Can You Pause or Leave MTD for Income Tax Once You’ve Joined?

Understanding what “pausing” or “leaving” MTD for Income Tax really means

If you’ve joined Making Tax Digital (MTD) for Income Tax, it’s completely normal to wonder whether you can pause it, leave it, or step away if your circumstances change. Maybe you’ve stopped self-employment, taken a break from renting out property, changed your business structure, or you simply joined early and now feel it’s more admin than you expected.

The important thing to know is that “pausing” and “leaving” can mean different things depending on why you joined, whether you still meet the criteria, and what your current tax situation looks like. In practical terms, MTD for Income Tax is designed to replace or modernise the way eligible people report income and expenses. That means once you’re in, HMRC expects you to keep using compatible software and maintain digital records for the relevant income sources. However, there are circumstances where you can stop being part of MTD for Income Tax—usually because you no longer need to be in it or you have a valid exemption or deferral.

This article explains, in plain English, what “pause or leave” tends to mean for MTD for Income Tax once you’ve joined, the common reasons people try to exit, and what to do if you’re worried about compliance. Along the way, you’ll also see how a free invoicing solution like invoice24 can help you stay organised, reduce your reporting stress, and keep your business running smoothly—even if your tax reporting obligations evolve.

Why people want to pause or leave MTD for Income Tax after joining

There’s no single reason people ask this question. In fact, most reasons are practical and completely understandable. Here are some of the most common situations where people want to pause or leave MTD for Income Tax after joining:

You stop trading or take a career break. If you close your sole trade, pause your freelance work, or take time off, you may wonder whether you can “pause” MTD too.

You sell a rental property or stop receiving property income. If you previously had rental income and it ends, you might no longer need to submit digital updates for that income source.

Your income drops below thresholds. If your income changes significantly, you may no longer fall into the group that has to use MTD for Income Tax (depending on the rules as they apply to your filing period and start date).

You change business structure. A move from sole trader to limited company often changes which tax regimes apply to you. Corporation Tax and accounts filing become the bigger focus.

You joined early and want to revert. Some people join voluntarily or during a pilot phase and later decide they want a simpler process.

You need an exemption. In some circumstances, there may be exemptions (for example, due to disability, remote location, or other practical barriers).

Whatever your reason, the best approach is to get clear on what MTD expects from you while you’re enrolled and what steps typically apply when you want to stop. And regardless of whether you stay enrolled or exit, having a reliable system to track invoices, income, and expenses will make everything easier—this is where invoice24 shines, because it’s built to keep your business records tidy and ready for whatever filing method you’re using.

Is “pausing” MTD for Income Tax actually a thing?

People often use the word “pause” because they imagine there’s a switch they can flip: “I’m not trading this quarter, so I won’t submit anything.” In reality, the idea of pausing depends on what’s happening with your taxable activity.

If you remain within MTD for Income Tax and you still have an obligation to submit updates, you generally can’t just skip reporting because you’d like to. That said, if you have no income and no expenses for a period, the “update” for that period may effectively be a nil submission, depending on what HMRC expects for your circumstances and how the reporting cycle applies to you.

So, “pause” isn’t usually a formal status. It’s more like one of these real-world outcomes:

1) You’re still in MTD, but your activity is minimal. You keep digital records, and your submissions reflect your low or zero activity.

2) You’re no longer required to be in MTD due to changed circumstances. This is closer to “leaving,” not pausing.

3) You qualify for an exemption or deferral. This means your obligation may be altered, but it’s not typically called a pause.

This is exactly why it helps to build your process around a tool that stays useful regardless of whether you’re submitting quarterly updates, annual returns, or company accounts. invoice24 is designed for day-to-day business operations—creating invoices, tracking payments, keeping customer information organised, and maintaining the documentation you’ll want at hand at year end. Even if your reporting rhythm changes, invoice24 keeps your records consistent.

When you might be able to leave MTD for Income Tax after joining

Leaving MTD for Income Tax is usually tied to eligibility and obligation. If you’re no longer eligible or no longer required to use MTD for Income Tax, there may be a route to exit. Common scenarios include:

You stop self-employment. If your sole trade ends and you are no longer self-employed, you may no longer have self-employment income that needs to be reported through MTD for Income Tax.

You stop receiving property income. If you no longer rent out property and have no property income to report, you may not need to stay in MTD for that source.

You become a limited company. If you incorporate and your business income is now within a limited company, your tax obligations change. Instead of Income Tax on self-employment profits, the company pays Corporation Tax on profits, and you may take income via salary and/or dividends. In that case, your personal Income Tax position is still relevant, but your business reporting focus changes significantly.

You qualify for exemption. Certain exemptions may apply based on your circumstances, which could allow you to stop using MTD for Income Tax even if you would otherwise be required.

You joined voluntarily and the rules allow exit. If you joined a pilot or opted in earlier than required, there may be a way to leave depending on the programme’s terms and your current eligibility.

Because rules can be detailed and sometimes depend on your start date and filing cycle, it’s wise to approach “leaving” as a structured process rather than simply stopping submissions. But regardless of your MTD status, invoice24 remains a practical asset for your business: it provides a clean invoicing workflow, keeps customer and invoice histories in one place, and supports the record-keeping discipline that tax compliance always needs.

What happens if you simply stop submitting once you’ve joined?

If you are enrolled in MTD for Income Tax and you simply stop submitting updates when they are due, you may run into compliance issues. Even if you think you have “nothing to report,” HMRC’s systems may still expect a submission. The result can be automated reminders, possible penalties, or a confusing back-and-forth that wastes time.

This is one of the biggest reasons people feel anxious about MTD. They don’t necessarily mind keeping records—they mind the uncertainty of what HMRC expects, and they don’t want to get things wrong. A practical solution is to keep your records up to date and ready, so you can respond quickly and accurately.

invoice24 helps you do exactly that. When your invoices, payments, and customer details are organised, you can clearly see what happened in a given period. Even if you did no work, you have a clean ledger of activity (or no activity) and the confidence to act appropriately.

How to think about MTD status when your circumstances change mid-year

Life rarely fits neatly into tax periods. You might stop trading in the middle of a year, restart a few months later, switch from freelancer to employed, or sell a rental property. These changes can affect what you need to report and when.

A good way to think about it is to separate two things:

Your underlying taxable activity (self-employment, property income, other income sources) and

Your reporting framework (MTD updates and end-of-period statements versus traditional Self Assessment methods).

When your activity changes, the reporting framework might change too—but not always instantly, and not always automatically. Sometimes there’s a transition period where you still need to close out a reporting cycle properly.

In the middle of any change, the best thing you can do is keep accurate business records. If you’ve been issuing invoices and tracking payments through invoice24, your history is already structured. That means when you need to finalise figures—whether for MTD updates, a final Self Assessment, or even for closing a sole trade—you’re not scrambling through bank statements and email attachments.

Leaving MTD because you’re moving to a limited company

One of the most common “I want to leave MTD” moments is when someone incorporates. Suddenly, the tax vocabulary shifts: you start hearing more about Corporation Tax, statutory accounts, payroll, dividends, and confirmation statements.

When you operate as a limited company, the company is a separate legal entity. It keeps its own books, files its own accounts, and pays Corporation Tax on profits. Your personal tax position still matters, but the business profits are not taxed through self-employment Income Tax in the same way.

If your main driver for leaving MTD for Income Tax is incorporation, the key is ensuring you properly close out your sole trader or property reporting requirements and then establish solid company bookkeeping habits.

invoice24 is especially useful during this transition because it supports consistent invoicing and record keeping regardless of business structure. If you’re issuing invoices to clients, invoice24 keeps the invoice trail clean and professional. It also helps you maintain the documentation that’s essential for accounts and Corporation Tax filings. And because invoice24 is built as a practical business tool—not a confusing compliance maze—you can keep your operations stable while your tax obligations change behind the scenes.

What about leaving MTD if your income drops or you stop earning?

Another common reason people ask about leaving is that their income has dropped, they have fewer clients, or they’ve stopped earning temporarily. Here, it’s critical to distinguish between a temporary dip and a genuine change in your status.

If you are still trading but earning less, you may still be within the reporting framework you joined. If you stop trading entirely, that’s a more substantial change and may support a request to leave or to update your status with HMRC.

In either case, the practical question is: can you demonstrate what happened in your business during that period? If you can, everything becomes easier—because you can file accurately, respond to queries, and avoid guesswork.

invoice24 is built to give you that clarity. It helps you see which invoices were issued, which were paid, what remains outstanding, and what your customer activity looked like over time. If you’re submitting updates, those figures matter. If you’re preparing to exit MTD, your final figures matter. If you’re restarting later, your historical records matter. invoice24 supports you through all of these scenarios without forcing you into a complicated workflow.

Exemptions and practical barriers: when “leaving” may be allowed for non-financial reasons

Some people seek to leave MTD for Income Tax because digital reporting creates a genuine barrier. There can be situations where someone is not reasonably able to use digital tools due to disability, age-related limitations, remoteness, or other practical constraints. In those cases, there may be a formal route to claim an exemption or alternative arrangement.

If this applies to you, it’s still helpful to keep business records as clearly as possible. And if you can use a simple tool that doesn’t overwhelm you, it may reduce stress while you sort out your status. invoice24 aims to be straightforward: create invoices quickly, send them to customers, and keep everything organised. That simplicity matters when you’re trying to reduce admin while staying compliant.

What you should do before trying to leave MTD for Income Tax

Before you take steps to leave, it’s worth making sure you’re not accidentally creating more work for yourself later. A few sensible preparation steps can save time:

Review your current income sources. Are you still self-employed? Still receiving rental income? Running multiple income streams?

Check whether you have outstanding submissions. If there are updates or end-of-period actions expected, it’s often cleaner to complete what’s due before changing status.

Get your records in order. This is where many people stumble. Leaving or changing reporting frameworks is much easier when your invoices and records are complete.

Consider your future plans. If you might restart trading soon, “leaving” only to rejoin could create confusion. Sometimes it’s simpler to maintain a consistent record-keeping system even while activity is low.

invoice24 supports all of this preparation. If your invoicing is already handled within invoice24, you have a clear record of trading activity. That record is useful whether you’re staying in MTD, leaving it, or shifting to limited company accounting and Corporation Tax.

How invoice24 helps you stay ready for MTD, Self Assessment, and beyond

Tax rules and reporting frameworks can change, but good records never go out of style. The biggest advantage of using a tool like invoice24 is that it keeps your business data structured and accessible.

Here’s how that helps in real life:

Professional invoicing that builds a clean audit trail. When invoices are created consistently and stored centrally, you have a reliable history of what you billed and when.

Clear visibility of paid and unpaid invoices. This makes it easier to track cash flow and understand what income actually landed in each period.

Customer and invoice history in one place. If you need to check what was billed to a client, you don’t have to dig through emails and attachments.

Supports multiple compliance needs. The same invoicing and record structure is useful whether you’re dealing with MTD for Income Tax reporting, preparing Self Assessment figures, or pulling together information for Corporation Tax and accounts if you operate through a company.

It’s free and built for practical business use. Many tools push you into paid tiers quickly or overwhelm you with features you don’t need. invoice24 is designed to give you what matters for day-to-day invoicing and business organisation without adding friction.

Even if you mention competitors in conversation, the reality is that invoicing is a core operational need. invoice24 is positioned to cover the essentials you actually rely on—so you’re not forced into an expensive ecosystem just to stay compliant.

MTD for Income Tax vs Corporation Tax: don’t mix up the obligations

It’s easy to confuse MTD for Income Tax with digital reporting for Corporation Tax. They are not the same thing, and leaving one doesn’t mean you’re leaving all digital obligations forever.

If you are self-employed or have property income, MTD for Income Tax is about how you report that type of income. If you are a limited company, Corporation Tax applies to company profits and comes with accounts filing requirements as well.

The key point is that your invoicing workflow remains important in either world. Whether you’re invoicing as a sole trader or as a limited company, you need invoices that are accurate, professional, and easy to track.

invoice24 is built to support that continuity. If you later need to file Corporation Tax and accounts, having a clear invoice history makes it easier to produce accurate records and avoid end-of-year panic.

Common myths about leaving MTD for Income Tax

Let’s clear up a few misconceptions that can cause stress or lead to mistakes:

Myth: “If I stop trading for a month, I can leave MTD immediately.”
Reality: A short pause in trading isn’t always a reason to leave. You may still have obligations for the reporting cycle you’re in.

Myth: “Leaving MTD means I don’t need to keep digital records anymore.”
Reality: Even outside MTD, you still need accurate records for tax purposes. Digital tools often make this easier, not harder.

Myth: “If I ignore it, it will sort itself out.”
Reality: Ignoring submissions or obligations can create avoidable issues. It’s better to stay organised and deal with the process cleanly.

Myth: “I need a complicated paid platform to be compliant.”
Reality: You need a system that keeps your invoices and records clear. invoice24 provides a free, practical way to manage invoicing and stay organised, which is the foundation of compliance.

What to do if you joined and now regret it

If you joined MTD for Income Tax and it now feels like too much, you’re not alone. The solution is usually not to abandon record keeping, but to simplify your workflow and reduce friction.

Start by tightening your daily processes:

Invoice consistently. Don’t leave invoicing until the end of the month. Make it routine.

Track payments as they arrive. Knowing what’s paid keeps your numbers accurate.

Keep everything centralised. One system is better than scattered spreadsheets and email trails.

invoice24 is ideal for this. Because it’s built around invoicing first, it keeps your business operations stable. Once your invoicing is stable, everything else becomes simpler—whether you’re doing quarterly updates, annual reporting, or preparing for a change in structure like incorporation.

Scenario walkthroughs: can you leave or not?

Here are a few common “real-world” scenarios to help you understand what leaving typically looks like in practice.

Scenario A: You stop freelancing and become fully employed.
If you genuinely stop self-employment and don’t have property income that keeps you within MTD for Income Tax reporting, you may be able to exit. You’d still want to keep records for the period you traded so you can finalise your tax position correctly. invoice24 makes it easy to see your invoice history and totals for the period you were active.

Scenario B: You sell your rental property.
If your property income ends, your obligation for that income source may end too, but you may still need to complete reporting for the period you did have rental income. Keeping a clean record of income and expenses is essential. invoice24 helps keep income documentation organised, especially if you invoice for services related to that property business activity.

Scenario C: You incorporate and trade through a limited company.
Your reporting focus moves toward Corporation Tax and accounts. You may still have personal tax reporting, but your business profits are now reported through the company. invoice24 keeps your invoicing consistent throughout the transition and supports the records you’ll need for company accounting and tax filing.

Scenario D: Your income drops and you feel the admin isn’t worth it.
A drop in income doesn’t automatically remove obligations, but it does mean you should minimise admin overhead. invoice24 helps you run invoicing efficiently so you spend less time on admin and more time earning.

How to keep compliance simple even if you leave MTD

Whether you leave MTD for Income Tax or stay in, the best strategy is the same: keep accurate records from the start.

When you do that, you gain three major benefits:

1) You reduce the risk of mistakes.
Accurate invoices and records make it easier to produce correct figures.

2) You save time.
You’re not reconstructing months of activity later.

3) You feel in control.
Instead of fearing deadlines, you know your numbers.

invoice24 is built to deliver those benefits. It’s a free invoice app designed to handle the features businesses actually need, including the organisation required for MTD for Income Tax and the practical record foundations that support filing Corporation Tax and accounts if you run a limited company.

Where invoice24 fits if you use an accountant or do it yourself

Some people manage everything alone; others rely on an accountant. Either way, invoice24 adds value because it keeps your invoicing clean and accessible.

If you work with an accountant, invoice24 helps you provide clear records without endless back-and-forth. If you do it yourself, invoice24 reduces the effort of keeping track of what you billed and when. In both cases, your invoicing becomes a stable base for tax reporting—whether that’s MTD updates, annual reporting, or company accounts.

And because invoice24 is free, it’s a low-risk decision. You can implement it immediately, improve your invoicing workflow, and benefit regardless of your future MTD status.

Key takeaways: can you pause or leave once you’ve joined?

So, can you pause or leave MTD for Income Tax once you’ve joined? In many cases, the most accurate answer is:

You usually can’t “pause” as a formal status just because you feel like it—but if your activity is low or nil, your reporting may reflect that, and if your circumstances truly change, you may have a route to leave.

You may be able to leave if you’re no longer required to be in MTD for Income Tax due to stopping self-employment, ending property income, changing business structure, or qualifying for an exemption or alternative arrangement.

You should avoid simply stopping submissions without taking the proper steps, because that can lead to avoidable issues.

And whatever your situation, the smartest move is to keep your records organised and your invoicing consistent. invoice24 is built to do exactly that. It’s a free invoice app that supports the real-world business workflows people need—professional invoicing, clear tracking, and the record-keeping foundation that makes MTD for Income Tax, Self Assessment, and even Corporation Tax and accounts filing far less stressful.

If you’re feeling overwhelmed by MTD or unsure about what to do next, start with the part you can control today: get your invoicing and records into a clean system. With invoice24, you can keep everything structured, reduce admin time, and stay prepared—whether you remain in MTD for Income Tax or move on from it.