Making Tax Digital for Income Tax: 3 myths debunked

Clearing up confusion around Making Tax Digital for Income Tax (MTD IT). Now that mandation is live for those earning over £50,000, we tackle three common myths.

If you’re self-employed, a landlord, or a subcontractor, you’ve probably heard about Making Tax Digital for Income Tax (MTD IT). Mandation came into effect in April 2026 for those earning over £50,000, with further thresholds following in 2027 and 2028. In this article the TaxNav team tackle the three questions we get asked the most.

Myth 1: I can use my UTR for MTD IT

No, you can’t. Although your Unique Taxpayer Reference (UTR) is still relevant for some parts of Self Assessment, MTD IT submissions must use your National Insurance number (NINO). Here’s why:

• NINO is HMRC’s primary identifier for individuals in most tax systems — including PAYE and benefits.
• Many people joining MTD IT don’t have a UTR, especially if they’ve never filed a Self Assessment return.
• The digital infrastructure for MTD IT has been built around NINO, not UTR.

If you’re preparing to sign up, make sure you have your National Insurance number handy — you can find it via the Gov.uk website.

Myth 2: HMRC will give me free software for MTD IT

No — HMRC doesn’t provide its own MTD software. Instead, it works with approved third-party developers who build compatible tools for taxpayers to use. What you need to know:

1. You’ll need to use MTD IT-compatible software, listed on HMRC’s official site.
2. Some tools have free trial versions, like TaxNav’s 30-day free trial.
3. For most users, you’ll need to budget for software, either monthly or annually, depending on the size and complexity of your business.

TaxNav is an HMRC-recognised provider, designed specifically for MTD IT. It’s built to be simple, affordable, and tailored to the self-employed, landlords and subcontractors with simple tax affairs.

Myth 3: I’ll be hit with penalties straight away if I make a mistake

Not quite. HMRC has introduced a soft-landing approach for the first year of MTD IT. Quarterly late submission penalties don’t apply in your first year of mandation, giving you time to learn the system without fear of fines. However, your year-end (annual) declaration is still fully subject to HMRC penalties if it’s late.

To avoid a hefty workload at year-end, it’s wise to use your first year to build MTD IT familiarity and compliance.

How to get MTD IT ready

If you haven’t started yet, don’t panic. Focus on these basics:

1. Confirm if your gross income will trigger the MTD IT rules with HMRC’s page
2. Register with HMRC for MTD IT before you begin
3. Select your software — TaxNav offers a 30-day free trial
4. Start keeping digital records, directly into our software or in a spreadsheet using our bridging software. Until your final return, this does not need to be 100% accurate
5. Diarise your quarterly updates — TaxNav will remind you
6. Diarise your final (annual) declaration deadline

People with income over £30,000 from self-employment and/or property will need to join MTD IT from April 2027. You can volunteer to join early and get familiar with it before your HMRC deadline.

With TaxNav you automatically get a 30-day free trial and low-cost subscriptions to keep things affordable. An annual subscription is £60+VAT, or pay as you go for £6+VAT per month.

Explore and try out our user-friendly MTD IT software