MTD for Income Tax: second quarterly update due 7 November 2026

If you are a sole trader selling online and your 2024-25 tax return showed more than £50,000 of sales and rental income before expenses, your second Making Tax Digital quarterly update is due by 7 November 2026. It covers 6 April to 5 October, it needs to come from digital records through MTD-compatible software, and HMRC has started signing up anyone in scope who has not signed up themselves. There are no penalty points for a late update this tax year, but the update is still mandatory and the points start in April 2027.

Who has to send an update by 7 November

Making Tax Digital for Income Tax applies to you from 6 April 2026 if your qualifying income for 2024-25 was over £50,000. HMRC's guidance defines qualifying income as "your total income from self-employment and property. This is the amount before expenses (also known as turnover), based on the tax return you submitted in the previous year."

That definition catches more online sellers than the profit figure suggests. An Etsy seller with £58,000 of gross sales and £34,000 of profit after materials, postage and fees is in scope. So is an Amazon seller whose payouts came to £44,000 but whose gross sales before referral fees, FBA fees and advertising were £61,000. Turnover is the number on the self-employment pages of your return, not what reached your bank account.

The threshold drops to £30,000 from April 2027 and to £20,000 from April 2028, each tested on the previous year's return, so the 2025-26 return you file by 31 January 2027 decides whether you join next April. HMRC says it will run an awareness campaign for the £30,000 to £50,000 group from mid October to late November, so expect letters and adverts even if this year does not apply to you yet.

What the second update covers

Updates are cumulative. The 7 November submission covers the whole period from 6 April to 5 October, not just the last three months, which means any correction to the first quarter goes in with this one rather than as a resubmission. If you elected calendar quarters, the period is 1 April to 30 September with the same 7 November deadline.

The content is simpler than a tax return. HMRC's guidance states: "Your quarterly updates will include totals for each income and expense category you've used for your self-employment and property income." It also confirms: "You do not need to make any accounting or tax adjustments before sending a quarterly update." No capital allowances, no private use adjustments, no stock figure. Those all go in the final return after the tax year ends.

For a marketplace seller, that means a gross sales total for the period and totals for the main expense categories, with marketplace fees sitting as an expense rather than netted off income. The figures must come from digital records. A bank feed into accounting software counts. A spreadsheet linked to bridging software counts. Retyping totals from an Amazon settlement report into an online form does not.

One timing point from HMRC's 30 September developer bulletin: if you switch between standard and calendar quarters, "a reporting type cannot be changed after the first quarterly update has been submitted for that tax year", and anyone who has just switched should wait until the change shows in their software before submitting, or the update can be rejected against the wrong obligation.

HMRC has started signing people up

HMRC reported on 12 August that 436,000 sole traders and landlords sent the first quarterly update by 7 August and 570,000 had signed up. Everyone else in scope is now being enrolled without asking. HMRC's guidance says: "From September 2026, HMRC will start to sign up anyone who needs to use Making Tax Digital for Income Tax for the 2026 to 2027 tax year and has not signed themselves up."

If that is you, HMRC confirms it by letter or through your online account, and the sign-up is built on the information HMRC already holds from your 2024-25 return. Four things follow. Sign in to HMRC online services and check the self-employment and property income sources HMRC has recorded for you, because a closed business or a missing one will throw the obligations out. Choose compatible software; HMRC's list includes free options. Create digital records back to 6 April and send the overdue 7 August update as soon as you can, then the 7 November one. Keep the 31 January deadline for your 2025-26 return in the diary as well, because that return is filed the old way and is unaffected.

If you think HMRC has it wrong, for example because 2024-25 turnover was under £50,000 or the business has ceased, HMRC's route is to contact Self Assessment general enquiries or apply for an exemption where it is not reasonable for you to use software.

What a missed update costs

For this tax year, nothing in penalties. HMRC's penalties guidance says: "There are no penalties for missing a quarterly update deadline for the 2026 to 2027 tax year." The cost is practical: the final return for 2026-27 cannot be filed until the quarterly updates are in, and catching up four quarters of digital records in January 2028 is slower and more expensive than keeping them as you go.

From April 2027 the points system applies. Each missed quarterly deadline is one point, and at four points HMRC charges £200, with a further £200 for each missed deadline after that. You collect one point per deadline whatever the number of businesses you run. Late payment of the tax itself is a separate regime, and interest runs from day one.

ICAEW has asked the government, in its Budget submission, to "conduct a full review of the first reporting cycle" before the April 2027 expansion. Nothing has changed as a result, and the 7 November date stands.

Frequently asked questions

Does the £50,000 include my Amazon fees or is it after them?

Before them. Qualifying income is turnover, so gross sales including the postage you charged customers, before marketplace fees, advertising and cost of goods. A seller with £52,000 of gross sales and £20,000 of profit is in MTD for Income Tax this year.

I have not sent the 7 August update. Is it too late?

No. HMRC's position is that there are no penalties for late quarterly updates in 2026-27. Send the overdue update as soon as your records are ready, then the cumulative update by 7 November. The second update covers 6 April to 5 October in any case, so your records need to go back to the start of the tax year.

Can I keep using a spreadsheet?

Yes, if it is linked to bridging software that sends the totals to HMRC. The records have to be digital and the link between the spreadsheet and the submission has to be digital too. Copying totals by hand into a form is not allowed. HMRC's compatible software list shows which products support spreadsheets.

I trade through a limited company. Does this apply to me?

Not for the company. MTD for Income Tax applies to sole traders and landlords. If you have a limited company and also let out a property or run a side business as a sole trader, the rental and sole trader turnover together decide whether you are in scope. Company directors with only salary and dividends are outside it.

Next steps

We run MTD quarterly updates for ecommerce sole traders, including getting marketplace sales and fees into compliant records from the start of the tax year. If HMRC has signed you up and you are not sure what it has recorded, book a discovery call and we will check it with you. For the full range of what we do for online sellers, see our ecommerce accountants page, our personal tax service and our bookkeeping service. For the background to the rules, read Making Tax Digital for Income Tax: who needs to act, when and how?

Sources: HMRC, send quarterly updates; HMRC, sign up for Making Tax Digital for Income Tax; HMRC, check what to do if HMRC has signed you up; HMRC, penalties for Making Tax Digital for Income Tax; HMRC press release, 12 August 2026; HMRC developer newsletter edition 7, 30 September 2026; ICAEW, review the roll-out of MTD.