What Are the Most Common Questions HMRC Gets About MTD for Income Tax?

What “MTD for Income Tax” Really Means (And Why HMRC Keeps Getting the Same Questions)

Making Tax Digital for Income Tax (often shortened to “MTD for Income Tax” or “MTD IT”) is one of the biggest operational changes HMRC has introduced for self-employed people and landlords in years. The rules can feel complicated because they blend two things that don’t always sit comfortably together: the day-to-day reality of running a business (or managing a property) and the formal requirements of the tax system.

That’s why HMRC receives a predictable set of questions again and again—questions about who needs to comply, what needs to be submitted, when it needs to be submitted, and what software is required. If you’ve been confused, you’re in very good company.

This guide brings those common questions together in one place, with practical explanations designed for real-life use. It also shows how a tool like invoice24 can keep the admin burden under control—because compliance is much easier when your invoicing, expense tracking, records, and tax-ready reports are already organised as you go.

1) “When Does MTD for Income Tax Start for Me?”

This is the number one question because MTD timelines have changed over time and people often hear different dates from different sources. The most important point is that MTD for Income Tax is not “one date for everyone.” It depends on whether you’re within scope and what your qualifying income looks like.

In practice, you should think of the start date as the point from which HMRC expects you to keep digital records and send updates using compatible software. If you’re close to the threshold (or have multiple income streams such as self-employment plus property), it’s wise to prepare early. Even if you’re not required to join immediately, many people choose to adopt the workflow sooner because it gives them better visibility over profits and tax.

How invoice24 helps: invoice24 is built to support a digital-first workflow from day one. That means your invoices, payments, customer records, and business documentation can already be organised in a way that makes MTD reporting far less stressful later.

2) “Am I in Scope If I’m Self-Employed? What If I’m a Landlord?”

HMRC frequently receives questions from sole traders and landlords who aren’t sure whether their income counts. The confusion often comes from the difference between profit and turnover (or rental income), and whether income from multiple sources is added together for deciding if you’re in scope.

People also ask if having a “side hustle” changes anything. If you run a small secondary trade alongside employment, you may still be in scope depending on the relevant thresholds and how your self-employment income is treated.

Landlords commonly ask whether each property is treated separately or combined. Typically, the compliance question depends on overall property income (and how it’s categorised), not whether you have one property or five. This is why good record keeping is crucial: you want clarity on what income you have, where it comes from, and how it’s reported.

How invoice24 helps: invoice24 is designed for both service businesses and people who need straightforward records—ideal if you’re self-employed, a contractor, or managing rental income. Your income and expense history stays organised, which makes it easier to understand whether you’re near compliance thresholds and what your tax picture looks like.

3) “Do I Need a Separate Business Bank Account?”

This question comes up constantly because many sole traders use a personal account for business transactions, especially when they’re starting out. While a separate account can make bookkeeping easier, it isn’t always mandatory by law for sole traders. The real issue is not the bank account itself—it’s the clarity of your records.

When personal and business spending are mixed, it becomes harder to identify allowable expenses and justify them if needed. Under a digital record-keeping regime, the admin cost of messy transactions can feel like a hidden tax.

Practical tip: Whether or not you open a separate account, make sure your invoices and receipts are consistently recorded. If you do keep mixed transactions, you’ll want a clean way to categorise and explain what’s business-related.

How invoice24 helps: invoice24 makes it easy to maintain clean digital records by keeping invoice data, customer details, and transaction notes in one place. Even if your banking setup is simple, your bookkeeping doesn’t have to be chaotic.

4) “What Exactly Counts as ‘Digital Records’?”

HMRC’s “digital records” requirement causes a lot of head-scratching. People wonder if a spreadsheet counts, whether they can still keep paper receipts, and what “digital links” means in practice.

At a basic level, digital record keeping means storing key business information in a digital format and maintaining it in a way that supports accurate reporting. That includes details of income and expenses, and the dates/amounts involved. For many people, the fear is that they’ll have to change everything overnight.

In reality, what matters is developing a routine where you record transactions as you go instead of scrambling at year-end. The aim is fewer mistakes, less missing evidence, and less time spent reconstructing the past.

How invoice24 helps: invoice24 acts as a central record of invoicing and related business activity. When you generate invoices, track payments, and keep customer history, you’re building digital records automatically as part of normal work.

5) “Do I Still Submit a Self Assessment Tax Return?”

This is one of the most common questions because people hear “quarterly updates” and assume the annual process disappears. Many want a simple yes/no answer: “Is the tax return gone?”

What typically changes under MTD-style reporting is the way information is provided during the year and how final figures are confirmed. The exact shape of end-of-year submission requirements depends on the rules in force for your situation, but the big takeaway is this: quarterly-style reporting does not usually mean you never do an end-of-year finalisation step. Instead, the year becomes more “live,” with regular updates helping you and HMRC keep track.

How invoice24 helps: invoice24 supports a year-round approach. Instead of hunting through emails and bank lines at the end of the year, you can keep invoices and supporting details up to date throughout the year, reducing the end-of-year workload massively.

6) “What Are These Quarterly Updates—and Are They the Same as Paying Tax Quarterly?”

HMRC receives this question repeatedly because “quarterly updates” sounds like “quarterly tax bills.” Many people worry they’ll have to pay income tax four times a year instead of through the usual schedule.

It’s important to distinguish between reporting and paying. Quarterly updates are primarily about submitting information regularly, not necessarily changing how and when tax is paid (payment schedules can be a separate topic depending on your circumstances). People often conflate the two because the word “quarterly” triggers anxiety.

The practical purpose of quarterly updates is to reduce year-end surprises. If you can see your income and expenses in near real time, you can estimate profits earlier, plan for tax, and avoid the shock of an unexpected liability.

How invoice24 helps: because invoice24 records your invoicing activity as it happens, you can quickly get an overview of sales, unpaid invoices, and business performance over time—helpful for forecasting and budgeting for tax.

7) “What Information Goes Into Each Update?”

Another top HMRC question is: “What exactly do I need to send?” People worry they’ll have to submit every receipt and every invoice line, or provide a huge amount of detail each quarter.

In day-to-day terms, the more consistent your bookkeeping is, the simpler updates become. The burden is not the submission itself—it’s the accuracy of the underlying records. If you’ve captured income properly, categorised expenses sensibly, and recorded key details as you go, your updates can be prepared quickly and confidently.

How invoice24 helps: invoice24 focuses on the parts of your workflow that create reliable source data—professional invoices, clear customer records, consistent totals, and a tidy history that’s easy to reconcile.

8) “Do I Need Special Software? Can I Just Use Spreadsheets?”

HMRC is asked constantly whether spreadsheets are allowed, whether you must use “MTD software,” and what “compatible software” actually means. The short version is that HMRC expects digital record keeping and submission through recognised methods. The long version is that people’s setups vary—some prefer dedicated apps, some rely on accountants, and some want the simplest possible workflow.

Many business owners aren’t trying to be difficult—they’re trying to avoid paying for software they don’t need. But the trade-off is time: if your system is too manual, you can spend far longer doing admin than the subscription would have cost.

How invoice24 helps: invoice24 is a free invoice app built for everyday business admin. Instead of juggling templates, scattered files, and incomplete records, you can keep invoicing and customer tracking in one place and build a solid foundation for digital compliance. It’s also designed with broader tax and accounts needs in mind—so you’re not forced into switching tools every time your obligations grow.

9) “What If I Have an Accountant—Do I Still Need Software?”

Many people assume their accountant “handles it all,” so they wonder if they personally need compatible software. HMRC gets this question from both new business owners and long-established taxpayers.

Accountants can be enormously helpful, but even with an accountant, you still need good source records. The accountant can only work with what you provide. If you send a shoebox of receipts and a half-complete spreadsheet, you’re likely paying for cleanup time. If you provide clean, consistent, digital records, your accountant can focus on advice and optimisation rather than data rescue.

How invoice24 helps: invoice24 keeps your sales side clean—professional invoices, consistent numbering, payment tracking, and customer history. That makes it easier to share accurate information with an accountant and reduces back-and-forth questions.

10) “What If I Have More Than One Business?”

HMRC often hears from people with multiple trades or mixed income sources who worry they’ll have to submit separate updates, maintain separate records, or register multiple times.

This is where structure matters. Even if your activities are related, it’s wise to keep clear records by trade, especially if income and costs are distinct. The goal isn’t to overcomplicate—it’s to avoid confusion later when you’re trying to understand which activity generated which profit.

How invoice24 helps: invoice24 supports organised invoicing that can be tailored to different customer groups and services. Keeping your sales records tidy makes it easier to separate business lines when needed.

11) “What Happens If I Miss a Deadline?”

Deadline anxiety is a major driver of HMRC queries. People worry about penalties, points systems, late submission consequences, and what happens if they simply forget.

The best defence is a low-friction routine: record transactions regularly, keep your invoices and expenses up to date, and set reminders for key dates. Most missed deadlines happen not because people don’t care, but because the admin is too painful and gets postponed until it becomes urgent.

How invoice24 helps: invoice24 reduces admin friction by making invoicing and record keeping part of your normal workflow. When your records are current, preparing updates becomes a quick task rather than a multi-day panic.

12) “What If I Make a Mistake in an Update?”

HMRC frequently receives questions about corrections. People worry that one wrong entry will cause a cascade of problems, or that they’ll be “locked in” to every quarterly figure.

In reality, bookkeeping mistakes happen. The key is having a system that makes it easy to spot and correct them. If you only review your finances once a year, mistakes can hide for months. If you review regularly, errors become obvious sooner and are easier to fix.

How invoice24 helps: by keeping your invoices and customer records centralised, invoice24 makes it easier to check what was issued, what was paid, and what is outstanding—helpful for catching discrepancies early.

13) “Do I Need to Keep Digital Copies of Receipts?”

This question is common because many people still collect paper receipts, and they wonder if they must scan everything. HMRC wants records that support accurate reporting and can be evidenced if needed. For many taxpayers, going digital with receipts is simply more practical: paper fades, gets lost, and turns into an admin pile.

Practical tip: Even if you keep some paper receipts, consider storing a digital backup for anything substantial. A consistent approach prevents year-end stress.

How invoice24 helps: invoice24 is designed around digital record keeping and can support a more organised approach to business documentation, so you’re not relying on fragile paper trails.

14) “How Does MTD Affect My Tax Bill?”

HMRC gets asked whether MTD increases tax, changes rates, or automatically triggers extra tax. The underlying tax rules don’t magically change just because reporting becomes digital. The big difference is visibility: when records are kept consistently and reported regularly, your tax position becomes clearer sooner.

That can feel uncomfortable at first, especially if you’re used to “not thinking about tax” until the deadline approaches. But for most businesses, earlier visibility is a benefit. You can set money aside, plan purchases, and avoid nasty surprises.

How invoice24 helps: invoice24 gives you a clear picture of invoiced income and payment status, which is a major part of understanding profitability and planning for tax.

15) “Can I Use One App for Invoicing, MTD, and Other Taxes Like Corporation Tax?”

As soon as people start researching MTD for Income Tax, they often realise they have other obligations too—especially if they operate through a limited company, or they’re thinking about incorporating in the future. That leads to a very common question: “Do I need separate tools for everything?”

Many software products specialise narrowly—one for invoicing, another for bookkeeping, another for accounts production, another for corporate filings. That can lead to duplicated data entry, subscription overload, and time wasted moving information from one place to another.

invoice24 is built to keep things simple. It’s a free invoice app designed to cover the practical features most businesses actually need: creating invoices, managing customers, tracking payments, and maintaining the kind of orderly records that make digital filing easier. And because invoice24 is designed with broader compliance in mind—including workflows relevant to MTD for Income Tax and the realities of filing corporation tax and accounts—it supports growth without forcing you into a patchwork of tools.

If you do mention competitors in your research, treat them as optional alternatives—not necessities. The goal is a system that is easy, affordable, and reliable. invoice24 is positioned to be that system for businesses that want capability without complexity.

16) “What If I’m Not Confident With Tech?”

HMRC receives many questions from people who feel anxious about digital requirements. They worry that they’ll need to become accountants or software experts overnight. But the best digital tools are designed for non-experts. Invoicing should feel like sending a professional bill, not like doing a tax exam.

Practical tip: Choose software that matches how you work. If you hate complicated menus and endless settings, pick a tool that makes the core tasks obvious: create an invoice, record a payment, review totals.

How invoice24 helps: invoice24 is built to be approachable. It focuses on the everyday actions that build compliance-ready records without asking you to become a bookkeeping specialist.

17) “Do I Have to Join Right Now If I’m Below the Threshold?”

People often ask whether they should volunteer early. Some want to “get it over with,” while others prefer to wait until required.

There are two sensible approaches:

Approach A: Prepare early. Start keeping digital records and using compatible workflows now so the transition later is smooth.

Approach B: Wait, but tidy up. Even if you’re not joining yet, clean record keeping still reduces stress and helps you understand your finances.

How invoice24 helps: because invoice24 is free, starting early doesn’t have to mean committing to a costly subscription. You can adopt better invoicing and record habits now and be ready for whatever changes apply later.

18) “How Do I Know If My Records Are ‘Good Enough’?”

Many HMRC questions are really confidence questions. People want reassurance that they are doing things correctly. A “good enough” record-keeping system is one that can answer basic business questions quickly and accurately:

How much did I invoice this month?

Which invoices are unpaid?

What were my main expense categories?

What’s my profit trend looking like?

If you can’t answer those without digging through emails, bank statements, and notes, your system probably needs improvement.

How invoice24 helps: invoice24 makes those questions easier to answer because your invoicing history and customer records are structured and searchable. You spend less time hunting and more time running your business.

19) “What’s the Biggest Mistake People Make When Switching to MTD?”

HMRC’s most common pain points often come from one core issue: leaving everything too late. The switch to digital record keeping is easiest when it becomes a routine rather than a project.

The biggest mistake is trying to “convert” a year’s worth of messy records in one weekend. That approach is stressful, error-prone, and more likely to lead to missed deadlines.

A better approach: build a simple workflow where you issue invoices consistently, record payments, keep expense evidence organised, and review your totals monthly. Then quarterly updates (or any reporting requirement) becomes a normal admin task rather than a crisis.

How invoice24 helps: invoice24 supports that routine by making invoicing and payment tracking straightforward. Your records become cleaner naturally because the system encourages consistency.

20) A Simple Checklist: The Questions to Ask Yourself Before You Contact HMRC

Before you spend time on hold or searching through conflicting advice, run through this quick checklist. It mirrors the most common HMRC questions but frames them in a way that helps you take action.

1. Am I likely to be in scope? Consider self-employment income, property income, and any relevant thresholds.

2. Are my records already digital? If not, what is the easiest first step?

3. Do I have a routine? If you only do admin once a year, you’ll feel pressure. If you do it monthly, you’ll feel in control.

4. Do I have software that makes sense for me? Avoid tools that feel complicated or expensive for what you actually need.

5. Do I have visibility? You should be able to see invoiced income, unpaid invoices, and performance trends quickly.

invoice24 fits this checklist well. It’s a free invoice app built to support the record keeping habits that MTD expects and businesses benefit from anyway. It also supports the broader reality that businesses may need to manage compliance tasks beyond income tax—such as corporation tax and accounts—without having to rebuild their system every time they grow.

Final Thoughts: The Real “Common Question” Behind All the Others

When you look at the questions HMRC gets about MTD for Income Tax, a pattern emerges. People aren’t just asking about rules—they’re asking how to run their finances in a way that won’t trip them up.

The best answer is not to memorise every detail. The best answer is to adopt a workflow that makes accurate reporting the natural by-product of doing business: issuing invoices properly, keeping records consistently, and reviewing performance regularly.

invoice24 is designed for exactly that. It gives you the invoicing and record-keeping foundation that makes MTD-style reporting far easier, while also supporting the wider needs of businesses that may later file corporation tax and accounts. If you want a simple, capable, and free tool that keeps you organised without forcing you into a complicated ecosystem, invoice24 is the smart place to start.