STEP-BY-STEP: How taxi drivers can submit quarterly updates under HMRC’s new Making Tax Digital
- Perry Richardson
- 6 minutes ago
- 2 min read
From April 2026, taxi drivers turning over more than £50,000 a year in fares will need to send quarterly updates to HMRC through Making Tax Digital (MTD) compatible software. Those taking between £30,000 and £50,000 will follow in April 2027. To prepare, drivers should understand the submission process clearly.
The first step is choosing suitable software. This must be recognised by HMRC as compatible with MTD for Income Tax. Some products allow drivers to record income and expenses directly, link bank accounts to import transactions automatically, or scan receipts. Others act as bridging software, connecting existing spreadsheets to HMRC.
Once the software is set up, drivers will need to create digital records of all self-employment income and expenses. This could include fares received, fuel costs, insurance, licence fees and maintenance. Only business-related figures are needed for the quarterly updates, but records must be accurate and kept up to date.
At the end of each quarter, the software will generate an update. This summary of income and expenses is then sent directly to HMRC. Taxi drivers will not need to calculate tax at this stage, as the updates are intended to give HMRC an ongoing picture of earnings.
The deadline for each quarterly update will be one month after the end of the quarter. For example, if a quarter ends on 5 July, the update must be submitted by 5 August. Submissions made after this date risk penalty points and, eventually, fines.
At the end of the tax year, drivers will need to make a final declaration, sometimes called the end-of-period statement. This is where any adjustments are made, such as claiming capital allowances or correcting errors from earlier updates. The final declaration replaces the traditional Self Assessment return and must be submitted by 31 January the following year.
If drivers also have other types of income, such as rental property or dividends, the software must be able to include these on the final declaration.
By setting aside time each week or month to update digital records, drivers can avoid a backlog of work and reduce the risk of missing deadlines. Most MTD software packages also provide reminders and make the submission process quick once records are entered.
The move to quarterly submissions may feel like an additional burden at first, but it is designed to make tax reporting more accurate and spread out through the year. For drivers who already use apps or spreadsheets to track takings, the change will mainly involve learning how to connect these systems to HMRC through approved software.
