Free reference·ExternalOS·2026/27

The 12 MTD terms HMRC writes badly.

A plain-English glossary. One worked example each. No login, no email gate.

How to read these

Each card gives the term as HMRC names it, then the plain meaning, then a worked example using a real number. Built from GOV.UK MTD ITSA guidance and ICAEW TAXguide 01/25.

01 HMRC term

Qualifying income

Your gross self-employment income plus your gross property income, added together, before any expenses. If this combined number is over the threshold for your phase, you're in MTD.

Worked example£38,000 from freelance design plus £14,000 from one rental is £52,000 qualifying income. Above the £50k threshold, so you're mandated from 6 April 2026.
02 HMRC term

Cumulative update

A quarterly submission showing your year-to-date totals, not just the quarter. Q3 shows Q1 plus Q2 plus Q3, not the three-month figure. You fix earlier mistakes by overwriting the running total.

Worked exampleQ1 turnover £9k, Q2 turnover £7k. Your Q2 submission sends £16k cumulative, not £7k. Forgot a Q1 invoice? Add it to the Q2 total, no resubmit needed.
03 HMRC term

EOPS (End of Period Statement)

Originally a fifth annual submission to close your trading year. HMRC scrapped the separate EOPS step in late 2024 and folded it into the Final Declaration. If older guidance mentions EOPS, skip past it.

Worked exampleOld plan: 4 quarterly updates plus 1 EOPS plus 1 Final Declaration was 6 submissions a year. New plan: 4 updates plus 1 Final Declaration is 5. Easier.
04 HMRC term

Final Declaration

The annual confirmation, due 31 January after the tax year ends. Replaces the old Self Assessment return for MTD-mandated people. Confirms total income, allowances and tax due. Quarterly updates feed into it.

Worked exampleThe 2026-27 year ends 5 April 2027, so the Final Declaration is due 31 January 2028. By then HMRC already has your Q1 to Q4 totals, so it's a confirmation plus any other income.
05 HMRC term

Bridging software

The connector between your spreadsheet and HMRC's submission API. You keep records in Excel, Numbers or Sheets, and the bridging software reads the numbers and submits them. HMRC officially recognises this path.

Worked exampleFree options exist, and one-time paid tools run roughly £15 to £30. No monthly subscription is needed if you stay on a spreadsheet.
06 HMRC term

Compatible software

Any software HMRC has certified to submit to MTD. That includes the SaaS accounting tools and the bridging tools above. Compatible doesn't mean you need a subscription. Spreadsheet plus bridging is compatible.

Worked exampleHMRC's find-software page lists dozens of compatible options. Most are paid SaaS subscriptions. A handful are bridging tools that work with your spreadsheet. Pick the path that suits you.
07 HMRC term

Quarterly update

Each of the four submissions per year. Q1 covers 6 April to 5 July, due 7 August. Q2 to 5 October, due 7 November. Q3 to 5 January, due 7 February. Q4 to 5 April, due 7 May.

Worked example2026-27 dates: Q1 due 7 Aug 2026, Q2 due 7 Nov 2026, Q3 due 7 Feb 2027, Q4 due 7 May 2027, Final Declaration due 31 Jan 2028.
08 HMRC term

Reasonable excuse

The defence against penalties for a missed submission. HMRC's bar is narrow: serious illness, bereavement, a failure of HMRC's own systems. "I forgot" and "I was busy" don't count.

Worked exampleHospitalised the week of a deadline is a reasonable excuse and an appeal can succeed. A lapsed software subscription isn't reasonable, and the penalty stands.
09 HMRC term

Soft-landing period

A grace window where HMRC doesn't enforce penalties for late submission. There's no soft-landing for MTD for Income Tax in 2026. The penalty regime starts on day one. The term survives from MTD for VAT in 2019.

Worked exampleMiss Q1 on 7 Aug 2026 and a penalty point starts immediately. Don't bank on a grace period this time round.
10 HMRC term

Time to pay arrangement

A formal payment plan with HMRC when you can't pay the tax due. Set it up online if you owe under £30k. It spreads the bill over up to 12 months. Interest still accrues, but enforcement action stops.

Worked exampleFinal Declaration shows you owe £4,200 and can't pay in full. Set up a 6-month arrangement online: £700 a month, interest on the balance, no enforcement.
11 HMRC term

Combined gross income

The qualifying-income test looks at self-employment and property income together. Even if neither alone hits the threshold, the combined sum can. This catches a lot of side-hustle freelancers with a rental.

Worked example£35k freelance plus £18k from one property is £53k combined. Both individually below £50k, combined above, so you're in.
12 HMRC term

Voluntary sign-up

Joining MTD before your phase mandates it. You can sign up now even if your income is under £50k. The main reason to do it is to spread the learning curve before your mandatory date.

Worked exampleYou earn £22k freelance and your mandate date is 6 April 2028. Voluntary sign-up now gives you two years of practice before it counts. Some prefer the deadline pressure. Trade-off.

Sources: GOV.UK Making Tax Digital for Income Tax collection, ICAEW TAXguide 01/25. Last reviewed May 2026. General information, not personalised tax advice.

Now you have the words

The workbook that uses them correctly.

The Sole Trader Tax Workspace puts these terms to work: a locked HMRC-shape template with cumulative quarterly totals, a bridging-software shortlist, the quarterly checklist and a deadline calendar. So you don't need to read 60 HMRC pages. Paid once, yours to keep.

Get the Sole Trader Tax Workspace, £19 Read the MTD explainer