Last updated: 18 Aug 2025 09:00 Posted in: AIA
As Making Tax Digital for Income Tax becomes compulsory for the first group of UK taxpayers in April 2026, we examine how to get your clients and practice MTD ready.
Making Tax Digital for Income Tax (MTD) represents the biggest shake up to income tax in the UK since the introduction of self-assessment. With less than eight months to go, time is of the essence and it’s important that agents and taxpayers start to get ready.
In this article, we’ll recap the main MTD requirements, before looking at the steps you can take now to prepare your clients and your practice for April 2026.
What is MTD?
There are three main MTD requirements: digital record keeping; submitting quarterly updates to HMRC; and a year-end ‘digital tax return’. Affected taxpayers and/or their agents will need to use some form of commercial software to handle all three steps.
Quarterly updates are not mini-tax returns, but rather summaries of the income and expenses recorded in the digital records, with tax and accounting adjustments optional. The quarters follow the tax year, rather than the accounting period of the business. Whilst the quarters are fixed, businesses can elect for ‘calendar quarters’ instead (so that quarterly periods finish at the end of the previous month). The filing deadline is the same under either option – being one month and two days after the end of the tax year quarter. The filing deadlines are set out in the table opposite.
The ‘digital tax return’ replaces the self‑assessment return for those in MTD. It will perform the same function as the self-assessment return and have the same 31 January deadline. However, it will be prepared differently, with greater pre-population of information held by HMRC.
Who is affected?
A key first step to getting ready for MTD is identifying which clients will be required to join and when. Only then can you start to prepare those clients and consider what MTD might mean for your practice.
MTD will only affect sole traders and landlords for now. The exact date they will have to enter MTD depends on their ‘qualifying income’:
Qualifying income is, very broadly, the taxpayer’s combined gross income (before expenses) from trading and property. When applying the income threshold for a tax year, HMRC will look at the qualifying income reported on the tax return for which the filing deadline has just passed. So, for 2026/27, HMRC will look at the figures on the 2024/25 tax return (filing deadline 31 January 2026). For 2027/28, they will look at the 2025/26 tax return (filing deadline 31 January 2027) and so on.
Even if a taxpayer passes the income threshold, there are several exemptions and deferrals available. A key exemption will be where the taxpayer is digitally excluded. If you have clients that you think might qualify for this exemption, you will need to apply to HMRC. Applications are expected to open this autumn.
The UK’s approach to Making Tax Digital
Making Tax Digital for Income Tax (MTD) is a UK government initiative that mandates digital tax compliance for certain self-employed individuals and landlords.
It forms part of HMRC’s broader strategy to modernise the UK tax system and reduce errors. If your firm supports UK clients or has UK-based operations, you’ll need to ensure your systems and advisory services are aligned with MTD requirements.
MTD is part of a global trend toward digital tax administration. Similar initiatives are emerging in other jurisdictions, making this a useful case study in digital compliance transformation.
Making Tax Digital for Income Tax: filing deadlines
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Standard end date |
Calendar quarter end date |
Filing deadline |
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Quarterly update 1 |
5 July |
30 June |
7 August |
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Quarterly update 2 |
5 October |
30 September |
7 November |
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Quarterly update 3 |
5 January |
31 December |
7 February |
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Quarterly update 4 |
5 April |
31 March |
7 May |
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Digital tax return |
5 April |
31 March |
31 January |
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How to get your clients ready
MTD will represent a significant change for your clients. The move to digital record keeping and more frequent reporting will no doubt bring challenges, especially for those clients who are uncomfortable with technology or who only bring in information once a year.
It is important to talk to clients who will be required to join in April 2026 if you have not done so already. HMRC are already writing to taxpayers they believe may be affected, so it’s better to have those conversations sooner rather than later.
A key point to discuss is the level of support clients will need, as a range of options is available. At one extreme, you can do everything for them – the digital record keeping, filing quarterly updates and completing the digital tax return. At the other, clients can keep their own records and file their quarterly updates, with you just completing the digital tax return. A popular middle ground may be engaging a bookkeeper to undertake the digital record keeping and file quarterly updates – this is now possible as MTD allows for multiple agents to be authorised.
Agreeing what services you will provide is an essential step towards planning your workflows for 2026 and beyond. However, you will also need to think about the practicalities. In particular, you need to agree with the client what information they will need to provide, and when. For example, if you will be completing the digital record keeping and/ or filing quarterly updates, you will need to ensure they provide the required information in time to meet the deadlines set out in the table above.
Another important issue to discuss with clients is fees. MTD will, in many cases, lead to an increase in the services you provide. Whilst talking to clients about fees might not be comfortable, it is better to be upfront about any increases and discuss these as soon as possible.
Your clients can also take a number of practical steps to help them transition into MTD. Wherever possible, encourage them to set up separate business bank accounts. Not only is it good practice to separate out personal and business expenditure, but bank feeds linked to software can also speed up the record keeping process significantly. Some business bank accounts even come with free basic bookkeeping software – something clients might value if they opt to keep their own records.
For those clients who are digitally challenged or adverse (but don’t reach the threshold to be digitally excluded), there are some intermediate steps you can take to ease them into MTD. For example, you could encourage them to use a spreadsheet to keep simple records, or ask them to start bringing in information quarterly, rather than once a year.
Practice planning
Just as important as getting your clients ready for MTD is ensuring that your practice has a plan in place to get ready for April 2026, and beyond.
As noted above, a key initial step is identifying which clients will be required to join MTD, when they will join and what support they will need. Once you have agreed this, you can go on to consider future workflows and staffing requirements.
Bear in mind that if you will be filing quarterly updates on behalf of clients, this will result in five filing peaks a year. You will need to ensure you have adequate staff in place at the right times to handle these peaks. This may mean changes to when staff are able to take annual leave, time off to study, etc. Pay particular attention to the deadline for quarterly update three, which falls only seven days after the 31 January tax return deadline for the previous year.
Software
Another key step in your MTD plans is ensuring that you have the right software in place. Remember that software needs to be used for all steps of the MTD journey – digital record keeping, quarterly updates and the final digital tax return. HMRC will not be providing software or any online filing service. They do, however, provide a filterable list of MTD-compatible software.
Software options under MTD range from using a spreadsheet for digital record keeping and ‘bridging software’ to file information with HMRC, through to full service packages. You need to ensure that your chosen software can provide all of the functionality you and your clients need in a cost efficient manner. It may be that the best solution is using multiple pieces of software – for example, using one product for digital record keeping and filing quarterly updates, and another for preparing and submitting the digital tax return.
If you would like to stick with your current software, or have identified a possible package to move to, you should check that it appears on HMRC’s list under either the ‘available now’ or ‘in development’ sections. If not, you should speak to the software provider as soon as possible about their MTD plans. Even if your product is on HMRC’s list, it is a good idea to contact your provider to ensure that their MTD product will meet your requirements.
Sorting the admin
Having a workflow plan and ensuring that you have the right software are essential steps in getting your practice ready. However, beyond this there are a range of smaller, but equally important, steps to take.
To represent your clients under MTD, you will need an Agent Services Account (ASA) – you will not be able to use your existing self-assessment Government Gateway accounts. Your practice may already have an ASA if you make VAT, trust registration or capital gains tax filings on behalf of clients. Only one ASA is permitted per firm, so if you aren’t sure whether you have one already you should check with colleagues working in those areas. If you don’t have an ASA, you can set one up relatively easily now – there is no need to wait until April 2026.
Once you have an ASA in place, the good news is that clients don’t need to reauthorise you to act under MTD – you simply need to link across your legacy Government Gateway accounts. This is a fairly simple process, and again is one you can do now.
Finally, all of your clients who are required to join MTD will need to be signed up – HMRC won’t do this for them. Clients can sign themselves up, or you can do this on their behalf. The sign up process is online via GOV.UK, and should only take a couple of minutes per client. However, if you have a large number of clients joining in April 2026, this could still add up to a significant amount of time. It’s therefore a good idea to put a plan in place to ensure all your clients are signed up in time. You can start signing up the majority of clients now, allowing you to spread out the workload.
Finally, ensure that your engagement letters are updated to reflect new services and fees, as well as setting out clear responsibilities and expectations as to who is required to do what, and when.
HMRC testing
One final, but very important, readiness step to consider is getting involved in HMRC’s testing programme. Signing up to testing is the best way to stress test your systems and processes ahead of April 2026. You will also benefit from access to HMRC’s dedicated customer support team, and no penalties will be charged for late filing of quarterly updates during the testing period.
It’s therefore recommended that, where possible, you sign up at least a couple of clients for testing. You should, however, always get the client’s permission first, and speak to your software provider. You can sign up for testing online through the same route as that used for signing up clients from April 2026. Don’t worry if you’re not quite ready to join testing yet – you can sign up at any point during 2025/26 provided you have digital records in place covering the full year.
Final thoughts
The above sets out a very high level summary of what agents need to work on in the coming months to prepare for MTD. More detailed information can be found in the ATT’s MTD hub. No matter how big or small your practice is, there is plenty to do ahead of next April – the main advice is to get started now, and not leave preparations to the last minute.
Author bio
Emma Rawson is Director of Public Policy at the Association of Taxation Technicians, leading their tax technical and professional standards work.
