If you started Making Tax Digital (MTD) for Income Tax in April, your first quarterly update is due by 7 August 2026. The easiest way to meet it is to keep your records up to date as you go.
This post sets out a simple routine. It works whether or not you are in MTD yet.
What MTD needs you to record
For each item of income and expense, your software needs:
the amount
the date you received the income or had the expense
the category
If your turnover from a business, or from your rental income as a whole, is under £90,000, you only need to record whether each item is income or an expense. Residential landlords must still record finance costs, such as mortgage interest, separately.
Retailers can record each day's takings as one total. You must also keep the original documents, or copies, such as invoices and bank statements.
Records for each quarter must be in your software before you send that quarter's update. HMRC says to record items as close to the date as you can.
Get set up first
Use a separate bank account for the business. It keeps business and personal spending apart and makes everything else easier.
Link it to your software. A bank feed brings your transactions in each day, so you only need to check and categorise them.
Use a receipt app. Photograph receipts when you get them and attach them to the transaction.
The routine
Every week (15 minutes)
Check the new transactions from your bank feed.
Give each one a category, or mark it income or expense.
Attach any receipts you photographed.
Add any cash income or expenses that don't go through the bank.
Every month (30 minutes)
Check the balance in your software matches your bank statement.
Chase any customers who haven't paid.
Look for anything personal that has gone through the business account, and mark it.
Every quarter (before the update is due)
Check every transaction in the quarter has been recorded.
Look over the figures for anything that seems wrong.
Send your update, or let your accountant know the records are ready.
Every year
Check any equipment you bought during the year. If you use traditional accounts (the accruals basis), also add what customers owe you and what you owe suppliers at the year end. The cash basis is the default for sole traders and landlords, and they usually don't need this step.
Make your MTD tax return by 31 January, or your tax return if you are not in MTD.
How long to keep records
Keep your records and receipts for at least five years after the 31 January filing deadline for that tax year. Limited companies usually need to keep them for six years.
Summary
A few minutes each week keeps your records accurate and makes each quarterly update quick. Start with a separate bank account, a bank feed and a receipt app, then follow the weekly, monthly and quarterly steps.
If you would like help setting up your records or sending your updates, book a call or contact us.