Does MTD Change When You Pay Your Tax?

No. Making Tax Digital (MTD) for Income Tax changes how often you report to HMRC, but it does not change when you pay your tax. You send quarterly updates through software, yet your Income Tax and National Insurance are still paid on the normal Self Assessment dates of 31 January and, where payments on account apply, 31 July. This guide explains the difference between reporting dates and payment dates, sets out the calendar for the first MTD years, and shows how to budget so the bill is never a surprise.

Key takeaways

• Quarterly updates are reports, not payments. Sending one does not create a bill.
• Tax is still paid by 31 January, with payments on account by 31 January and 31 July where they apply.
• Your first MTD year is the tax year you join; its balancing payment comes almost ten months after it ends.
• HMRC's in-year estimate is a budgeting aid, not a demand.
• Missing an update and missing a payment are separate problems with separate penalties.

What do we mean by MTD payment dates?

MTD payment dates are the dates by which you must actually pay the tax worked out under Making Tax Digital for Income Tax. They are different from MTD reporting dates, which are the deadlines for sending quarterly updates and your final declaration. Under MTD, the reporting calendar is new, but the payment calendar is the familiar Self Assessment one. HMRC sets out both in its guidance on using Making Tax Digital for Income Tax.

MTD for Income Tax is being phased in. Sole traders and landlords with qualifying income over £50,000 (based on 2024/25) joined from 6 April 2026. Those over £30,000 (based on 2025/26) join from 6 April 2027, and those over £20,000 (based on 2026/27) from 6 April 2028. If you are not sure where you sit, read our guide to qualifying income.

Reporting dates and payment dates compared

If you are in MTD from April 2026, your second quarterly update for 2026/27 is due by 7 November 2026. It is a reporting deadline only; nothing is payable that day. Our article on MTD quarterly update deadlines covers the quarters in more detail.

How payments on account fit in

Payments on account are advance payments towards your next tax bill, each normally half of the previous year's bill. They are part of Self Assessment and carry on unchanged under MTD. GOV.UK explains when they apply, including the cases where you do not have to make them, on its payments on account page. If your income has fallen, you may be able to ask HMRC to reduce them; see our guide to reducing payments on account.

The point many people miss is this: the money you pay on 31 January and 31 July is driven by your last annual tax position, not by your latest quarterly update. A strong quarter does not automatically increase a payment, and a weak one does not reduce it unless you make a claim.

The first MTD years, step by step

For someone mandated from 6 April 2026, the timeline looks like this:

1. By 31 January 2027: file your 2025/26 Self Assessment return in the normal way (not under MTD) and pay any balance for 2025/26, plus your first payment on account for 2026/27 if required.
2. Through 2026/27: send quarterly updates by 7 August 2026, 7 November 2026, 7 February 2027 and 7 May 2027.
3. By 31 July 2027: make your second payment on account for 2026/27, if required.
4. By 31 January 2028: submit your 2026/27 final declaration through MTD software and pay the balancing payment, along with your first payment on account for 2027/28 if one applies.

Our guide to the final declaration explains what is included in that last step.

Checklist: budgeting under MTD

• Open a separate savings pot just for tax and move a set share of each payment into it.
• Check HMRC's in-year estimate in your software after every quarterly update.
• Diary 31 January and 31 July as payment dates, separately from the four update dates.
• Review whether a budget payment plan suits you; GOV.UK lists the ways to pay your Self Assessment bill.
• Keep your digital records up to date weekly, so each estimate is reliable.

Worked example (illustrative example)

Illustrative example only, not a real client. Sam is a self-employed electrician with qualifying income above £50,000 in 2024/25, so Sam joined MTD from 6 April 2026. Sam assumed that sending a quarterly update in August meant a quarterly tax bill and nervously moved money to cover it. Nothing was due.

What Sam does now: after each update, Sam checks the software's estimate of the tax for the year so far and moves a matching amount into a tax savings account. In January 2027 Sam pays the 2025/26 balance and the first payment on account for 2026/27 from that pot. In July 2027 Sam pays the second payment on account. When the 2026/27 final declaration is submitted, the money set aside through the year covers the balancing payment due by 31 January 2028. The amounts are Sam's own; the rhythm is what matters.

Common mistakes

• Thinking updates trigger bills. They do not, so do not drain cash flow paying tax that is not due yet.
• Treating the estimate as final. The in-year figure changes with later quarters, adjustments and other income.
• Forgetting the 2025/26 return. Joining MTD in April 2026 does not cancel the normal return due by 31 January 2027.
• Ignoring payments on account. A higher MTD-year profit can increase the payments on account that follow.
• Mixing up penalties. Late updates and late payments are dealt with separately. See our guide to MTD penalty points and check current late payment rules on GOV.UK.

How we can help

We are a London-based specialist gig-economy and MTD accounting practice with fixed monthly fees. Our MTD compliance service starts from £49 per month and covers your digital records, quarterly updates, final declaration and a clear reminder of what to pay and when. See our MTD compliance service, check our pricing, or contact us to talk it through.