Common MTD Misconceptions

Rebecca Duale
Aug 15
2 min read

Heard of Making Tax Digital (MTD) but feeling a bit unsure about what it actually means or whether it even applies to you?

There’s a lot of misinformation out there, and it’s easy to feel overwhelmed. So, we’re cutting through the confusion to bust some of the most common MTD myths and help you stay on top of what really matters.

Myth 1: “I’ll get fined straight away if I make a mistake”

Truth: HMRC isn’t out to get you.Yes, there are penalties, but they’re not as instant or scary as you might think. A new points-based system is being rolled out, meaning you’ll usually get a warning first (and the chance to put things right) before any fines land.

Think of it more like a nudge, not a slap on the wrist.

Myth 2: “I don’t need to worry about MTD – I’m exempt”

Truth: Some businesses are exempt, but most aren’t.If you have a genuine reason, like digital exclusion due to age, disability, or location, you can apply for an exemption. But having a small business or not liking tech? Unfortunately, not valid reasons.

If you’re VAT-registered or a sole trader earning over £50k, MTD for Income Tax (MTD ITSA) is heading your way from April 2026, and that £30k+ bracket follows in 2027.

Myth 3: “I can just keep doing my records on paper”

Truth: Not anymore.MTD means digital record-keeping is now the standard. That doesn’t mean you need fancy systems, but you do need to keep your books in a compliant digital format and file returns using approved software.

The good news? Digital tools can actually save you hours of hassle and reduce errors (and we can help you find one that fits your business).

Myth 4: “I’ll have to submit loads of extra tax returns”

Truth: It’s not more tax, it’s just more frequent updates. For MTD ITSA, sole traders and landlords will need to send quarterly updates to HMRC, plus an end-of-year finalisation. But these aren’t full tax returns, they’re summaries of your income and expenses.

With the right software (and support), these updates can be quick and painless.

Myth 5: “I don’t need to think about it yet – it’s ages away”

Truth: 2026 might seem far off, but getting ready now will make your life so much easier. Whether it’s choosing software, tidying your records, or building a process that works, the sooner you start, the smoother the transition.

Making Tax Digital doesn’t have to be a headache. And you don’t have to figure it out on your own.

At Accounting Forward, we’re already helping Norfolk’s businesses make sense of MTD and get ahead of the curve with tools, support, and advice that actually make life easier (not more complicated).