MTD Quarterly Updates vs VAT Returns: Key Differences

An MTD quarterly update and a VAT return are two different submissions for two different taxes. A VAT return works out VAT you owe or are owed and comes with a payment deadline, while a quarterly update under Making Tax Digital for Income Tax is only a running summary of income and expenses, with nothing to pay when you send it. Both happen four times a year and both come from your bookkeeping software, which is why they get confused. This guide sets out the differences and shows how the two calendars fit together if you have to do both.

Key takeaways

• A VAT return creates a bill or a repayment. A quarterly update does not.
• MTD quarterly updates are due on 7 August, 7 November, 7 February and 7 May.
• A VAT return is usually due 1 calendar month and 7 days after the VAT period ends.
• Income Tax is still paid on 31 January, with payments on account where they apply.
• A VAT-registered sole trader over the MTD threshold has to do both.

What is an MTD quarterly update?

Under Making Tax Digital for Income Tax, sole traders and landlords above a qualifying income threshold keep digital records and send HMRC a summary of their business or property income and expenses every quarter. That summary is the quarterly update. It is totals by category, taken from your records by compatible software. It is not a tax return and it is not a final figure for the year.

MTD for Income Tax applies from 6 April 2026 if your qualifying income was over £50,000 in 2024/25, from 6 April 2027 if it was over £30,000 in 2025/26, and from 6 April 2028 if it was over £20,000 in 2026/27. HMRC's own guidance is in use Making Tax Digital for Income Tax, and our guide to qualifying income explains what counts towards the threshold.

What is a VAT return?

A VAT return reports the VAT you charged customers and the VAT you can reclaim on purchases for a VAT period, normally three months. The difference is a liability: either you pay HMRC or HMRC repays you. The return and any payment are usually due 1 calendar month and 7 days after the end of the period. HMRC explains the process in send a VAT return. MTD for VAT applies to all VAT-registered businesses, whatever their turnover. There is more detail in Making Tax Digital for VAT explained.

The key differences at a glance

Payment: the difference that matters most

Sending a VAT return creates a debt or a repayment straight away. Sending a quarterly update changes nothing about when you pay Income Tax. The bill for the year is still settled on 31 January after the tax year ends, following a year end submission that brings in your other income, reliefs and accounting adjustments. Payments on account on 31 January and 31 July continue where they apply. See the MTD final declaration and payments on account for how that works.

The practical risk is treating quarterly updates like VAT returns and expecting a bill each quarter, or doing the reverse and assuming nothing is due on a VAT return because the last quarterly update was free.

Why the periods rarely match

HMRC allocates each VAT-registered business a stagger, which fixes the months its VAT quarters end. The standard MTD update periods follow the tax year instead: 6 April to 5 July, 6 July to 5 October, 6 October to 5 January and 6 January to 5 April. Those dates fall in the middle of a month, so they will not match any VAT quarter.

You can make a calendar quarters election so that your Income Tax update periods run to month ends: 1 April to 30 June, 1 July to 30 September, 1 October to 31 December and 1 January to 31 March. The filing deadlines stay the same. If your VAT stagger also ends on those month ends, the two submissions cover matching periods, which makes the bookkeeping simpler. If your stagger ends in other months, the election still gives you clean month end cut-offs.

Step by step: running both from one set of records

1. Confirm which regimes apply. Check your VAT registration and compare your qualifying income with the MTD for Income Tax thresholds.
2. Find your VAT stagger. Your VAT online account shows when each VAT period ends and when each return is due.
3. Decide on calendar quarters. Choose this in your software before you send your first quarterly update if month end periods suit you.
4. Check your software does both. One product can usually handle VAT and Income Tax, but confirm it before the first deadline.
5. Authorise each service separately. Linking software to HMRC for VAT does not link it for Income Tax.
6. Keep records up to date monthly. Both submissions draw on the same sales and purchase records, so one tidy set of books feeds both.
7. Diary every deadline. Four VAT returns, four quarterly updates, the year end submission and the tax payment dates.
8. Set money aside. Put VAT collected to one side for each return, and save towards 31 January separately.

Worked example (illustrative)

"Marlowe Joinery", an illustrative example, is a VAT-registered sole trader whose qualifying income is over £50,000, so the owner is in MTD for Income Tax from 6 April 2026. The VAT stagger gives quarters ending 31 May, 31 August, 30 November and 28 February. The owner uses the standard MTD update periods.

For the 2026/27 tax year the calendar looks like this:

• VAT return for the quarter to 31 May 2026: due 7 July 2026, with payment.
• Quarterly update for 6 April to 5 July 2026: due 7 August 2026, no payment.
• VAT return to 31 August 2026: due 7 October 2026, with payment.
• Quarterly update to 5 October 2026: due 7 November 2026, no payment.
• VAT return to 30 November 2026: due 7 January 2027, with payment.
• Quarterly update to 5 January 2027: due 7 February 2027, no payment.
• VAT return to 28 February 2027: due 7 April 2027, with payment.
• Quarterly update to 5 April 2027: due 7 May 2027, no payment.

That is eight submissions in the year, none of them covering the same dates. The Income Tax for 2026/27 is then finalised and paid by 31 January 2028. The business and dates are invented for illustration and are not a real client.

Common mistakes

• Assuming VAT compliance covers Income Tax. They are separate obligations with separate sign-up and authorisation.
• Expecting a quarterly Income Tax bill. Nothing is payable when an update is sent, so the 31 January bill can still be large.
• Using VAT figures for the Income Tax update. A VAT return covers different dates and treats some items differently from your income and expenses summary.
• Mixing up the deadlines. The 7th of the month appears in both regimes but usually in different months.
• Leaving the bookkeeping until each deadline. With up to eight submissions a year, catching up each time is hard work. See MTD quarterly update deadlines for a planning calendar.
• Forgetting the year end submission. Four updates do not finish the year.

How we can help

We keep digital records, send quarterly updates and complete the year end submission for sole traders and landlords, and can run your VAT returns from the same books. MTD compliance starts from £49 per month on a fixed fee. See our MTD compliance service, view our pricing, or contact us to map out your own deadline calendar.