MTD for Income Tax: lessons from people who’ve already filed

Making Tax Digital (MTD) for Income Tax is the new system many self-employed people and landlords will have to use to submit their information to HMRC. The first group of taxpayers (those whose qualifying income is over £50k) have to comply from April 2026, followed by those with income over £30k in 2027 and those with income over £20k from 2028.

But an intrepid group of testers signed up early to the new system. We spoke to dozens of these brave souls to bring you real-world lessons from the people who have already experienced MTD for Income Tax. This is what they wanted you to know.

Don’t stick your head in the sand

“I’ve always found doing my Self Assessment tax return the accounting equivalent of hitting my funny bone - a pretty unpleasant experience, followed by a weird sort-of feeling of enjoyment after the event,” says Richard Chenery, a handyman and landlord from Reading. “Taking my PAYE salary, self-employment income, and the rental income from two flats and plugging everything into an online form never seemed particularly straightforward; and this was undoubtedly complicated by the fact that I could never remember what all the fields meant every year.”

Still, Richard was keen to “get ahead of the curve” with MTD for Income Tax. “I wanted to avoid being an ‘MTD virgin’ when the programme became mandatory and it really mattered,” he explains. 

His top bit of advice? “Don’t stick your head in the sand with MTD. Talk to others, do your research, engage with FreeAgent and HMRC. You can’t avoid MTD, but you can definitely avoid a load of unnecessary grief by grasping that nettle!”

Strategic operations consultant and virtual business manager Gemma Baxter.

Start now

As a strategic operations consultant and virtual business manager, Gemma Baxter is used to supporting her clients to make all the behind-the-scenes graft of running a business feel calmer. She signed up to test MTD for Income Tax, so she could support them over that hurdle. 

“Start now,” she advises. “MTD sounds far more intimidating than it actually is. Once your bookkeeping is part of your regular routine it becomes empowering rather than stressful. You gain real time clarity over your tax liabilities, which allows you to make better decisions throughout the year instead of scrambling in December when all you want to be doing is eating Christmas goodies.”

It might not be as bad as you fear

“Being honest, when I first heard about Making Tax Digital it felt a bit overwhelming,” says Sheffield-based online retailer Logan Jones. Logan runs Bits’N’Bobs 24-7, a website specialising in selling collectable coins. “As a sole trader, anything new around tax feels daunting, especially with a whole new system like MTD. But once I actually started using the system and keeping everything updated regularly, it wasn’t nearly as bad as I expected.” 

You might even find the new way of working helpful

“I was a bit wary about MTD at first due to the increased risk of fines,” says CB Transport Compliance’s Connor Benn-Williamson. “After using it, I’ve found it’s actually helpful to review my accounts more often as opposed to once per year for annual filings. Regular filing forces you to keep a closer eye on your accounts and helps to catch expenses that may fall through the net later on in the year.” 

Under the old paper-based annual filing system, Michael Cotterill says he “only ever had an accurate idea of the financial position of my business and how this compared to previous financial years, once a year”. The combination of MTD and accounting software has changed that for his will-writing service TRF Wills. “For the first time, I know exactly how much turnover compared to profit I am generating on an ongoing basis. This helps me to plan financially for the future.”

Jim Duff and Aoife Sheridan of Blairgowrie Self Catering.

Don’t believe the myths

“I think there is a lot of misinformation out there, especially in social media,” says Nathan Berry, a cabinet maker who crafts handmade kitchens, fitted wardrobes and other interior joinery in his small workshop near Exeter, Devon. “99% of it is nonsense. I watched one video that claimed the self-employed now have to submit five tax returns a year!” 

It is true that - in addition to a final declaration, which is similar to the Self Assessment tax return you’ve been used to - you will have to file four quarterly updates. But if you’ve been keeping your accounts up to date, quarterly updates should be pretty simple. That’s certainly how Nathan has found them. “FreeAgent literally does all the heavy lifting, all I do is click the submit button,” he says.

And getting accounting software can do more for your business than just help you stay on top of MTD, he adds: “I’ve been in construction for most of my career and the majority of trades I work with are self-employed. I know people who don’t even use accounting software, so my tip would be to just sign up for MTD even if you don’t meet the £50k threshold, because the benefits of taking your books online are worth the hassle.”

Worried you might be at risk of MTD myths? Check out our mythbusting blog here to make sure you don’t fall for inaccurate or misleading information. 

Stay on top of your expenses

The annual scramble to find receipts and record expenses will be familiar to many sole traders and landlords - but if you can get on top of doing it regularly it makes the world of difference, according to our community. 

“Keep on top of your expenses as you go, rather than letting them build up,” advises Adam Dawson, a freelance web developer who runs DawsonyWeb in Barnsley. “Even five minutes here and there beats spending hours at the end of the month trying to catch up, and it’s miles easier to stay organised and know where you stand.”

It might take some effort to change your ways, but it’s worth it, confirms Basingstoke-based counsellor and psychotherapist Nicola Wills. “The biggest hurdle for me was changing my routine around logging in [to FreeAgent] and keeping on top of transactions,” she says. “I needed to be more organised. However the system on FreeAgent is very easy to use. I would say as well, as a self-employed person it’s easy to overlook how valuable it is to pause each quarter and look at a P&L [profit and loss report]. MTD for Income Tax gives me that and I feel more in control of my business.”

Educational psychologist Dr Jo Hewitt. 

Link your business bank account to your accounting software

As the woman behind Bea’s Pet Care Services in Bristol, Boguslawa Babijczuk [pictured at the top of this blog] specialises in solo walking for dogs that need extra support. She admits she hardly ever logs into her HMRC account. For people in a similar boat she recommends using software to do much of the hard work for you. 

“I would advise getting software that is linked with your business bank account, so all expenses are tracked accordingly,” she says. “That makes MTD easier to complete. I use FreeAgent and it made the process so much easier for me.”

Categorise your transactions once a week

Once you’ve got your business bank account linked, the next step is to make sure your transactions are categorised correctly. If you can do that once a week, says Jim Duff, owner of Blairgowrie Self Catering, you’ll be on to a good thing.

“If you have the time to label income and expenditure regularly - weekly at least - then it all falls into place,” he says. “MTD seems to work well for me and I’ve always been a bit surprised it hasn’t come earlier. If you keep on top of the figures, it saves an end-of-year rush and panic.” 

FreeAgent’s AI-powered Guess feature will automatically categorise most of your transactions for you - all you have to do is check and approve. 

Set yourself reminders

Despite being set up in FreeAgent and having successfully filed her quarterly update, Craigavon-based educational psychologist Dr Jo Hewitt admits to “feeling anxious about missing a deadline”. Her simple solution? “One thing I have done is set an alert in my diary for when MTD is due. I give myself advance notice of this to allow time to check through everything before sending.” 

For an easy way to add all the MTD dates to your digital diary, check out our free downloadable calendar.

Artist Allan Levy.

Be careful if you have multiple income streams

While handyman Richard Chenery has found his quarterly updates simple enough so far, he does warn his fellow self-employed workers to take care if they have multiple sources of income. 

“One big frustration for me is that having multiple income streams requires multiple MTD submissions,” he explains. “An individual with a rental property, an online selling business and a cleaning contract would have a dozen separate submissions each year, plus the final end-of-year declaration. This doesn’t help the small business owner or industrious entrepreneur.”

For information on how to use FreeAgent to manage multiple income streams, see our detailed guide.

And finally… reward yourself for a job well done

Artist Allan Levy runs a visual arts practice specialising in large-scale photographic mosaics and public installations. His top MTD tip is a good way to maintain your motivation. Each Friday, after finishing his bookkeeping, he rewards himself with a nice glass of wine! “I use FreeAgent with Mettle, this part is essential,” he says. “FreeAgent and Mettle together are an absolute saviour… they work so well together.”