Where Munshian Ledger stands: Munshian Ledger does not yet send MTD for Income Tax quarterly updates or tax returns to HMRC. It keeps your books and gives you your Self Assessment (SA103) figures. If you must use MTD for Income Tax now, you'll need software that HMRC lists for it (see choosing software). Would you use it in Munshian? Tell us, and we'll let you know if and when it's ready.
What is Making Tax Digital for Income Tax?
Making Tax Digital (MTD) for Income Tax changes how sole traders and landlords deal with Self Assessment. Instead of one tax return a year built from paper records or a spreadsheet, you:
- keep digital records of your self-employment and property income and expenses,
- send HMRC a short summary of them every three months (a quarterly update), and
- send your tax return from software after the end of the tax year.
It follows Making Tax Digital for VAT, which every VAT-registered business already uses.
Who has to join, and when
MTD for Income Tax applies to sole traders and landlords who are registered for Self Assessment. Whether you have to join depends on your qualifying income: your total turnover from self-employment and property, before expenses. HMRC looks at the return for the tax year two years before.
| Qualifying income on this return | Over | You join from |
|---|---|---|
| 2024 to 2025 | £50,000 | 6 April 2026 |
| 2025 to 2026 | £30,000 | 6 April 2027 |
| 2026 to 2027 | £20,000 | 6 April 2028 |
For example, a self-employed plumber with £36,000 of sales and £8,000 of rent from a flat has qualifying income of £44,000. That is under £50,000, so they don't join in April 2026, but it is over £30,000, so if their 2025 to 2026 return shows the same they join in April 2027.
Income from employment, pensions or savings doesn't count towards qualifying income. Partnerships and limited companies are not part of MTD for Income Tax at the moment; limited companies pay Corporation Tax instead (see our Corporation Tax guide). HMRC can exempt some people, for example if it isn't reasonably practical for them to use computers.
Digital records
You need digital records only for your self-employment and property income and expenses. Each record needs:
- the amount,
- the date you received the income or had the expense, and
- a category, using the same categories as the Self Assessment return.
Records start from the first day of your first MTD year: 6 April for most people, or 1 April if you use calendar quarters.
Quarterly updates and deadlines
A quarterly update is a summary of your income and expenses for the last three months, sent from software. It isn't a tax return and you don't pay tax with it. You send one for each sole trader business and each property business.
| Quarter (standard periods) | Update due |
|---|---|
| 6 April to 5 July | 7 August |
| 6 July to 5 October | 7 November |
| 6 October to 5 January | 7 February |
| 6 January to 5 April | 7 May |
If you choose calendar quarters (1 April to 30 June, and so on), the deadlines stay the same.
The tax return at the end of the year
After the tax year ends, you add any adjustments and your other income, and send your tax return from MTD software. The deadline is still 31 January after the end of the tax year, and that is still when your tax is due. For people who joined in April 2026, the first one is due by 31 January 2028.
Penalties
Late quarterly updates and late returns earn penalty points rather than an instant fine. For quarterly updates, a £200 penalty applies once you reach 4 points, and points expire after a period of sending everything on time. Paying late is separate: the longer tax stays unpaid, the higher the penalty.
HMRC has said it won't give penalty points for late quarterly updates in the 2026 to 2027 tax year. You still have to send all four updates before you can send that year's tax return.
Choosing software
You need software that HMRC lists as working with MTD for Income Tax. HMRC's guide to choosing software links to the official list and shows which products are free. Some products keep your records and send the updates; bridging software sends updates from records you keep elsewhere, such as a spreadsheet.
Munshian Ledger isn't on that list yet. Today it helps in two ways:
- it keeps your invoices, bills and bank transactions together, so your income and expenses are already in one place, and
- it works out the figures for the self-employment pages (SA103) of your Self Assessment return. See Munshian for sole traders.
If you're not in MTD for Income Tax yet, you can keep filing your Self Assessment return as you do now.
This guide is general information, correct as we understand it at the date shown. It isn't tax advice for your situation. For the latest rules see GOV.UK, or speak to an accountant.