Myth-busting Making Tax Digital

This is the year of Making Tax Digital (MTD). From April 2026, landlords, sole traders and self-employed individuals will be required to keep digital records and submit regular updates using approved software.

This is a big change and is sure to shake up the way income is declared, but while it sounds complicated, there’s a lot of misinformation online – and MTD is probably more straightforward than you think it is.

Here are some of the most common MTD myths – busted.

Myth 1: I’ll have to pay tax four times a year

Myth busted: You are not paying tax quarterly. Instead, it is just updates that are submitted quarterly and are just estimates of income and expenses. Your actual tax bill is still worked out in the usual way.

Myth 2: I won’t be able to use spreadsheets to record income and expenses anymore and instead will have to go through heavy and expensive administration changes.

Myth busted: You can still use spreadsheets. They just need to connect to MTD-compatible software so figures are sent digitally to HMRC.

Also, there are low-cost and even free MTD software options available. You don’t need anything complicated to stay compliant.

After an initial adjustment, many people find MTD actually saves time. Keeping records regularly can reduce stress and last-minute paperwork.

Myth 3: Making Tax Digital is only for big businesses

Myth busted: MTD is being phased in from April 2026. The first phase will apply to landlords, sole traders and self-employed individuals whose total income from business and/or property is more than £50,000 a year.

If your income is below this level, you are not expected to be required to join until at least April 2027, as HMRC plans to reduce the threshold gradually. Some groups have been delayed until 2029, and others may be permanently exempt, such as individuals with certain disabilities.

Even if you are not affected straight away, it’s a good idea to start preparing early to avoid unnecessary pressure when the changes eventually apply.

Myth 4: One mistake means an instant fine

Myth busted: If MTD applies to you, it is mandatory. Once you’re in scope, you must follow the digital record-keeping rules. However, HMRC focuses on repeat non-compliance, rather than genuine mistakes. There has also been a soft-landing approach while people get used to MTD.

Myth 5: I won’t need an accountant anymore

Myth busted: Many people find accountants are more helpful than ever under MTD – especially for setup, reviews, and peace of mind.

If you’re feeling unsure about MTD, you don’t have to navigate it alone. Monahans is offering free support sessions designed to help self-employed individuals and landlords understand what MTD means for them, what they need to do and how to prepare with confidence.

These sessions are practical, jargon-free, and ideal if you want clear answers without pressure.

Find out more and register here: https://monahans.co.uk/events/free-support-for-making-tax-digital-for-income-tax or contact us for more information and advice.

Katy Tovey