MTD for Income Tax: getting your bank transactions into the quarterly updates

If you're a sole trader or landlord with more than £50,000 of qualifying income, this is your first year inside Making Tax Digital for Income Tax. The first quarterly update was due on 7 August — for many people the first HMRC submission they've ever made that wasn't an annual return — and the second is due on 7 November. If the first one was a scramble, the fix isn't more software. It's getting the bank transactions in reliably, every quarter, with proof that they're complete.

What a quarterly update actually is

Less than most people fear. A quarterly update is a cumulative, year-to-date summary of income and expenses for each business or property source, sent through MTD-compatible software. It is not a tax return: no accounting adjustments, no capital allowances, no tax calculation. Those all wait for the final declaration after the year ends, which replaces the Self Assessment return.

Because each update is cumulative, a mistake in one quarter is corrected simply by getting the figures right in the next; there's no amendment process for a single quarter. And if your turnover is under the VAT threshold, you can submit totals only — total income, total expenses — rather than the full category breakdown.

The deadlines for a standard year:

You can elect for calendar quarters instead — 1 April to 30 June and so on — with the same deadlines. For anyone working from bank statements, that election is worth making: statements arrive by calendar month, and a quarter that ends on the 5th is a quarter you have to split a statement for.

Where the transactions come from

Every update is built from individual transactions recorded in your software with a date, an amount and a category. There are three ways they get there.

A bank feed. The connected account pushes transactions into the software daily. When it works, it's the easiest route. It fails more than its reputation suggests: feeds break and silently skip days, some accounts and smaller banks have no feed at all, feeds typically only start from the day you connect — so the quarter before you set up is missing — and landlords who receive rent through a letting agent don't have a feed for the agent's statements at all. Bank feeds vs statement conversion goes through the failure modes.

A file import. A CSV or OFX of transactions, imported into the software. This is the catch-all for everything the feed doesn't cover — the gap, the account without a feed, the agent statement, the quarter before you started.

Manual entry. Typing transactions in from a statement. Allowed, slow, and the one route with nothing checking it.

The statement route, and why it passes the digital-records test

MTD requires digital records: each transaction held in software (or a spreadsheet) rather than on paper, and moved between pieces of software by digital links — imports, exports, APIs, linked cells — rather than being retyped.

A statement PDF isn't a digital record in that sense; it's a document. Converted to CSV, it is: a dated, itemised, digital list of transactions. Import that CSV into your MTD software, or into the spreadsheet that your bridging software reads from, and the chain from bank to HMRC is digital end to end. What you must not do is extract totals from the converted data and type those into the software — that's the retyping the rules exclude.

The conversion is where accuracy is decided, so it's worth doing with a tool that proves its output. NoRekey checks every converted statement against the statement's own opening and closing balances before you download it: if the rows don't reconcile to the penny, you're told, rather than submitting a quarter that's a transaction short. Scanned and photographed statements convert too, which matters for the letting-agent statement that only ever arrived on paper.

The fifteen-minute quarter

With calendar quarters elected and the statement route in place, a quarter looks like this:

1. Download the quarter's statements for every account in the business — three months each — the week after the quarter ends. Include the agent statements, the business credit card, and the deposit account the tax money sits in.
2. Convert them, check every one shows balanced, and download CSV.
3. Import into your software (or your bridging spreadsheet). Categorise anything new; repeated payees are remembered after the first quarter.
4. Review the cumulative totals against the previous update — they should only ever go up — and submit.

Steps 1 and 2 are minutes. Step 3 is where the time goes, and it shrinks every quarter as the software learns your payees. If you've been doing this annually in a January panic, notice what's changed: the same work, in four small pieces, with a deadline that's never more than five weeks after the period ends.

The categories

If you're over the VAT threshold (or choose to report in full), the expense categories mirror the boxes on the self-employment and property pages you've been filling in for years — cost of goods, travel, premises, repairs, professional fees, interest, and so on for a trade; rent received, repairs, insurance, agent fees, loan interest and the rest for property. Categorise bank rows directly into those buckets and the update is a pivot table. The landlord and sole trader guides cover the buckets in detail; the only difference now is that you total them quarterly instead of once.

Two sources — a trade and a rental property, say — mean two updates each quarter, each from its own transactions. Separate bank accounts per source make that trivial. Mixed accounts make it a quarterly untangling, and this is the year to stop.

What late costs

Late quarterly updates earn penalty points, and at four points you're fined £200, with a further £200 for every late submission after that until you've had a clean run. The final declaration carries the existing Self Assessment late-filing penalties. None of it is ruinous for one slip; all of it is avoidable with a calendar reminder and a statement-conversion habit.

The next deadline

The second update covers 6 July to 5 October (or July to September on calendar quarters) and is due 7 November. The statements for July and August already exist. Convert them now, reconcile them, and the October update is one month's statement and a button.

If your income is between £30,000 and £50,000, your turn comes in April 2027, and the £20,000 threshold follows in 2028. The routine above works identically whenever you start — and starting it a year early means the first mandatory quarter is just another quarter.