What did the first MTD for Income Tax quarter teach practices?
What did the first MTD for Income Tax quarter teach practices? Let's show you what reach practices had to say about it.
·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 our August 2026 survey. 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 7 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 for Income Tax deadline of 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 |
What changed for unregistered clients from September 2026?
HMRC began automatically signing up taxpayers it believes should be in MTD for Income Tax from September 2026, working in stages from records showing qualifying income over £50,000, 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 our August 2026 survey, 60% of respondents said they spend more time on tax filing than before MTD IT. 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 IT clients used no bookkeeping software, split roughly 33% Excel and 37% paper records.
The practical question for each client is who populates the records each quarter. How to segment MTD clients by who keeps the records sets out four groups, and moving shoebox clients to receipt capture covers the paper-based group.
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 our August 2026 survey, 53% of respondents named software choice as the main reason they succeeded with MTD IT, 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 7 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 6 April, so the second update covers 6 April to 5 October 2026. Calendar periods run from 1 April, so the second update covers 1 April to 30 September 2026. The deadline is 7 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?
Bright describes its MTD for Income Tax tools as working together, and a practice can choose the combination it needs. The role of each product in the quarterly cycle is 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 as Open, Generated, Submitted or Fulfilled. There is a document capture tool, as an add-on to BrightBooks, where clients photograph or upload receipts and invoices. It extracts the date, amount, vendor and VAT, and the accountant reviews the extracted data before posting it to BrightBooks.
BrightManager adds an MTD 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. BrightManager links to HMRC to collect filing status and works with clients on any filing software.
BrightTax prepares the final declaration and pulls the submitted quarterly data from HMRC 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 7 November 2026. It covers 6 April to 5 October 2026 for standard update periods, or 1 April to 30 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 6 April to 5 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, clients can still use Excel for MTD IT, 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.
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