June 17, 2026
Article
We have now passed the sign-up deadline for MTD-IT and it seems the publicity and hype regarding the topic has reduced.
For anyone who needs to register and has not yet done so, it’s not too late. HMRC are accepting late registrations with no penalties. If you have successfully signed up to MTD-IT, it’s time to get your MTD-IT software set up and ready to go for the first update, which is due to be submitted to HMRC by the 7th of August 2026.
Your MTD-IT software should allow you to select the following set up options:
- Accounting dates or calendar dates. You have the choice of submitting updates to the 5th of each quarter i.e. first period 06/04/2026-05/07/2026 or to the standard calendar quarters i.e first period 01/04/2026-30/06/2026.
- Cash accounting or traditional accounting. You can either submit updates based on the dates the income and expenses pass through your bank account (cash accounting) or based on the dates the income and expenses are incurred (traditional accounting). Consideration is needed before deciding which option to choose, especially where your turnover may exceed £1.6m. Generally, the best option is to align the MTD-IT preparation basis with your VAT return and income tax return preparation basis.
Full expenses or simple expenses. Full expenses will send all your expense category totals to HMRC, whereas simple expenses will combine all your expense categories into one, therefore reducing the amount of information sent to HMRC. If your turnover exceeds £90,000 you should use full expenses.
If you are using Xero to submit your quarterly updates, it’s important to review the tracking category options before you start reconciling the data. To prepare the quarterly updates Xero will only pull through transactions which have been allocated to a tracking category. Where you have both property and sole trade returns to submit, you will need to set up two separate tracking categories to ensure the correct income and expenses are allocated to the correct MTD-IT update.
If you are still unsure on your MTD-IT requirements or require any assistance setting up your software or tracking categories in Xero please do get in touch.