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BrightBooks & MTD for Income Tax – Quarterly Periods and Accounting Method FAQs

Shannon Brady
  • Updated

BrightBooks supports Making Tax Digital for Income Tax (MTD for ITSA) by letting UK sole traders and landlords keep digital records and submit quarterly updates and year‑end Final Declarations using HMRC‑recognised connections.

Bright’s connected tools give you a complete MTD workflow from April 2026 onwards:

  • BrightBooks – digital bookkeeping and quarterly MTD for Income Tax updates 
  • BrightTax – year‑end adjustments and the Final Declaration 
  • BrightManager – tracking deadlines and automating client workflows

For an overview of MTD for Income Tax and Bright’s solution, see our MTD hub: 
Click Here.

 

General

1. How does BrightBooks fit into MTD for Income Tax?

BrightBooks lets UK sole traders and landlords:

  • Keep income and expense records digitally 
  • Generate and submit quarterly updates to HMRC 
  • Use either direct bookkeeping in BrightBooks or spreadsheets via BrightBooks’ bridging tool

At year end, BrightTax pulls the submitted quarterly data from HMRC (regardless of which bookkeeping software you used) and guides you through the Final Declaration, including any adjustments and other income. BrightManager then helps you track tasks and deadlines across your client base.

 

Quarterly Period Type

2. What is a “Quarterly Period Type” in BrightBooks?

Your Quarterly Period Type tells BrightBooks how to split your tax year into the four MTD quarters that HMRC expects.

You can choose between:

Standard update periods – quarters aligned to the tax year:

  • 6 April – 5 July 
  • 6 July – 5 October 
  • 6 October – 5 January 
  • 6 January – 5 April

Calendar update periods – quarters ending on the last day of a month:

  • 1 April – 30 June 
  • 1 July – 30 September 
  • 1 October – 31 December 
  • 1 January – 31 March

The pattern you choose is used for all four quarterly updates in that tax year.

 

3. Which Quarterly Period Type should I choose?

It depends on how your accounts are prepared:

  • If your accounting year matches the tax year (6 April to 5 April), Standard quarters will usually be the simplest. 
  • If your year end is 31 March or does not exactly match the tax year, Calendar quarters often make record‑keeping and reconciliation easier.

If you’re not sure which is best, speak to your accountant or tax adviser.

 

4. When do I have to choose my Quarterly Period Type?

You must choose your Quarterly Period Type before you submit your first quarterly update (Q1) for that tax year.

  • If you try to file Q1 without choosing a Period Type, BrightBooks will block the submission and prompt you to go to MTD for ITSA Setup to select one. 
  • Once Q1 has been successfully submitted, your Period Type is locked for the rest of that tax year for that income source.

 

5. Can I change from Standard to Calendar quarters (or the other way round) during the year?

No. For each income source:

  • After you submit the first quarterly update for a tax year, you cannot change the Period Type for that year. 
  • You can change the Period Type for the next tax year, as long as you do it before filing the first quarterly update for that new year.

This keeps your HMRC submissions consistent and avoids periods overlapping or missing.

 

6. Where do I select the Quarterly Period Type in BrightBooks?

Once your business is set up for MTD for Income Tax:

  1. Go to Settings → MTD for ITSA → MTD Tax Setup. 
  2. For each MTD business (for example, self‑employment, UK property, foreign property), choose: 
    1. Standard update periods, or 
    2. Calendar update periods.
  3. Click Save.

BrightBooks will then show your four quarters and their due dates on the MTD screen and/or dashboard so you can clearly see what’s due and when.

For more about MTD quarters and deadlines, see HMRC’s guidance on quarterly updates and timings for MTD for Income Tax.icaew.com +1 

 

7. Will BrightBooks show me which quarter I’m filing and when it’s due?

Yes. Once you have:

  • Connected BrightBooks to HMRC, and 
  • Chosen your Quarterly Period Type,

BrightBooks will display, for each MTD business:

  • The four quarterly periods 
  • Their corresponding due dates 
  • The status of each period (for example, Open, Generated, Submitted, Fulfilled)

This makes it easy to see which quarter you’re working on and to keep on top of MTD deadlines.

 

Accounting Method (Cash vs Accruals)

8. What is the default accounting method in BrightBooks for MTD for Income Tax?

By default, BrightBooks sets each new MTD business to Cash Basis accounting.

You can change this to Accruals Basis in MTD Tax Setup if that better reflects how your accounts are prepared.

 

9. What is the difference between Cash Basis and Accruals Basis?

Cash Basis

  • Income is counted when you actually receive the money. 
  • Expenses are counted when you actually pay them.

Accruals Basis (traditional accounting)

  • Income is counted when it is earned (for example, when you raise an invoice). 
  • Expenses are counted when they are incurred, matched to the period they relate to.

Your choice affects how your profits are calculated for tax. If you’re unsure which method is right for you, speak to your accountant or tax adviser. HMRC’s Making Tax Digital guidance also explains how both methods work under MTD for Income Tax.icaew.com

 

10. When do I need to confirm my accounting method?

There are two key points:

  1. During the year 
    1. BrightBooks stores a current accounting method (Cash or Accruals) for each MTD business. 
    2. You can change it in MTD Tax Setup if needed, and this method is used in your in‑year figures and reporting.
  2. At year end, before the Final Declaration 
    1. Your accounting method must be confirmed before the Final Declaration is submitted to HMRC. 
    2. This is done per income source (each trade, UK property business, foreign property business). 
    3. The confirmed method is what HMRC will treat as final for that year.icaew.com

Bright’s MTD workflow uses:

  • BrightBooks – for digital bookkeeping and quarterly updates 
  • BrightTax – for year‑end adjustments and the Final Declaration

BrightTax reads the accounting method from BrightBooks and asks you to confirm or update it at year end, so what you report matches how your accounts have been prepared.

 

11. Can I change the accounting method during the year?

Yes, but you should take care:

  • You can switch between Cash and Accruals in BrightBooks during the year in MTD Tax Setup. 
  • At year end, when preparing the Final Declaration in BrightTax, you’ll be asked to confirm the method one last time. 
  • If you change method close to year end (for example, from Cash to Accruals), extra adjustments may be required to make sure your figures are correct for the full year.

Because method changes can have tax implications, we recommend discussing any change with your accountant before you make it.

 

12. Does my Quarterly Period Type affect my accounting method?

No. These are two separate settings:

  • Quarterly Period Type controls how your quarters are dated and when your updates are due. 
  • Accounting Method (Cash or Accruals) controls how your income and expenses are calculated for the year.

BrightBooks stores both settings in MTD Tax Setup and passes them through the MTD workflow so that HMRC receives the correct combination for each income source.

 

If you have questions about how to set up MTD in BrightBooks or how BrightTax and BrightManager fit into your workflow, your usual Bright support contact can talk you through the options.