More than 436,000 sole traders and landlords have now filed their first Making Tax Digital quarterly update, according to HMRC figures published in August. Over 570,000 people have signed up to the service.
If you earn more than £50,000 from self employment or property, this has applied to you since April. The threshold drops to £30,000 in April 2027 and £20,000 in April 2028, so a large number of freelancers and small landlords who aren’t affected yet shortly will be.
The quarterly updates themselves are not the hard part. HMRC describes them as short summaries sent through compatible software, taking minutes. What has actually changed is the rhythm. Record keeping used to be something you could postpone for eleven months and survive. Now it has a deadline four times a year.
What the new rhythm really demands
The shift is from an annual scramble to a quarterly habit, and the people struggling with it are mostly those who used to run on the scramble.
Here’s the thing worth knowing: HMRC is not issuing penalty points for late quarterly updates during the 2026 to 2027 tax year, though penalties for late returns and late payments still apply. After that, each missed deadline earns a point, and four points means a £200 fixed penalty. So there is a grace period, and it’s a good year to get the habit wrong cheaply rather than expensively.
The practical implication is unglamorous. Separate your business banking properly, categorise transactions as you go rather than in a panic, and keep a note of anything unusual when it happens instead of trying to reconstruct it in nine months.
Best free time tracking app for freelancers, and where free runs out
If you bill by the hour or by the day, there’s a second record that matters as much as the financial one: where your time went.
This is less about tax and more about whether you’re earning what you think you are. The small items are what disappear: the overrunning call, the extra revision round, the question answered on a Thursday evening. Each feels too small to bill. Over a month they add up.
A free tool handles this perfectly well at first, and there’s no reason to pay for something you don’t need. This comparison of free time tracking apps sets out what each free plan actually includes, which matters because the caps vary a lot: some limit you to one user, some cap projects, and most hold back exports and reporting.
The useful test is simple. If you only need to know how your time was spent, free is enough. If you need to prove it, bill from it, or control a budget against it, you’ve outgrown the free tier. Worth checking whether you’d be happy with the paid plan of whatever you pick, since moving your history to another app later is its own small nightmare.
What to expect from your accountant’s fee
A lot of people are now paying an accountant to handle quarterly updates for them, which is a reasonable choice. It’s worth understanding how that fee is set.
An accounting practice is selling hours, even when the quote is a flat monthly figure. That figure is a bet on how much work your account takes, and firms are increasingly able to check whether the bet was right. Time tracking software built for accounting practices organises hours by client and task, compares estimated hours against actual by service type, and sets revenue against labour cost per client.
That’s not sinister. It means your fee at renewal reflects how much work you actually generate, and the things that generate work are predictable: mixed personal and business transactions, records arriving late, and questions that could have been answered in one email instead of six. Clean records are the cheapest discount available to you.
Managing leave in a small firm
A footnote for anyone who has grown past working alone.
Quarterly deadlines create four pinch points a year rather than one, and a small team is vulnerable to someone being away at the wrong moment. Leave agreed in passing and remembered vaguely is how that happens.
A shared calendar everyone keeps current is enough. Where that keeps slipping, a leave planner such as actiPLANS holds requests, approvals and availability in one place, so time off is approved against a known workload. For a sole trader this is irrelevant. For a team of five with a quarterly filing cycle, it isn’t.
The sensible plan for this year
Use the penalty free window. Pick your software, sign up if you haven’t, and run one full quarter deliberately rather than at the last minute.
While you’re at it, track your hours for a month and work out what you’re really earning per hour. The tax change forces you to get organised anyway. You may as well find out something useful in the process.
