5 Things People Are Getting Wrong About Their First Making Tax Digital Submission
With the first Making Tax Digital (MTD) quarterly submission deadline fast approaching, many sole traders and landlords are preparing to submit their first update to HMRC.
Over the past few months, we’ve spoken to many business owners who are making the move to MTD. One thing has become clear – there’s still a lot of confusion about what the first submission actually involves.
Here are five of the most common misconceptions we hear.
1. “I’ll have to pay tax when I submit.”
This is probably the biggest misconception.
Your quarterly update is not a tax payment.
Instead, it’s simply a summary of your income and expenses for that quarter, submitted digitally through compatible software.
Your tax bill will still be calculated after your End of Year Final Declaration.
2. “It’s basically another tax return.”
Not quite.
Your quarterly update isn’t designed to replace your tax return with four mini tax returns.
Instead, it’s intended to provide HMRC with regular updates throughout the year using the digital records you’re already keeping.
Think of it as reporting your bookkeeping rather than completing your annual tax return.
3. “Once I’ve bought software, I’m ready.”
Software is only part of the process.
Before submitting, you’ll also need to ensure:
- Your records are complete.
- Income has been entered correctly.
- Expenses are accurately categorised.
- Bank transactions have been reconciled.
- Your software is connected to HMRC.
Good software still relies on good record keeping.
4. “If I’m late once, I’ll receive a huge fine.”
HMRC has introduced a points-based penalty system for late submissions.
For those joining MTD from April 2026, HMRC has also announced a soft landing for the first year of quarterly updates, meaning penalty points won’t apply to late quarterly submissions during that period.
That said, it’s still worth getting into the habit of meeting deadlines from the outset.
5. “My accountant does everything.”
Your accountant will guide you through the process, but you still play an important role.
Keeping accurate records throughout the year makes quarterly updates much simpler and gives your accountant the information they need to support you effectively.
Final Thoughts
Making Tax Digital isn’t about creating more work.
It’s about moving towards more accurate, digital record keeping that helps both businesses and HMRC work more efficiently.
The better prepared you are now, the easier future submissions will become.
