As the UK accounting world prepares for the full implementation of Making Tax Digital for Income Tax Self Assessment (MTD ITSA), confusion continues to swirl among accountants and clients alike. Rebecca Benneyworth FCA, a respected chartered accountant and tax lecturer, recently delivered a comprehensive webinar that cuts through the myths and misinformation. Here’s a summary of the key insights from her myth-busting session.

MTD: Origins and Intentions

Contrary to popular belief, MTD was not dreamed up by software companies. It was introduced by HMRC in 2015 as a response to the limitations of its legacy tax system, particularly the aging “Caesar” platform. The aim? To digitise and modernise tax reporting, improve accuracy, and reduce the tax gap. Although software vendors stand to benefit, many have struggled financially during the stop-start development and delays of MTD.

What MTD ITSA Really Involves

Rebecca clarified that MTD for Income Tax isn't just about quarterly reporting: it’s part of a broader shift to a new digital tax infrastructure:

• Digital Records: Required for income from self-employment and property only.
• Quarterly Updates: Summary totals, not full accounts. No accruals, no disallowables.
• Finalisation (BSAS): End-of-year adjustments made before submitting the final figures to HMRC.
• Software-Driven: Updates can be made using a variety of software tools, including spreadsheets with bridging software.

Debunking the Common Myths

Here are some major misconceptions Rebecca addressed:

• “MTD was created by software companies.”
  False. It was driven by HMRC's need to update outdated systems.
• “Quarterly tax payments are coming soon.”
  Highly unlikely. There are no current plans or infrastructure to support this. Benneyworth suggests it won’t happen for at least another decade.
• “Manual records and spreadsheets are banned.”
  Not true. Spreadsheets are still acceptable when paired with bridging software.
• “It applies to all income types.”
  No. Only self-employment and property income count, and only if the total exceeds specific thresholds.

Thresholds and Mandated Income

The key thresholds are:

• £50,000+ in combined gross income from self-employment and/or property = mandated from April 2026.
• £30,000–£50,000 = mandated from 2027.
• Under £30,000 = not currently mandated, but subject to future developments.

Rebecca provided tools and guidance to calculate whether clients cross these thresholds, emphasising the importance of using annualised figures even for partial-year traders.

Real-World Application: A Glimpse into Practice

Rebecca, who is actively testing MTD with her own clients, shared insights from the front lines:

• Early adopters are debugging the system in collaboration with HMRC.
• BSAS (Business Source Adjustment Summary) is the key mechanism for reconciling year-end figures.
• Digital linking between software platforms is essential—manual re-keying is not compliant.

Tips for Accountants

• Start the conversation now: Identify which clients are in-scope using 2024/25 tax return data.
• Use flexible tools: Don’t lock into one software provider. Pick what fits each client.
• Expect transitional pain: Especially in the early years, systems may be glitchy or incomplete.
• Educate clients: Particularly those with joint income or non-traditional records.

Looking Ahead

MTD is already law. Arguing its merits is now moot; the focus must shift to how to comply effectively. Rebecca’s pragmatic advice: prepare early, communicate clearly, and leverage digital tools intelligently.

“This isn’t about whether we like it or not. It’s about making it work—for our clients and our practices,” she concluded.

For the full webinar, please click here. Here is what is covered in the presentation:

• Addressing concerns about the feasibility of the April 2026 rollout.
• The biggest myths surrounding MTD and the truth behind them.
• What MTD means for accountants, bookkeepers and their clients.
• Key deadlines and upcoming changes in MTD.
• Steps you need to take now to prepare for MTD.

The contents of this article are meant as a guide only and are not a substitute for professional advice. The author/s accept no responsibility for any action taken, or refrained from, as a result of the material contained in this document. Specific advice should be obtained before acting or refraining from acting, in connection with the matters dealt with in this article. The information at the time of publishing was accurate and could be subject to final changes.