How MTD for Income Tax affects retired people – and how to get prepared
From April 2026, Making Tax Digital for Income Tax (MTD IT) becomes mandatory for anyone with more than £50,000 in gross income from self-employment or property. While the headlines tend to focus on business owners, a growing number of retired people will also be brought into the new rules. Here’s what retired individuals need to know and how to prepare in good time.
Why retired people fall within the MTD IT rules
A big misconception about MTD IT is that it only affects people who are still working. In reality, HMRC is looking at income sources, not employment status. Even if you’re fully retired, you could cross the £50,000 gross income threshold through rental income from one or more properties.
If you do fall within the rules, MTD IT requires you to:
- Keep digital records using HMRC-recognised software.
- Submit quarterly “year-to-date” summaries of income and expenses relating to your property or other income sources.
- Complete a Final Declaration each year, (which replaces the traditional Self Assessment tax return).
Keeping digital records as part of MTD IT
One of the biggest practical changes for retired people entering MTD IT is the move to digital record-keeping. HMRC is not providing free software, so you will need to use either:
- HMRC-recognised software designed for MTD IT, or
- A spreadsheet that links to HMRC via the recognised ‘bridging’ software
TaxNav covers both options.
For many retired individuals, you’ll need to record your income and expenses digitally in a way the software can understand. This means:
- You must keep digital records for each income source that falls under MTD IT — for most retired people, this is most likely to be property rental income.
- You do not need to photograph or upload every receipt. MTD IT only requires totals of your expenses, so they can be reported accurately to HMRC. You will need to keep copies of individual expenses separately in a digital format as a reference for what your submitted totals stem from.
- Your software should help you organise your information, track year-to-date totals and quickly submit the summaries which HMRC requires.
If you’ve been used to keeping this information in paper files or personal spreadsheets, the biggest change will be ensuring these records are captured digitally and flow cleanly into the MTD IT system through recognised software.
TaxNav is HMRC-recognised, and with our software, you can comply easily online by either
- inputting information into our software directly
- using one of our MTD IT-friendly spreadsheet templates, or
- use our bridging technology to upload the totals in your own spreadsheet into HMRC’s MTD IT portal.
Rest assured, by using TaxNav, you don’t have to abandon your current way of working and your favourite spreadsheet. You can simply link it via our software to the HMRC MTD IT system and continue as normal.
Once your records are kept digitally, the rest of the process (quarterly updates, and your final declaration) becomes much easier to manage.
What quarterly updates mean in practice
Each update is a simple digital summary of your income and expenses for the year-to-date. It’s not a full tax return, and you won’t pay tax quarterly. HMRC simply wants more regular information to help estimate year-end liabilities.
For retired people, the main shift is moving from one annual tax return to four small digital submissions, plus a final declaration at the end of the tax year.
Annual declarations
Alongside quarterly updates (if applicable), every MTD IT user must complete a Final Declaration — the digital replacement for the Self Assessment return. This is where you’ll also report things like:
- pension income
- savings interest
- dividends
- capital gains
- any benefits and credits
- rental profits after year-end adjustments
Why now is a good time to prepare
Although mandation only begins in April 2026, retired people have a clear advantage if they start early. Trying out software now means you can:
- get used to digital record-keeping before it becomes compulsory
- understand what information you need to track and when
- reduce the risk of errors or rushed submissions
- simplify the process of pulling together your annual income
It’s particularly helpful if you have several different income sources, as many retired people do. MTD IT becomes much easier when everything is captured in one place, automatically and consistently throughout the year.
Why not join the many retired individuals who are using TaxNav in the current HMRC pilot and prepare before the mandate?
How TaxNav helps retired people manage MTD IT effortlessly
TaxNav has been designed to be simple, affordable and intuitive - ideal for individuals who want to comply with MTD IT without complexity or cost. Here are some key features:
- TaxNav is free to use for the remainder of the 2025/26 tax year, so you can practise before mandation.
- It will then be just £5 a month from April 2026, making it a highly cost-effective option.
- TaxNav is built specifically to help UK taxpayers with mixed income sources - it handles income from self-employment (trade), UK property and foreign property within one license.
- It’s simple to use in app or desktop formats and gives clear prompts, simple journeys and automatic calculations.
A smooth transition into MTD IT
MTD IT is a significant shift, but it doesn’t need to be stressful. Many retired people with rental income or any trade-related income streams will be affected - and getting ready early is the simplest way to stay in control.
TaxNav brings all income streams together, showing the information HMRC requires in an easy-to-understand way. It helps you keep digital records, prepare quarterly updates if required, and complete your Final Declaration with confidence in a safe space.
Why not join the many retired individuals who are using TaxNav to prepare. Find out more or access the software for free at taxnav.digital