How to file your first MTD quarterly update, step by step

Filing an MTD quarterly update is the same job whatever software you use, including the free options on HMRC’s list. These are the steps, start to finish.

Step 1: Gather the quarter’s income and expenses

You need every business transaction for the quarter (for Quarter 1, that’s 6 April to 5 July). The easiest source is your bank statement, exported as a CSV file. How to import your bank statement covers getting that file out of each bank, and fixing it when it won’t read. A spreadsheet works too, or a bank feed if your software offers one. The point is to have the figures in digital form, because MTD requires the record to travel to HMRC digitally end to end.

Step 2: Sort each transaction into a category

HMRC groups income and expenses into set categories: rent, repairs, travel, and so on (the SA105 categories for property, SA103 for a sole trade). Every transaction needs one, and what goes in each category lists them with examples. Do this as you go and the quarter is nearly done before you start; leave it all to deadline week and it becomes the slow part.

Step 3: Sign up with HMRC, then connect your software

These are two separate jobs, and this is the step people get caught by. First you sign up for MTD for Income Tax on HMRC’s side, which is what makes your quarters exist at all. Our guide on signing up for MTD with HMRC covers it, including how to check whether your accountant has already done it.

Then you authorise the software: you sign in with your Government Gateway details on HMRC’s own website and press “Grant authority”. The software never sees your password, and you only do this once. Our guide on connecting to HMRC walks through that screen. If your software shows no quarters after connecting, it’s almost always the sign-up that’s missing, not the connection.

Step 4: Check the totals and file

Your software adds up each category and shows the totals it’s about to send. Review them, fix anything that looks wrong, and file. HMRC sends back a confirmation. Keep it. That receipt is your proof the update was received.

How long it really takes

The filing itself is minutes. The time goes into categorising transactions, so anything that speeds that up (a saved column mapping, suggested categories) is where the idea of a ten-minute quarter comes from. Doing it by hand for the first time? Block out an hour; the second quarter is much faster. Not sure MTD applies to you yet? The two-minute checker tells you your exact start date.

See how these four steps look for a sole trade (bank statement in, categories confirmed, quarter filed) on the sole traders page.