MTD for Income Tax FAQs: Everything You Need to Know

MTD for Income Tax FAQs

MTD for Income Tax FAQs are becoming increasingly important as HMRC introduces new rules for reporting income. Whether you’re self-employed or a landlord, understanding how MTD for Income Tax (MTD for ITSA) affects you is essential.

In this guide, we answer the most common questions about Making Tax Digital for Income Tax — including who needs to comply, key deadlines, and what you need to do to stay compliant.

MTD for Income Tax will become mandatory for most self-employed individuals and landlords with a total annual income from self-employment and property over £50,000 starting from 6 April 2026.

Below are our answers to some key questions. If you don’t find the answer to a question you may have, contact us, and we will be happy to help.

Common MTD for Income Tax FAQs Explained

Q. Will you pay more tax with MTD?

The amount of tax you pay will remain the same (provided you’ve been filing your tax returns correctly). MTD has been introduced to improve the way taxes are calculated and reported.

Q. Must all my accounting be 100% digital?

No. You may still use paper invoices to send to clients and receive paper receipts. However, this information will need to be transferred to your digital accounting software. To keep things simple and save time, we recommend switching to a 100% digital accounting system.

Q. Do I have to use MTD for Income Tax if I am a small business?

If you receive a single or combined income from self-employment or property which is more than £20,000, then yes, you will legally have to use the MTD service. Excluded income includes:

• Partnership income
• Salary & Employment income
• Income from savings and investments
• Foster Care income

Q. Do I have to use the MTD for Income Tax service if I jointly own a property from which I receive income?

If your share of the income is over £20,000, then yes, you will have to use the MTD for Income Tax service.

Q. Who will be exempt from Making Tax Digital for Income Tax

The following groups are exempt:

• Trusts & estates
• Charities
• Ministers of religion
• Recipients of Married Couples’ Allowance (not marriage allowance)
• Recipients of Blind Persons’ Allowance
• Lloyds Underwriters
• Taxpayers subject to Power of Attorney
• Non-resident sports people & entertainers who have no other income subject to MTD
• Taxpayers for whom HMRC cannot provide a digital service- this will cover very specific groups of taxpayers who have to submit paper tax returns.

There will also be some exclusions if you are what is known as “digitally excluded”, but this will be assessed on an individual basis. You should speak to your accountant if you think this applies to you.

Q. Will I have to submit more data to HMRC under MTD for Income Tax

No. You will not need to submit more data to HMRC, but data will need to be submitted more frequently. Reports of your income and expenses will need to be submitted quarterly, and you will have the ability to carry out annual adjustments, such as tax allowances, at the year-end. Your accountant will probably do these. In addition, you will need to file a final declaration annually and submit details of your other income.

Q. Can I use my current digital accounting system to submit MTD for Income Tax returns?

Any software you use must be MTD compatible to send your returns to HMRC. You can find a list of compatible software providers on the HMRC website. If your current provider is not listed, contact them to inquire about their compatibility with the required standards.

Q. Can I sign up for MTD for Income Tax before 6 April 2026?

Yes. You can voluntarily sign up for the service if all the following apply:

• You’re a resident of the UK
• You’re already registered for Self Assessment
• Your accounting period aligns to the tax year — for example, 6 April to 5 April
• You have submitted at least one Self-Assessment tax return
• You’re keeping digital records
• One or more of the following were included in your last return:
  • an existing self-employment income
  • a UK property source
  • a foreign property source
• You’re up to date with your tax records — for example, you have no outstanding tax liabilities.

Q. Do I need to have an accountant to use the MTD for Income Tax service

No. Using compatible accountancy software, you can submit the quarterly returns yourself as long as you are confident with your record-keeping. We recommend that an accountant checks the submissions annually and carries out the tax adjustments for you to ensure you are getting all the tax reliefs available to you. This must be done before the end of period statement is submitted.

Q. If I use an accountant, can I send them paper accounts, and they will do all the work for me?

Yes. If you are unable to keep the digital records yourself, an accountant can do so for you. There are ways in which you can do part of the work easily to minimise costs, and you should discuss these with your accountant. At Maynard Johns, we help our clients find the right solution to help them and provide training where needed.

Q. How do I learn about moving to digital accountancy?

For support moving your accounting records to digital, there are the following options:

• Online webinars and courses
• Gov.UK help pages and guides
• MTD compatible accountancy software companies’ training and support
• One-to-one or group training via an accountant such as Maynard Johns.

Q. What if I have specific accessibility issues or disabilities and cannot go digital?

HMRC is working with the MTD Accessibility Working Group and the Additional Needs Working Group and has stated that if a business cannot go digital, it will not be required to do so. A request can be submitted to HMRC to consider an MTD exemption.

Q. How much does MTD-compatible software cost?

Costs vary across providers, and some are free. Some banks also include compatible software for free as part of their business banking package. Software costs are tax-deductible and will also bring benefits to the business, such as improved efficiency and productivity. It is essential to select the appropriate package for your business.

Q. When should I start preparing for MTD for Income Tax?

The sooner the better. By preparing now, you can try different MTD-compatible software providers to see which suits you best, learn how to use the software to its full potential, train any staff, and start getting into a routine of recording your information.

Disclaimer on MTD for Income Tax FAQs

These MTD for Income Tax FAQs are designed to give straightforward guidance on the new rules and what they mean for you.

The information provided was correct at the time of publishing, but is subject to change. Please ensure you speak to your accountant for up-to-date information, as legislation may change.

Further MTD for Income Tax FAQs Support

If you still have questions beyond these MTD for Income Tax FAQs, contact us, and we will be happy to help. We have a specialist team on hand to advise you.

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