Making Tax Digital Quarterly Updates for Freelance Journalists

Your four deadlines at a glance

Each deadline is one month and seven days after the period ends. The year-end tax return deadline of 31 January is unchanged and sits on top of these four.

Who has to do this, and from when

Making Tax Digital for Income Tax applies if you are a sole trader or a landlord registered for Self Assessment, you have income from self-employment or property (or both), and your qualifying income is above the relevant threshold. It is mandatory, not optional, once you cross the line — the pilot phase is over.

HMRC checks the Self Assessment return you filed for the tax year in the middle column and writes to people it believes are caught. Do not wait for the letter and do not assume it will arrive: sign-up is not automatic. You, or your agent, must sign up through HMRC online services. To do that you need to be registered for Self Assessment, to have filed a return within the last two years, and to have your Self Assessment user ID and password to hand.

If your qualifying income later drops, you are not stuck forever — but you cannot leave immediately. HMRC allows you to opt out once your qualifying income has been below the relevant threshold for three consecutive years, using the income information in your fourth quarterly update for the third year. If you do opt out, updates already sent for that tax year are deleted and you go back to filing a Self Assessment return.

Qualifying income is turnover, not profit — and it includes your rent

This is the point most freelancers get wrong. HMRC defines qualifying income as your total income from self-employment and property before expenses — turnover — based on the tax return you submitted for the previous tax year. Your taxable profit is irrelevant to the test.

What does not count towards qualifying income: employment or PAYE income (so a two-day-a-week staff shift does not push you over), your share of partnership profits, dividends including from your own limited company, and state or private pension income. Income from a jointly owned property counts, but only your share of it.

One consequence worth planning for: because the test is on gross income, a reporter who rebills travel, fixers and translation to an outlet can cross the threshold on gross billings while netting far less. HMRC’s qualifying income guidance sets out what is included and excluded in detail, and does not describe a carve-out for recharged costs — so if a large share of your turnover is passed-through expenses, check the treatment with your accountant rather than assuming it is stripped out.

What you actually have to do: three obligations

• 1Keep digital records. Every item of income and expense must be recorded digitally with its amount, the date the income was received or the expense was incurred, and its category. HMRC says to create these records as close to the transaction date as possible, and in any case before the quarterly update deadline or before you send that update, whichever comes first. A shoebox of receipts reconciled in January is no longer compliant.
• 2Send quarterly updates. Every three months, for each self-employment and each property business separately, you send HMRC totals for each income and expense category you have used. These are summaries, not tax returns and not tax calculations. If a source had no income and no expenses in the period, you must still send its update to say so.
• 3Submit your tax return. After the fourth quarterly update you use your software to make any accounting adjustments, claim reliefs and allowances, add employment income, pensions, savings interest, dividends and gains, and submit the return by 31 January as before.

On terminology: earlier HMRC material and a lot of accountancy commentary calls the year-end step the “final declaration”. The current guidance calls it your tax return. Both refer to the same submission. If your software still uses the older label, that is a cosmetic difference, not a different obligation.

There is one useful simplification for smaller businesses. If your turnover is below £90,000, HMRC allows sole traders to record only whether each transaction is income or an expense, rather than categorising every line. Landlords of residential property must still separately identify restricted finance costs. If you use HMRC’s simplified (flat-rate) expenses for mileage or use of home, you do not need to record the actual underlying costs, but you must make the adjustment before finalising your position.

Standard periods, calendar periods, and the cumulative quirk

The calendar election is worth taking. Electing calendar update periods moves your cut-offs to calendar month ends without changing any deadline. That matters because bank statements, card statements, subscription invoices and most accounting software reports all run to month end. Reconciling to 5 July means manually splitting a statement; reconciling to 30 June does not. You must select calendar periods for each income source in your software before you send your first quarterly update for that source.

Updates are cumulative. Each quarterly update covers from the start of the tax year to the end of that period, not just the preceding three months. The practical benefit is real: if you miscategorised a train fare in quarter one, you fix the record and the corrected figure simply flows into the quarter two update. You do not have to resend the earlier submission.

HMRC’s published guidance is thin on a couple of edge cases freelancers hit — notably when the first update falls due for a business that starts partway through a tax year, and exactly what happens to your obligations while an exemption application is being considered. Rather than guess, check the current wording on the quarterly updates guidance or ring the Self Assessment helpline before your first deadline.

Software: what you need and whether free options exist

You cannot type quarterly updates into the HMRC website. You must use commercial software that has been through HMRC’s recognition process, and HMRC publishes a software finder tool listing what is available. There are two broad types: record-creating software that imports bank transactions, scans receipts or takes manual entry; and bridging software that connects to records you already keep in spreadsheets and makes the submissions for you.

Free products do exist.HMRC’s guidance states free products are available for those with simple tax affairs, but warns there may be limits on how they can be used — for example a cap on the number of transactions. A freelance journalist with one sole trade, a business current account and forty invoices a year is close to the profile a free product is designed for. Add a rental property, a VAT registration or several overseas income streams and you will probably need a paid tier.

Two selection points that catch freelancers out. First, your software must support every income source you have — a package built for sole traders alone will not file your property updates, and you may end up using two products. Second, you can use more than one product, but only one product for each separate submission you make to HMRC. Check before you commit that whatever you choose handles both the quarterly updates and the year-end tax return, or that you have a plan for the second half.

The practical workflow for a freelance journalist

MTD punishes the classic freelance pattern — ignore the books for eleven months, panic in January. Four deadlines a year means the reconciliation has to become routine. What works:

• 1Book a recurring 30-minute slot, monthly, not quarterly. Reconciling one month of transactions while you still remember why you were in Leeds takes half an hour. Reconciling three months takes an afternoon and produces worse categorisation. Put it in the diary on the first working day of each month.
• 2Separate your business banking properly. You are not legally required to have a business account as a sole trader, but mixing a household supermarket shop into the same feed as your commission payments guarantees mis-categorisation under a system that now looks at your records four times a year. A separate current account plus one card used only for work is the single highest-value change.
• 3Photograph receipts at the point of spend. Most compatible software has a mobile capture feature. Doorstep parking, a court transcript fee, a fixer paid in cash — these are exactly the items that vanish before quarter end and exactly the items HMRC expects to see recorded near the transaction date.
• 4Set your category list once, at the start of the tax year, and reconcile before the 7th rather than on it. Travel, accommodation, equipment, software subscriptions, professional fees and subscriptions (including the NUJ), phone and broadband, research materials, use of home. Bank feeds break and 7 February lands in the same fortnight as your Self Assessment payment, so aim to file each update by the last day of the preceding month.
• 5Keep the year-end mindset. The quarterly figure your software displays is not your tax bill. Capital allowances, private-use adjustments, disallowable items and reliefs are applied at the year-end return. Treat quarterly estimates as a directional cash-flow signal only.

Late-paying clients across a quarter boundary

Journalism runs on 30-, 60- and sometimes 90-day payment terms, and a feature filed in June can easily be paid in October. Which quarterly update it lands in depends on your accounting basis, so know which one you are on.

Since 6 April 2024 the cash basis is the default for eligible sole traders — you record income when it is actually received and expenses when actually paid. If you want traditional accruals accounting instead, you have to elect out when you submit your Self Assessment return. On the cash basis, an invoice raised in June and paid in October appears in your quarter two update, not quarter one, and a chased invoice that finally clears in April falls into the next tax year altogether.

The practical implications for a freelance journalist:

• ›Your quarterly updates will look lumpy, and that is fine. A quarter with three slow payers looks like a bad quarter; the next one looks abnormally good. HMRC is not assessing you quarterly, so do not distort your records to smooth them.
• ›Do not record an invoice as income when you send it if you are on the cash basis. Raising the invoice is not the trigger — receipt of the money is. Configure your software accordingly; several packages default to invoice-date recognition.
• ›A kill fee or a partial payment is income when received, in whatever amount actually arrives. If a client short-pays, record what landed and deal with the shortfall as a debt-recovery matter rather than by adjusting the update.
• ›Chasing matters more, not less, under MTD. Four points a year where you look at unpaid invoices is a built-in credit-control rhythm — use the quarterly reconciliation as the trigger to send statutory-interest letters on anything overdue.
• ›If you are on traditional accruals accounting, the opposite applies: the income belongs to the period you did the work and billed it, regardless of when the money arrives, and you will need to track debtors across quarter ends.

Exemptions and how to apply

Some exemptions are automatic and need no application: qualifying income of £20,000 or less; not having a National Insurance number before the start of the tax year; filing as a personal representative, for a trust, or for a non-resident company; being a Lloyd’s member; and being unable to provide information because of a disability or incapacity where a power of attorney or legal deputy is in place. HMRC also lists temporary exemptions running until at least April 2027, covering people claiming averaging relief (relevant to some authors and artists), qualifying care relief, or reporting trust and estate income.

Everyone else must apply, and the main ground is being digitally excluded. HMRC gives three examples: your age, health condition or disability stops you using a computer, tablet or smartphone; you cannot get internet access at home or at your business because of your location; or you are a member of a religious society whose beliefs are incompatible with using electronic communications.

HMRC is explicit about what it will not accept: that you have always filed on paper and prefer to; that you are unfamiliar with the software; that you only have a small number of digital records; or that it will take extra time and cost. None of those will get you an exemption.

You can apply yourself by phone or in writing using the Self Assessment general enquiries contact details, or an agent, friend or family member can apply on your behalf with your authorisation. Written applications should use the subject line HMRC specifies for the exemption type. HMRC aims to respond within 28 calendar days — so apply well before a deadline, not after you have missed one.

The points-based penalty regime

MTD brings a points-based late submission system. You get one penalty point for each missed quarterly update or tax return deadline. Only one point per deadline, even if you had to file several updates that day for different businesses. At four points you get a £200 penalty, and a further £200 each time you miss another deadline while at the threshold.

Points below the threshold fall away automatically after 24 months. Once you have hit four points they do not expire individually: you have to submit your quarterly updates and tax returns on time for 12 months and clear any outstanding updates and returns for the previous 24 months before the points are removed.

Late payment penalties are separate and were also reformed. For the 2026 to 2027 tax year there is no penalty if you pay within 15 days of the due date; between 16 and 30 days late the penalty is 3% of the tax owed at day 15; from day 31 it is 3% of the tax owed at day 15 plus 3% of the tax owed at day 30, plus a further charge at a 10% annual rate accruing daily. Those percentages rise to 4% for the 2027 to 2028 tax year. Late payment interest runs separately, from the first day.

One caveat we will not resolve for you: HMRC’s page qualifies the 16-to-30-day penalty with the phrase “or no penalty if it’s your first year”, and separately says you only receive the extended 30-day period once. The interaction between that first-year relief, volunteers who have since become mandated, and people who become exempt part-way through is not stated plainly. If you are relying on the relief, read the penalties guidance yourself and take advice — do not plan a cash-flow gamble on it.

What does not change

• ›Payment dates. HMRC states that Making Tax Digital will not change the way you pay tax or the dates that payments are due. Your balancing payment and first payment on account remain due 31 January; the second payment on account remains 31 July.
• ›The tax return deadline. Your return for a tax year is still due by 31 January following the end of that year — filed through software instead of the HMRC portal.
• ›What is allowable. MTD changes how you record and report, not what counts as an allowable expense. Travel to a story, equipment, professional subscriptions and use of home are treated exactly as before.
• ›Your tax rates and allowances. Income tax bands, the personal allowance and Class 4 National Insurance are unaffected by MTD.
• ›Registering for Self Assessment. The obligation to register when you start freelancing, and the deadline for doing so, are unchanged — MTD sits on top of Self Assessment, it does not replace registration.

Payments on account are still triggered where your Self Assessment bill exceeds £1,000, and MTD does not change that.

Common mistakes freelance journalists are making

• ⚠Testing the threshold against profit instead of gross income — the most common error, and the one most likely to leave you unknowingly non-compliant.
• ⚠Forgetting rental income entirely. Qualifying income combines self-employment and property. A modest let can be what pushes a mid-career freelance over £50,000.
• ⚠Assuming HMRC signs you up. It does not. You or your agent must sign up, even after receiving HMRC correspondence.
• ⚠Sending one update for two businesses, or skipping a nil update. A sole trade and a property business need separate quarterly updates, and a source with no activity in the period still needs a submission telling HMRC so.
• ⚠Missing the calendar-period election window. You must select calendar update periods in your software before the first quarterly update for that income source — you cannot decide in November that you would rather have month ends.
• ⚠Reading the first-year easement too broadly. No penalties for late quarterly updates in 2026 to 2027 does not mean no obligation, and does not cover the tax return.
• ⚠Applying for a digitally excluded exemption on grounds HMRC has expressly ruled out — cost, inconvenience, unfamiliarity or a preference for paper.

Primary sources

Frequently asked questions