Making Tax Digital for Income Tax: Clearing Up the Confusion

There’s a lot of confusion out there about Making Tax Digital for Income Tax Self Assessment (MTD for ITSA) and we don’t blame you if you feel overwhelmed. HMRC’s announcements have changed over the years, and some headlines have made things sound more dramatic than they are.

So let’s clear the fog and clear some common myths around MTD for ITSA and explain what you really need to know if you're a landlord, sole trader, or business owner.

❌ Myth #1: MTD for Income Tax has been scrapped

✅ Truth: It’s still happening just not for everyone yet.

The government has delayed rather than cancelled Making Tax Digital for Income Tax. It will now be phased in from April 2026, starting with:

• Self-employed individuals

• Landlords

• With a total income of £50,000 or more

Those earning between £30,000 and £50,000 will join in April 2027. If you earn under £30,000, HMRC is reviewing how to include you in future.

So, if you're within those income bands, you’ll need to get ready just not immediately.

❌ Myth #2: MTD means submitting tax returns four times a year

✅ Truth: You’ll submit quarterly updates, not full tax returns.

A lot of people worry they’ll need to file four full tax returns a year. That’s not the case.

Under Making Tax Digital for Income Tax, you’ll send quarterly updates of your income and expenses using approved accounting software, plus a final End of Period Statement and Final Declaration at year end.

So yes, there are more submissions but they’re lighter, more frequent updates, designed to help you stay on top of your finances all year round.

❌ Myth #3: MTD for Income Tax only affects landlords

✅ Truth: It applies to both landlords and self-employed people.

If you’re a sole trader earning over the income threshold, you’ll need to follow MTD rules too even if you don’t own any rental property. In fact, many people fall into both categories and will need to report both types of income.

We can help you combine and submit your income streams accurately, keeping you compliant and stress-free.

❌ Myth #4: You can still submit on paper

✅ Truth: Under MTD, paper submissions aren’t allowed (unless you’re exempt).

Once MTD for ITSA applies to you, you must keep digital records and submit your updates via compatible software. There are exemptions for those who are digitally excluded due to age, disability or location but these need to be applied for and approved by HMRC.

So, if you’re currently relying on spreadsheets or paper, now’s the time to make the switch to cloud-based tools like Xero (and Syft Analytics, which we include with our full accountancy package).

❌ Myth #5: You can do it all yourself without software

✅ Truth: You must use MTD-compatible software.

You won’t be able to log into HMRC and manually enter your quarterly figures. The new system is all about digital integration, and the only way to submit your updates will be through recognised accounting software.

That’s why we’re helping our clients get ahead now — setting up the right systems, training them (if they want to do it themselves), or handling it all as part of our Virtual Finance Officer or Full Accountancy packages.

What should you do now?

Even though 2026 sounds a way off, we recommend using this time to prepare so it’s a smooth transition:

✅ Check your income – if you’re over the £50,000 threshold, start planning now✅ Use digital software – get used to keeping digital records with Xero✅ Ask for help – we can guide you step by step or take it off your hands entirely

Want stress-free Making Tax Digital for Income Tax compliance?

At Strength in Numbers, we help sole traders, landlords, and limited company directors stay in control of their finances, with tailored services that grow with your business.

Let us help you get MTD-ready without the confusion. Get in touch for a free chat today.

📩 Contact us | 📞 01902 632 627