What did the first MTD IT quarter teach practices, and what should you do before the 7th of November 2026?
What should you do before the 7th of November 2026? Let's discuss what the first MTD IT quarter taught accounting practices.
·5 min read
The first Making Tax Digital for Income Tax (MTD IT) quarter put most of the difficulty for UK practices into registration, records and confirming filings, rather than into sending the update itself, according to Bright’s August 2026 survey of its customers and prospects. HMRC reported more than 436,000 first quarterly updates sent, against its own estimate of about 864,000 taxpayers in scope. The second quarterly update is due on the 7th of November 2026, so the useful work for practices is to get unfiled clients through now.
What did the numbers show after the first MTD for Income Tax deadline?
HMRC’s figures after the first MTD IT deadline on the 7th of August 2026 show that about half of the taxpayers HMRC expected to be in scope had sent a first quarterly update. The table sets out what HMRC published, with its source and date.
Measure | Figure | Source and date |
Taxpayers HMRC estimated would need to sign up from April 2026 | About 864,000 | HMRC estimate, August 2025, based on 2023/24 data |
Taxpayers signed up to MTD for Income Tax | More than 570,000 | HMRC announcement, August 2026 |
First quarterly update successfully sent | More than 436,000 | HMRC announcement, August 2026 |
HMRC also confirmed the thresholds of qualifying income over £50,000 from April 2026, over £30,000 from April 2027 and over £20,000 from April 2028.
What changed for unregistered clients from September 2026?
HMRC began automatically signing up taxpayers it believes should be in MTD IT from September 2026, working in stages from records showing qualifying income over £50,000 for 2024/25, according to ICAS. HMRC asks the taxpayer to share its letter or message with their agent rather than sending the agent a separate copy. Ask every client who has not registered whether an HMRC letter or digital message has arrived.
Do late quarterly updates earn penalty points in 2026/27?
HMRC’s guidance says it will not apply penalty points for late quarterly updates during the 2026/27 tax year. Quarterly updates must still be sent before a client can submit their tax return, and penalty points still apply for late tax returns for 2026/27. After the 2026/27 tax year a late quarterly update earns a penalty point, and four points bring a £200 penalty, according to the HMRC guidance on sending quarterly updates.
What went wrong for practices in the first MTD for Income Tax quarter?
Bright’s survey respondents described four recurring problems in the first MTD for Income Tax quarter. The table pairs each with what to check and where the detail is.
Problem reported | What to check |
An update showed as sent but the quarter stayed outstanding at HMRC | The obligation status, as well as the sent message |
Rejected updates where standard and calendar update periods did not line up | The period type on the client’s HMRC record and in the software |
Clients signed up but no quarterly obligation to file against | That the obligation exists before the deadline week |
Volume: software and HMRC systems met live filing at scale for the first time | File early, and report problems to the software supplier or HMRC |
Where did the extra time go in the first MTD IT quarter?
Bright’s respondents reported that the extra time went on preparing records rather than on the click that files. In Bright’s August 2026 survey, 60% of respondents said they spend more time on tax filing than before MTD IT. In Bright’s August 2026 survey, respondents who felt unprepared spent on average 35 minutes (46%) longer on each quarterly return.
Respondents also reported that creating the digital records and the filing figures took longer than submitting them, and that client communication took a further share. Record preparation used to happen once a year and now happens every quarter.
Which clients create the most quarterly work?
Clients who keep no digital records create the most quarterly work for the practice. In Bright’s August 2026 survey, 70% of respondents’ MTD clients used no bookkeeping software, split roughly 33% Excel and 37% paper records.
What separated practices that coped from those that struggled?
Choosing the right software for each client and segmenting clients were the two factors respondents named most. In Bright’s August 2026 survey, 53% of respondents named software choice as the main reason they succeeded with MTD, and 42% named client segmentation. 27% of responding practices gained clients in Q1 from taxpayers who had used HMRC’s free Self Assessment filing service.
What should you do before the 7th of November 2026 update?
Get unfiled clients to file now. The second MTD for Income Tax update is due on the 7th of November 2026. Clients who have not sent their first update can still send it, and a filing sent now surfaces problems in your process and in the software while HMRC is applying no penalty points to late quarterly updates in 2026/27.
Check the update period type for each client. Standard periods run cumulatively from the 6th of April, so the second update covers the 6th of April to the 5th of October 2026. Calendar periods run from the 1st of April, so the second update covers the 1st of April to the 30th of September 2026. The deadline is the 7th of November 2026 either way.
Confirm each quarter shows as fulfilled. Check the obligation status for each client after filing.
Move capture of paper records to the client. Let the client photograph receipts and invoices, and keep the review for the practice.
Write to the next waves now. MTD for Income Tax extends to qualifying income over £30,000 from April 2027 and over £20,000 from April 2028.
The HMRC guidance on sending quarterly updates sets out the update periods and deadlines for both period types.
How do BrightBooks, BrightManager and BrightTax fit the MTD IT quarterly cycle?
A practice can choose the combination it needs. The role of each product in the MTD IT cycle is outlined below.
BrightBooks keeps digital records and prepares quarterly updates for self-employment, UK property and foreign property. It generates the quarterly figures from ledger transactions and from imported Excel template data, sends the update to HMRC, and shows each period’s status. It also has a document capture tool where clients photograph or upload receipts and invoices. The app extracts the date, amount, vendor and VAT, and the accountant reviews the extracted data before posting it to BrightBooks.
BrightManager adds an MTD IT Quarterly Filing service to a client record. Quarterly tasks are generated when a Next Due date is entered, record-request email templates are available, and automatic records requests can be sent a set number of days after the period end.
BrightTax prepares the final declaration by pulling submitted quarterly data from HMRC into whichever bookkeeping software the client used.
For the detail of how Bright’s tools handle spreadsheet clients, read how bridging tools work for spreadsheet-based MTD clients. For the wider picture, see Bright’s complete guide to MTD for Income Tax for accountants.
Frequently asked questions
When is the second MTD for Income Tax quarterly update due?
When is the second MTD for Income Tax quarterly update due?
The second quarterly update for 2026/27 is due on the 7th of November 2026. It covers the 6th of April to the 5th of October 2026 for standard update periods, or the 1st of April to the 30th of September 2026 for calendar update periods.
Do late MTD for Income Tax quarterly updates earn penalty points in 2026/27?
Do late MTD for Income Tax quarterly updates earn penalty points in 2026/27?
HMRC’s guidance says it will not apply penalty points for late quarterly updates during the 2026/27 tax year. The updates are still required before the tax return can be submitted, penalty points still apply for late tax returns, and late quarterly updates earn points after the 2026/27 tax year.
Are MTD for Income Tax quarterly updates cumulative?
Are MTD for Income Tax quarterly updates cumulative?
Yes. Each quarterly update covers the tax year from the start of the update period type to the end of that quarter, so the second update covers the 6th of April to the 5th of October 2026 for standard periods rather than only the latest three months.
Can clients still use Excel for MTD for Income Tax?
Can clients still use Excel for MTD for Income Tax?
Yes, as long as the spreadsheet is connected to HMRC through bridging software or MTD-recognised software. BrightBooks includes an Excel import that works as a bridging tool for self-employment, UK property and foreign property quarterly updates.
This content may have been developed with the assistance of AI tools. Content is reviewed by a member of the Bright team before publication. Guidance on legislation can be obtained from your industry body.
Talk to our team
See how Bright can help your practice.
