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You hit submit on your quarterly update, then found the rent payment you forgot to log. Or you realised a £900 boiler repair went in as an improvement by mistake. If you keep your records under Making Tax Digital for Income Tax (MTD For IT) and you have spotted an error, the good news is that the system was built to expect this.
This guide shows you how to correct a mistake in your MTD digital records, step by step, and what HMRC actually expects you to do. It covers landlords and the self-employed who are already keeping digital records, whether you were mandated in or voluntarily signed up early.
A Quarterly Update Is Not Your Final Tax Bill
A quarterly update is a summary of your income and expenses for the tax year to date. It is not a tax return, and it is not the final figure your tax is based on. HMRC uses quarterly updates to provide an in-year estimate of what you might owe.
The figure that legally counts is your tax return, submitted through MTD-compatible software by 31 January after the tax year ends. This is where you check the full year, include any other information needed, make year-end adjustments, and finalise your Self Assessment position.
That does not mean an error is safe to leave. Because each quarterly update covers the tax year to date, a mistake in quarter 1 can continue to affect later updates and your running estimate until you correct the underlying record.
Your running tax estimate stays wrong while the error remains uncorrected, and the error could still be there at year end. If it is still in place when you submit your final tax return, it may become an inaccuracy in a legal return. The risk is not in making the mistake. It is in knowing about it and doing nothing.
Types of MTD Mistake and How Each One Happens
The fix is nearly always the same but knowing which type of error you are dealing with helps you find it and stops it happening again.
You Put Something in the Wrong Category
The most common one. Typical examples:
A repair logged as an improvement
Rent recorded before the letting agent took their fee, instead of after
A personal cost claimed as a business expense
Note on Mortgage Interest
Watch mortgage interest especially. For individual landlords with residential property, finance costs such as mortgage interest are not deducted in full from rental income. Since the restriction was fully in place from 2020 to 2021, relief is normally given as a basic rate tax reduction, subject to the detailed rules. Putting mortgage interest in with general expenses is an easy slip to make.
You Missed a Transaction
You forgot to log an invoice, a repair, or a rent payment. For a landlord, one missed month of rent can shift your estimate noticeably.
You Duplicated the Same Transaction
A bank feed imported the same transaction twice, or you added a payment the app had already pulled in. This happens a lot when you switch software mid-year.
You Mixed Up the Property or the Business
Two things to check here:
Income logged against the wrong property
Personal money landed in the records as rent
If you have both property income and self-employment income, keep them separate. HMRC guidance says you need to send quarterly updates for each self-employment and property business you have. Correcting a mistake in your property records does not correct your self-employment figures, and the other way round.
How to Correct a Mistake in Your MTD Digital Records, Step by Step
The exact buttons depend on your software, but the process underneath is almost the same on every HMRC-recognised platform.
Step 1: Find the Exact Error and the Quarter It Belongs To
Do not guess. Pull up the records for that period and check them against your bank statements, invoices, receipts, letting agent statements, or any other supporting documents. Note whether it affects income, expenses, or both, and by how much.
Step 2: Fix It in Your Digital Records, Not Just the Submission
This is the part people get wrong. HMRC's MTD rules require you to keep digital records, not just submit totals to HMRC. If you patch the number sent to HMRC but leave the underlying record wrong, your records and submitted figures may not agree.
Go into the transaction, correct the category or the amount, and save it properly. Most MTD-compatible software keeps a history or audit trail of changes automatically, so correcting a transaction updates your records while preserving a record of what changed.
Step 3: Let Your Next Update Carry the Correction Through
Quarterly updates are year-to-date summaries. Once you fix the record, your next quarterly update should include the corrected year-to-date totals, so HMRC's latest in-year position reflects the correction. In the normal process, you do not send a separate correction form for the earlier quarter. Check your software's workflow, because HMRC requires corrections to be made using MTD-compatible software.
Step 4: A Fourth-Quarter Mistake Is the Exception
Your fourth update is the last quarterly update for the year, so there is no later quarterly update to carry a correction forward. How you fix it depends on timing. If you spot the mistake before you have filed the fourth update, correct the digital record and send that update with the right figures. If you only spot it after the fourth update has gone in, correct the digital record first, then make sure the final figures are right in your final tax return. Either way, do not leave the mistake uncorrected at year end.
Step 5: Check It Actually Pulled Through
After you fix the record, open your next update or your running tax estimate and confirm the corrected figure is showing. Two minutes now saves you wondering later whether it worked.
Worked Example: a Landlord who Miscategorised a Repair
A landlord takes £3,600 in rent for the quarter. In quarter 2, they log a £950 boiler repair as a property "improvement" instead of a "repair."
Logged as improvement (wrong) | Logged as repair (right) | |
|---|---|---|
Treated as an allowable expense? | No | Yes |
Effect on running profit | Overstated by £950 | Correct |
Effect on tax estimate | Too high | Accurate |
The fix: change the category in the digital records from improvement to repair, assuming it is genuinely a revenue repair and not capital improvement. Because updates are year-to-date summaries, the quarter 3 update should reflect the corrected figure. Quarter 2 would not normally need resubmitting as a separate step.
These figures are illustrative. Your own position depends on your specific income and expenses.
Will HMRC Penalise Me for Correcting a Mistake?
HMRC does not penalise you simply for correcting a mistake in your digital records. The penalty risk is different: missing required submission deadlines, paying tax late, or leaving an inaccuracy in the tax return can have consequences. The MTD process expects records and figures to be updated during the year.
It helps to separate three different things, because people tend to lump them together. Correcting a mistake is not the same as filing late. HMRC says the new penalty rules apply if you miss deadlines for quarterly updates, tax returns, or payments.
The key point for anyone worried about a wrong figure in a quarterly update is this: quarterly updates are summaries used to build an in-year estimate, while the final tax return is the legal filing that determines the Self Assessment position. A wrong number in a quarter, corrected before the final tax return is submitted, should not be treated in the same way as an inaccuracy left in the final return.
What to Do Now
You have spotted the error, which is the hard part done. Correcting it is usually straightforward: open your software, put the record right, and let your next update carry the corrected figure through to HMRC. If the fourth update has already been sent, correct the digital record and make sure the final tax return is right. In most cases there is no resubmitting old quarters and no separate correction form.
Making Tax Digital was built on the assumption that figures may need updating during the year. The version that creates risk is the one where you know a figure is wrong and leave it sitting there until after your final tax return. Deal with it while it is still a quick fix, and your records, updates, and final filing stay aligned.
