Making Tax Digital for Income Tax: 3 myths debunked

Clearing up confusion around Making Tax Digital for Income Tax (MTD IT). With mandation coming in April 2026 and the 2025 beta test underway, we tackle three common myths in part one of our new TaxNav series.

Making Tax Digital for Income Tax: 3 myths debunked

If you're self-employed, a landlord, or a subcontractor, you've probably heard about Making Tax Digital for Income Tax (MTD IT). Mandation comes in April 2026, but the beta test is already underway in 2025 – and there’s still time to join.

Unfortunately, there's a lot of confusion out there. In this new series from the TaxNav team, we’ll clear up some of the most common myths. Here's part one – covering three of the questions we get asked the most.

 

Myth 1: I can use my UTR for MTD IT

No, you can’t. Although your UniqueTaxpayer Reference (UTR) is still relevant for some parts of Self Assessment, MTD IT submissions must use your National Insurance number (NINO). Here’s why from HMRC…

  • NINO is HMRC’s primary identifier for individuals in most tax systems – including PAYE and benefits.
  • Many people joining MTD IT don’t have a UTR, especially if they’ve never filed a Self Assessment return.
  • The digital infrastructure for MTD IT has been built around NINO, not UTR.

So if you're preparing to sign up,make sure you have your National Insurance number handy – you can find it here via the Gov.uk website.

 

Myth 2: HMRC will give me free software for MTD IT

No – HMRC doesn’t provide its own MTD software. Instead, it works with approved third-party developers who build compatible tools for taxpayers to use.

Here’s what you need to know:

  1. You’ll need to use MTD IT-compatible software, listed on HMRC’s official site. See the list here.
  2. Some tools have free trial versions, like TaxNav, for a limited period.
  3. For most users, you’ll need to budget for software, either monthly or annually, depending on the size and complexity of your business

Good news! TaxNav is an HMRC-recognised provider, designed specifically for MTD IT. It’s built to be simple, affordable, and tailored to the self-employed, landlords and subcontractors with simple tax affairs.

 

Myth 3: Can I still get penalties if I join the MTD IT beta test?

Not necessarily true, because beta testers are treated as volunteers. HMRC has confirmed that quarterly late submission penalties do not apply while you're in the trial phase. Annual filing penalties still exist though. This removes the pressure and gives you a chance to learn the system without fear of fines.

Read HMRC’s full guidance regarding penalties in the beta phase.

Joining the beta isn’t just about avoiding penalties – there are real advantages:

  • Dedicated HMRC support is available for those in the beta for the 2025-26 tax year – covering your MTD queries and some general tax issues too.
  • Get ahead of the game – you can learn how MTD IT works now, before it becomes compulsory.
  • Shape how it develops - your feedback helps HMRC and TaxNav improve the system.

 

Get involved via TaxNav

Now is the perfect time to join the MTD IT beta test – and you can do so easily with TaxNav.

You’ll benefit from extra support, have time to get familiar with the system,and reduce the risk of surprises when MTD IT becomes mandatory in April 2026. If you want a smooth, stress-free transition, early adoption is the smart choice.

Find out more and get started today with the TaxNav team.

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