hd to 4k

they don't offer trade in for appletvs so

you can sell the hd and buy the 4k

or connect the hd to another tv and buy the 4k model for your 4k tv

the resolution it output is a hardware set thing so software updates can't do anything for you

Apple TV 4K - Apple

You'll set it up out of the box and connect it to your TV. If there is a software update, you can do that too.