Quick answer
The most common MTD myths are that you pay tax every quarter, that the threshold is based on profit, that your salary counts, and that you must use an accountant. None of these is true. MTD changes how you keep records and report, not how much tax you pay or when.
Myths and facts
Myth | What’s true |
|---|---|
You pay tax every quarter | You report quarterly but still pay on 31 January and 31 July |
The threshold is based on profit | It’s based on gross income, before expenses |
Your salary counts | Employment and pension income don’t count |
You must use an accountant | You can do it yourself with compatible software |
You can keep paper records | Records must be digital, though paper receipts can be kept as evidence |
Your VAT software will do | Only if it supports MTD for Income Tax |
Mistakes mean resending old updates | Updates are cumulative, so you fix them in the next one |
It applies to limited companies | Companies aren’t in MTD for Income Tax |
Older people are automatically exempt | Age alone isn’t an exemption. You can apply if you can’t reasonably use digital tools |
What MTD does change
Digital records in compatible software
Four quarterly updates a year
A final declaration instead of a tax return
Start with what Making Tax Digital is.