Twenty-Five Minutes, Four Times a Year: A Calm Start to MTD for Sole Traders
You did not set up on your own to become a part-time tax filer. Yet here you are, in the first year of Making Tax Digital for Income Tax, staring at a quarterly update and wondering whether 'office snacks' counts as a business expense or a cry for help.
Take a breath. The quarterly update is not an exam. It is a summary of numbers you already have, sent four times a year instead of once. Once you have done two, it takes less time than a supermarket shop.
What actually changed (and what did not)
If your qualifying income went over £50,000, you are in the first wave, and HMRC should have written to you. From April 2027 the threshold drops to £30,000, then £20,000 the year after, so plenty of sole traders will join you shortly.
What has not changed: you still file one Self Assessment return at the end of the year — now called a final declaration — and you still pay your tax on the usual dates, 31 January and 31 July.
What has changed: four quarterly updates in between, sent through compatible software, backed by digital records.
Here is the bit that calms most people down. The quarterly update is reporting, not billing. You are telling HMRC what came in and what went out. Nobody is demanding a payment in July just because you filed in August.
The four updates, at a glance
| Update | Period covered | Deadline |
|---|---|---|
| First | 6 April – 5 July | 7 August |
| Second | 6 July – 5 October | 7 November |
| Third | 6 October – 5 January | 7 February |
| Fourth | 6 January – 5 April | 7 May |
| Final declaration | Whole tax year | 31 January (following year) |
Deadlines fall on the 7th, or the next working day if that lands on a weekend. You can submit early — the system does not mind — and a nil update is a perfectly normal thing to send if you had a quiet quarter, took a break, or were ill. Silence is the only option that causes trouble.
The digital records you actually need
You do not need to scan every receipt into a towering archive. You need a digital record of each transaction, plus evidence to back it up if HMRC ever asks.
Income: date, amount, customer and invoice number. If you invoice through software, this is already done for you.
Expenses: date, supplier, amount and a category — travel, materials, software, subcontractors. Keep the receipt as a photo, a scan or the paper original. Digital record first, evidence second.
Bank statements: these are your safety net, not a filing category. Keep them accessible so you can reconcile.
A spreadsheet counts, provided you use it with bridging software that talks to HMRC. Plenty of sole traders run a simple sheet plus a filing tool and never pay for a full accounting package. If spreadsheets make you twitchy, a low-cost app that links to your bank will do the job for less than a takeaway a month.
The 25-minute pre-submission routine
Run this the week before the deadline, not the night of. Five blocks, five minutes each.
Minutes 1–5: the bank sweep. Open your business account and scroll the quarter. Tick off each transaction against your records. Anything on the statement with no matching entry is either missing income or a personal purchase that should never have been there.
Minutes 6–10: the loose ends. Look for anything sitting in 'other', 'unallocated' or 'miscellaneous'. That pile is where errors hide. Give each item a proper category or delete it.
Minutes 11–15: the personal-stuff check. Did a family takeaway slip in as 'client entertaining'? Did that Amazon order include a birthday present? Strip out anything that is not wholly and exclusively for the business — a small correction now beats a painful conversation later.
Minutes 16–20: the sanity check. Compare this quarter with the last one. Income halved? Expenses doubled? Sometimes there is a perfectly good reason, and sometimes you have double-counted an invoice. Either way, you want to know before you press send, not after.
Minutes 21–25: submit and file. Send the update, download the PDF or CSV receipt, and drop it in a folder called something like 'MTD 2026-27'. Write the next deadline in your diary. Close the laptop.
Three things people get wrong
Treating it as a tax return. It is a summary of totals, not a full set of accounts. Do not spend an evening trying to make it beautiful.
Assuming your accountant does it all. You can authorise them as your agent, and many sole traders do. But the records still come from you, and the deadline is still real. Agree who presses submit, in writing, before the first quarter ends.
Leaving all four to January. The whole point of quarterly reporting is that no single session is enormous. Four small ones beat one horrible one, every time.
Keep this beside your laptop
- Business bank account reconciled for the quarter
- Every sale recorded with date, amount and customer
- Every expense categorised, with a receipt saved somewhere sensible
- Personal spending stripped out
- This quarter compared with last
- Update submitted, confirmation saved, next deadline diaried
- Accountant or bookkeeper told what you have filed
You are not being asked to become an accountant. You are being asked to keep decent records and send four short summaries a year. Set a repeating calendar reminder for the first Monday of the month before each deadline, run the 25 minutes, and get back to the bit of the business you actually enjoy.
