Since 6 April 2026, many sole traders and landlords in the UK have to keep digital records and send HMRC a quarterly update from software such as Xero. The update itself is a set of totals, but those totals are only as good as the books behind them. This guide covers who's in, when updates are due, and the Xero reports worth checking before each one. Report names are as Xero uses them for UK organisations; menus move from time to time.
Who has to use it
You need Making Tax Digital for Income Tax if you're a sole trader or landlord registered for Self Assessment and your qualifying income is over the threshold, unless you're exempt. Qualifying income is your total self-employment and property income before expenses (turnover, not profit). Employment income, dividends, pensions and your share of a partnership's profit don't count towards it.
| Qualifying income over | In the tax year | Start using MTD from |
|---|---|---|
| £50,000 | 2024 to 2025 | 6 April 2026 |
| £30,000 | 2025 to 2026 | 6 April 2027 |
| £20,000 | 2026 to 2027 | 6 April 2028 |
HMRC works this out from your Self Assessment return and writes to you, but it's your responsibility to check even if no letter arrives. Sources: GOV.UK's check if you're eligible and work out your qualifying income.
Update periods and deadlines
Each quarterly update covers the tax year to date, not just the latest three months. The standard periods follow the tax year:
| Update covers | Due by |
|---|---|
| 6 April to 5 July | 7 August |
| 6 April to 5 October | 7 November |
| 6 April to 5 January | 7 February |
| 6 April to 5 April | 7 May |
If your accounts run 1 April to 31 March, you can choose calendar update periods instead (1 April to 30 June, to 30 September, to 31 December and to 31 March), with the same deadlines. You have to choose them in your software before you send the first update of the tax year, and you can't switch back until the next one.
Each update sends totals for each income and expense category, using the same categories as Self Assessment. HMRC doesn't get your invoices or receipts. If you find a mistake later, fix it in your records and it goes into the next update, because the next one covers the whole year so far. If it affects the fourth update, you may need to resend that one. You still file a tax return after the year ends, now through your MTD software, and pay tax on the same dates as before. For the 2026 to 2027 tax year the return is due by 31 January 2028.
For the first year there's some slack: HMRC won't apply penalty points for late quarterly updates during the 2026 to 2027 tax year. Late tax returns still get penalty points. Source: GOV.UK's send quarterly updates.
Before each update: what to check in Xero
| Check | Why | Xero report |
|---|---|---|
| Bank and card accounts reconciled to the end of the period | Unreconciled lines are income or costs missing from the totals | Bank Reconciliation |
| No sales invoices or bills left in draft | Drafts aren't posted, so they're not in the figures | Sales and purchase lists (Draft tab) |
| Income and costs coded to the right accounts | The accounts decide which Self Assessment category each total lands in | Profit and Loss, Account Transactions |
| Private spending kept out | Personal costs paid from the business account shouldn't be in expenses | Account Transactions |
| Each business kept separate | Each self-employment and each property business gets its own update | Profit and Loss, filtered by tracking category if you use one |
| Year to date looks sensible | A last look at the cumulative totals before they go to HMRC | Profit and Loss for the tax year to date, next to last year |
The Profit and Loss for the tax year to date is the closest everyday report to what the update contains. Run it for the same dates as the update period, on the same cash or accrual basis you report on, and compare it with the same period last year. A big swing, a negative expense line or a balance in a suspense account is easier to sort out now than in January. Landlords with several properties can split it by property with tracking categories; see Xero reports for landlords.
Making it routine
The second update of each tax year covers 6 April to 5 October (or to 30 September on calendar periods) and is due by 7 November. Rather than opening Xero the week before each deadline, you can have the figures arrive by email once the quarter closes:
- Quarterly, early in July, October, January and April: the Profit and Loss for the financial year to date, with last year alongside, on your reporting basis. If your Xero financial year ends on 31 March, this gives exactly the calendar update periods: 1 April to 30 June in July, to 30 September in October, and so on.
- Every Monday: the draft invoices list and the bank summary, so drafts get approved and bank balances can be checked against your statements during the quarter.
Reportpost emails these from Xero as PDF or Excel to you, your bookkeeper or your accountant. It works on whole months, so its figures run from the start of your financial year to a month end. On the standard 6 April periods they're a few days off the update period, so they're for reviewing, not for copying into the return. This works best with a Xero financial year ending on 31 March. It doesn't send quarterly updates to HMRC; that stays in Xero or your MTD software. You can try the demo with sample data.
Related: Xero month-end checklist, Xero year-end checklist and the Xero Profit and Loss by month.