When setting up a self-employed business for Making Tax Digital for Income Tax (MTD ITSA), one of the decisions you may need to make is whether to use Calendar quarterly periods or Standard quarterly periods.
Both options satisfy HMRC's quarterly update requirements, but one may fit your bookkeeping process better than the other.
Meet David, a Self-Employed Builder
David operates as a sole trader and keeps digital records for his construction business using AccountsDesk.
As part of his MTD ITSA setup, he must choose a Quarterly Period Type in his tax settings.
Before making a decision, David reviews the guidance in:
Manage Tax Settings for MTD ITSA Businesses
Option 1: Calendar Quarterly Periods
David currently prepares management reports every month.
His bookkeeping follows calendar months:
- April
- May
- June
- July
- August
- September
Because of this, he chooses Calendar quarterly periods.
Under the Calendar option, quarterly updates are based on:
| Quarter | Period |
|---|---|
| Q1 | 1 April – 30 June |
| Q2 | 1 July – 30 September |
| Q3 | 1 October – 31 December |
| Q4 | 1 January – 31 March |
Why David Chose Calendar Quarters
The main advantage is simplicity.
David's bookkeeping software already produces monthly reports, making it easy to prepare figures for:
- April to June
- July to September
- October to December
- January to March
There is no need to split a month between two reporting periods.
For many self-employed businesses and sole traders, Calendar quarters are often easier to understand because they align with normal business reporting practices.
Option 2: Standard Quarterly Periods
David's accountant explains that HMRC also allows businesses to use Standard quarters.
Under this approach, reporting periods are:
| Quarter | Period |
|---|---|
| Q1 | 6 April – 5 July |
| Q2 | 6 July – 5 October |
| Q3 | 6 October – 5 January |
| Q4 | 6 January – 5 April |
These periods follow the tax-year pattern rather than calendar month boundaries.
When Standard Quarters May Be Suitable
Some self-employed businesses prefer Standard quarters because:
- They have historically worked around the tax year.
- Existing accounting procedures already use these dates.
- Their accountant prefers consistency with tax-year reporting.
Which Option Generates Less Work?
For David, Calendar quarters are simpler.
When preparing his quarterly updates, he can use complete calendar months without adjustments.
For example:
- April + May + June = Q1
- July + August + September = Q2
With Standard quarters, bookkeeping may require reports to be cut off on the 5th day of certain months rather than month-end.
This can make reconciliations slightly more time-consuming for some businesses.
Does the Choice Affect Tax Liability?
No.
Whether David chooses Calendar or Standard quarterly periods, the business ultimately reports the same income and expenses to HMRC.
The choice mainly affects:
- Quarterly reporting periods.
- Record preparation.
- Administrative convenience.
Key Takeaway
Many self-employed businesses using Making Tax Digital for Income Tax prefer Calendar quarters because they align with normal monthly bookkeeping and management reporting.
However, businesses that already operate around HMRC tax-year reporting periods may prefer Standard quarters.
The best choice is usually the one that fits naturally with the way you maintain your digital records throughout the year.