. Once you reach the threshold (four points for quarterly filers), you'll receive a £200 fine — plus £200 for each subsequent missed submission.

Points remain on your record for 24 months. To have them reset to zero, you must submit all required updates on time for a sustained period (typically two years of clean submissions).

This is a stricter system than the old Self Assessment regime — missing a quarter is more consequential than missing the old January deadline was.

Frequently asked questions