Common Myths About MTD ITSA – What You Really Need to Know

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As Making Tax Digital for Income Tax Self Assessment (MTD ITSA) approaches, misinformation is everywhere.

From clients to online forums, we hear the same worries:

“I’ll have to do four tax returns a year!”
“MTD will increase my tax bill.”
“I’ll have to pay tax every quarter now.”
“My pension income pushes me over the threshold!”

Let’s set the record straight.

In this blog, Merranti Accounting clears up the top 8 myths about MTD ITSA so you know what’s fact, what’s fiction — and how to stay confidently compliant.

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✅ Myth 1: “I have to submit four full tax returns every year.”

FALSE.
You do not have to file four tax returns under MTD.

You submit:

• Four quarterly updates (summaries only)
• One year-end final declaration (like your current Self Assessment)

What’s in a quarterly update?

• Totals of income and expenses
• Per income source (e.g. property, self-employment)
• No supporting documents required
• No tax calculated at this stage

It takes minutes — especially with Merranti’s support and automation tools.

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✅ Myth 2: “MTD ITSA changes how much tax I pay.”

FALSE.
MTD does not change tax rates or what income is taxable.

It only changes how and when you report your figures to HMRC. Your final tax bill is still calculated:

• Annually
• Using the same tax bands and allowances
• With the same reliefs (e.g. mortgage interest, capital allowances)

So if your tax bill increases, it’s not because of MTD — it may be due to better record accuracy or changing income.

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✅ Myth 3: “I’ll have to make tax payments every quarter.”

FALSE.
Quarterly updates do not mean quarterly payments.

Your tax payments will still follow the standard system:

• 31 January – main payment + balancing payment
• 31 July – second payment on account (if applicable)

However, voluntary payments may be encouraged by HMRC in future.

At Merranti, we’ll help you plan ahead so you don’t get caught short — but you won’t be paying tax four times a year.

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✅ Myth 4: “Dividend income pushes me into MTD.”

FALSE.
Only self-employment and property income count toward MTD thresholds.

Excluded income includes:

• Dividends
• Employment (PAYE)
• Pensions
• Savings interest
• Capital gains

Example:

• £45,000 employment income
• £6,000 property income
  = £51,000 total income ✅
  = Only £6,000 qualifying income ❌ → Not in MTD

If you’re unsure how your income is categorised, Merranti offers a free eligibility check.

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✅ Myth 5: “Spreadsheets are banned under MTD.”

FALSE.
You can still use spreadsheets under MTD — but only if they connect to HMRC via bridging software.

Merranti has a dedicated spreadsheet+bridge system for clients who prefer Excel but want to remain compliant.

We also offer full setup and submission services for those using spreadsheets.

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✅ Myth 6: “My accountant will handle everything — I don’t need to do anything.”

PARTLY FALSE.
Your accountant plays a huge role, but you are still responsible for:

• Keeping accurate digital records
• Providing information quarterly
• Approving the final declaration

The days of sending a bag of receipts once a year are gone.

At Merranti, we simplify everything with software that scans receipts, categorises expenses, and prepares your data automatically — but you still need to keep records up to date.

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✅ Myth 7: “MTD is just another name for Self Assessment.”

FALSE.
MTD is a new way of interacting with HMRC — it is separate from traditional Self Assessment and more frequent.

In 2026, MTD replaces Self Assessment for those who qualify.

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✅ Myth 8: “I don’t need to worry about MTD until 2026.”

FALSE (and risky).

HMRC will assess your eligibility based on 2024/25 income.

That means:

• You must start preparing now
• If your income is over £50,000 in 2024/25, you’ll be mandated into MTD in 2026
• Waiting could lead to errors, penalties, and stress

Start getting your records digital-ready today. Merranti can help you transition gradually — not all at once.

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🔍 Bonus Myth: “MTD will go away or be delayed again.”

Very unlikely.

MTD for VAT has already been live since 2019.

MTD for ITSA has already been postponed twice — and HMRC has committed to:

• April 2026: £50,000+ qualifying income
• April 2027: £30,000+ income
• April 2028 (proposed): £20,000+ income

The system is being tested, updated, and promoted. It’s happening.

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How Merranti Helps You Navigate MTD — Without the Myths

We provide complete MTD ITSA compliance support, including:

✅ Free Eligibility Check

We’ll review your income sources and assess whether/when MTD applies to you.

✅ Software & Setup

Choose Xero, QuickBooks, or spreadsheet+bridging — we’ll set it up and show you how it works.

✅ Quarterly Reminders & Filing

Never miss a deadline — we’ll handle the submissions or automate them for you.

✅ Final Declaration Support

Our accountants and AI assistant “Martin” will help you prepare and sign off your year-end declaration.

✅ Ongoing Education & Advice

No more myths, confusion, or stress — just straight answers and practical help.

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Final Thoughts: Cut Through the Noise

With the internet full of half-truths and fear-mongering, it’s easy to get overwhelmed. But MTD ITSA doesn’t have to be scary — especially when you understand the facts.

And at Merranti Accounting, we’re here to keep you informed, compliant, and focused on your business — not your tax software.

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📞 Still unsure what’s true or not about MTD ITSA?

Find More About MTD ITSA Here