Glossary

Making Tax Digital glossary for online sellers

Last updated 28 October 2026. Every fact below is checked against the sources listed at the end. General information, not tax advice.

Short answer: Making Tax Digital for Income Tax is a new way for sole traders and landlords to do Self Assessment. The terms below are the ones you'll meet most, each taken from HMRC's guidance on GOV.UK.

Terms

Qualifying income: Qualifying income is your total turnover from self-employment and property: the amount before expenses, taken from the tax return you submitted for the previous tax year. It can come from more than one source.
Quarterly update: Quarterly updates are totals of your self-employment and property income and expenses. They're summaries, not tax returns, and HMRC doesn't receive individual receipts or invoices.
Cumulative (year-to-date) update: Each quarterly update covers the tax year so far: from the start of the tax year to the end of the update period.
Standard update periods: Standard update periods (the default, aligned to the 6 April to 5 April tax year): 6 April to 5 July, due 7 August; 6 April to 5 October, due 7 November; 6 April to 5 January, due 7 February; 6 April to 5 April, due 7 May of the following tax year.
Calendar update periods: Calendar update periods (for an accounting period of 1 April to 31 March): 1 April to 30 June, due 7 August; 1 April to 30 September, due 7 November; 1 April to 31 December, due 7 February; 1 April to 31 March, due 7 May of the following tax year. The deadlines are the same as for standard periods.
Digital record: A digital record needs the amount, the date the income was received or the expense occurred, and its category (the same categories as Self Assessment).
Bridging software: You can keep using spreadsheets for your records, but you'll need software that links to them (sometimes called bridging software) to send quarterly updates and your tax return.
Digital link: If you use more than one software product, your record-keeping software must be digitally linked to the software that sends your submissions. Linked spreadsheet cells, emailing a spreadsheet to import, CSV import and export, and downloading and uploading files are all digital links. Writing figures out again or copying and pasting them isn't.
Simpler categorisation: If turnover from a self-employment is under £90,000, you can choose simpler categorisation: a sole trader only needs to record whether each transaction is income or an expense.
Trading allowance: The trading allowance is a tax exemption of up to £1,000 a year. If your gross trading income is more than £1,000 you can deduct the £1,000 allowance instead of your actual expenses.
Penalty points: For tax years after 2026 to 2027, each missed quarterly update or tax return deadline gets a penalty point (only one point per deadline, even with several businesses). At 4 points you get a £200 penalty, and another £200 for each further missed deadline.
Digital platform reporting: Since 1 January 2024, UK digital platform operators may need to collect and check sellers' details and report them, with the seller's income from the platform, to HMRC.
Exemption: Some people are exempt from MTD for Income Tax, for example if they're digitally excluded. Exempt people still report income in a Self Assessment return as normal.
Tax return (final submission): You still submit one tax return a year and pay your tax bill by 31 January after the end of the tax year, now through your compatible software.

Worked example: the terms in one quarter

Example figures Made-up figures for a fictional seller, not real data.

Term	Example
Gross sales (turnover)	£2,480.00
Fees (expenses)	−£372.00
Payout (not income: a transfer)	£2,108.00
Quarterly update 1 sends	£2,480.00 income, £372.00 expenses

The payout never appears as income: it's the same money already recorded as sales less fees.

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TidyTill reads Etsy, eBay, Amazon, Shopify and PayPal exports, works out gross turnover, splits it into MTD periods and flags gaps and duplicates. Upload your exports and see your totals, quarters and Health Check free before you pay. Then £19 one-off for a workbook or £49 a year for unlimited workbooks. Paid workbook downloads open very soon; the free preview works now.

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Questions

Is a quarterly update a tax return?

Quarterly updates are totals of your self-employment and property income and expenses. They're summaries, not tax returns, and HMRC doesn't receive individual receipts or invoices.

Who needs MTD?

You only need to use it if you're registered for Self Assessment, have submitted a tax return, and get income from self-employment as a sole trader, property as a landlord, or both.

Can I still use spreadsheets?

You can keep using spreadsheets for your records, but you'll need software that links to them (sometimes called bridging software) to send quarterly updates and your tax return.

Sources

Using Making Tax Digital for Income Tax for the first time (GOV.UK, checked 28 October 2026)
Work out your qualifying income for Making Tax Digital for Income Tax (GOV.UK, checked 28 October 2026)
Send quarterly updates (Making Tax Digital for Income Tax) (GOV.UK, checked 28 October 2026)
Create digital records (Making Tax Digital for Income Tax) (GOV.UK, checked 28 October 2026)
Tax-free allowances on property and trading income (GOV.UK, checked 28 October 2026)
Penalties for Making Tax Digital for Income Tax (GOV.UK, checked 28 October 2026)
Selling goods or services on a digital platform (GOV.UK, checked 28 October 2026)
Find out if you can get an exemption from Making Tax Digital for Income Tax (GOV.UK, checked 28 October 2026)

TidyTill is a record-keeping aid only. This page is general information, not tax advice. TidyTill is not HMRC-recognised software and it doesn't submit anything to HMRC: you send quarterly updates and your tax return through HMRC-recognised software. Rules and dates can change, so check GOV.UK or ask an accountant about your own situation.