You might have heard that Making Tax Digital means four updates a year, and pictured four separate little tax returns. It is less work than that. From 2025-26 onwards, the quarterly updates are cumulative. Each one is a running year-to-date total, not a standalone chunk.
That one word changes how the year feels. Here is how it works with a set of numbers.
Meet Sarah, a landlord with one flat
Sarah rents out a flat in Leeds. Her gross rent is £1,400 a month, so £16,800 a year. On its own that is below the threshold, but Sarah also does some freelance design work, and because the MTD threshold looks at your combined gross self-employment and property income (turnover, before expenses), her two incomes together push her over £50,000. So she is in MTD for Income Tax from 6 April 2026.
If you have more than one income source, our guide on MTD when you have other income explains how the threshold is measured.
For this example, we will focus on her property figures, which she reports separately from her self-employment.
The four quarters, built up step by step
The standard quarterly periods run to 5 July, 5 October, 5 January and 5 April. Here is what Sarah records in each three-month window.
Quarter 1 (6 April to 5 July)
- Rent received: £4,200
- Expenses (letting agent fees, a plumber, insurance): £900
Quarter 2 (6 July to 5 October)
- Rent received: £4,200
- Expenses: £500
Quarter 3 (6 October to 5 January)
- Rent received: £4,200
- Expenses (a boiler repair): £1,300
Quarter 4 (6 January to 5 April)
- Rent received: £4,200
- Expenses: £400
Now the cumulative part. Each update you send is not "this quarter's figures". It is everything since 6 April.
| Update (deadline) | Cumulative income | Cumulative expenses |
|---|---|---|
| Q1, by 7 August | £4,200 | £900 |
| Q2, by 7 November | £8,400 | £1,400 |
| Q3, by 7 February | £12,600 | £2,700 |
| Q4, by 7 May | £16,800 | £3,100 |
The numbers only ever grow. By her fourth update, Sarah is reporting the whole year: £16,800 of rent and £3,100 of expenses. You can check those running deadlines against our MTD deadlines guide.
Why cumulative helps
The main advantage is that mistakes fix themselves.
Say Sarah forgot to log that £900 of Q1 expenses until October. Under a cumulative system she does not need to reopen Q1 or send a correction. She includes the £900 in her Q2 cumulative total, and the year-to-date figure is now right. The running total absorbs it.
The same goes for a payment that landed in the wrong quarter, or a receipt that surfaced late. As long as the figure is in the total by the time you reach the relevant update, you are covered. Good software does this maths for you, so you keep recording income and expenses as they happen and the cumulative figure updates itself.
This is why little and often beats a once-a-year panic. If you reconcile each month, your quarterly update is already done.
What the quarterly updates are not
A quarterly update is not a tax bill, and it is not the final word. It is a rough, in-year snapshot. You do not claim every relief or allowance at this stage, and HMRC is not asking you to pay anything off the back of it.
The tidying-up happens once, at the end, in your tax return, due by 31 January after the tax year ends, the same date Self Assessment always used. That is where you confirm the figures, add anything else (other income, allowances, reliefs), and arrive at the tax owed. The four updates plus that tax return together replace the old Self Assessment return for this income.
Jointly-owned property
If Sarah owned that flat 50/50 with her partner, the picture splits cleanly. Each owner reports their share of the income and expenses, and the threshold is measured per person. So Sarah would record £8,400 of rent and £1,550 of expenses across her year, her half, and her partner would do the same on their own digital records. Two sets of cumulative updates, each running to its own year-to-date total.
Keeping it manageable
You do not need to memorise any of this. The point of the cumulative system is that you record as you go, and the year-to-date figure takes care of itself.
That is what Quarterwise does for landlords with one property or a small portfolio: you log your rent and expenses, and it keeps the running totals and files each quarterly update and your tax return to HMRC. If you want a refresher on the basics first, start with what Making Tax Digital actually is.
This is general information, not tax advice. Always check your own circumstances with HMRC or a qualified accountant.
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