How to Submit Quarterly Tax Returns to HMRC

Under Making Tax Digital, sole traders must submit four quarterly updates to HMRC each tax year. New to MTD as a sole trader? Start with our complete MTD guide for sole traders. If you have never done this before, the idea of filing four times a year instead of once might sound like four times the work.

It is not. Quarterly updates are simpler than your annual Self Assessment return. They are summaries, not full tax returns. And with the right software, each one takes minutes rather than hours.

Here is exactly what to do.

What HMRC Expects in Each Quarterly Update

A quarterly update includes two main things:

1. Income

All business income received during the tax year to date. This includes:

• Payments from clients and customers
• Cash and bank transfer income
• Any other self-employment earnings

You report the total income from the start of the tax year up to the end of the current quarter, not just the income from that quarter alone.

2. Expenses

All allowable business expenses, broken down by HMRC's categories. The standard categories are:

• Cost of goods sold: stock, materials, direct costs
• Construction industry subcontractor costs (if applicable)
• Travel costs: fuel, train fares, mileage
• Premises costs: rent, rates, utilities for business premises
• Administrative costs: phone, internet, stationery, postage
• Advertising and marketing
• Interest on business loans
• Bank charges and fees
• Professional fees: accountancy, legal, insurance
• Depreciation and loss on sale of assets
• Other expenses: anything that does not fit the above

Like income, expenses are reported cumulatively from the start of the tax year.

Step-by-Step: Filing Your Quarterly Update

Step 1: Make sure your records are up to date

Before submitting, check that all income and expenses for the quarter are recorded in your software. This means:

• All invoices paid have been logged
• All receipts for expenses have been entered
• Bank transactions have been reconciled
• Any cash transactions have been recorded

If you use TapTax, the app connects to your bank and pulls transactions automatically, so most of this is already done.

Step 2: Review your expense categories

Check that each expense is in the correct HMRC category. Miscategorised expenses will not cause your submission to be rejected, but they can create problems if HMRC enquires into your return.

Common categorisation mistakes:

• Putting phone bills under "travel" instead of "administrative costs"
• Categorising insurance as "other expenses" instead of "professional fees"
• Missing the distinction between stock (cost of goods) and tools (capital expenditure)

AI expense categorisation can help get this right automatically.

Step 3: Review the totals

Before submitting, look at the summary your software shows you:

• Does the total income look right for the year so far?
• Do the expense totals make sense?
• Are there any obvious gaps or duplicates?

This is not a detailed audit. It is a sanity check. If your Q2 total income is half of Q1 and you have not had a quiet quarter, something might be missing.

Step 4: Submit through your software

Your MTD-compatible software will have a "submit" or "file" button that sends the data directly to HMRC via their API. You do not need to log into the HMRC website separately.

With TapTax, this is literally one tap. Review your summary, tap submit, done.

Step 5: Save confirmation

After submission, your software should provide a confirmation reference from HMRC. Save this. It is your proof that you filed on time if there is ever a dispute.

The Quarterly Deadlines

Each quarter has a deadline roughly one month after it ends:

For the 2026-27 tax year specifically, here are the exact dates:

After all four quarters, you must also file an End of Period Statement (to finalise figures and add adjustments) and a Final Declaration (to confirm your total tax position). Both are due by 31 January of the following year.

Common Mistakes to Avoid

Reporting only the current quarter

This is the most common mistake. HMRC expects cumulative figures. Your Q3 submission should include everything from Q1, Q2, and Q3, not just Q3 alone. Good MTD software handles this automatically, but double-check if you are entering data manually.

Forgetting cash income

If customers pay you in cash, those payments still need to be recorded. The fact that they do not appear in your bank statements does not mean they can be left out. Keep a record of all cash income as it comes in.

Mixing personal and business expenses

If you use your personal bank account for business, make sure you are only claiming genuine business expenses. A meal with a client is a business expense. Your weekly grocery shop is not, even if you paid from the same account.

Leaving everything to the deadline

Filing on the last day means any technical issue (internet outage, software glitch, HMRC system maintenance) could result in a late submission and a penalty point. File in the first week after the quarter ends.

Not keeping receipts

You do not need to submit receipts with your quarterly update, but HMRC can ask for evidence at any time. If you cannot produce a receipt for an expense, HMRC can disallow the deduction. Digital receipt scanning makes this easy.

What Happens After You Submit?

After each quarterly update:

• HMRC acknowledges receipt: your software will show a confirmation
• Your tax estimate updates: HMRC can provide an in-year estimate of what you owe
• No payment is due: quarterly updates are information-only. You still pay your tax through the existing payment on account system (31 January and 31 July)

The quarterly updates do not change when or how you pay tax. They just give HMRC (and you) a running picture of your income throughout the year.

Can You Amend a Quarterly Submission?

Yes. If you realise you made an error in a quarterly update, you can submit a corrected version before the End of Period Statement deadline. Your software will allow you to update figures and resubmit.

This is one advantage of the cumulative system. Because each quarter includes all prior data, a correction in Q3 automatically fixes any errors from Q1 or Q2.

However, once you file your End of Period Statement and Final Declaration, amendments follow the normal Self Assessment amendment rules.

How TapTax Simplifies Quarterly Filing

TapTax is designed to make quarterly submissions effortless for sole traders:

• Automatic bank feeds pull in your transactions so you do not need to enter them manually
• AI categorisation sorts expenses into the correct HMRC categories with a swipe
• Cumulative tracking means your quarterly totals are always up to date
• One-tap filing submits directly to HMRC in seconds
• Filing reminders alert you before each deadline so nothing slips through

The result: quarterly filing goes from a chore to a five-minute task.

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