How to prepare for Making Tax Digital (MTD) in the UK 

What is MTD for income tax (MTDfITSA)?

Put simply, MTD is the government’s initiative to digitalise the tax system, primarily through maintaining digital records. The reasoning for this is that it’s thought it’ll make it easier for companies and individuals (sole traders) to get their personal tax returns right. Originally, MTD was planned to launch in April 2018 this was then pushed back several times, and is now set to be mandated in 2026 or 2027 depending on the taxpayer's threshold. The change will affect those with over £50,000 in income per year in 2026, moving to £30,000 in 2027.

What are the requirements for MTD?

Under current plans, MTD will apply to those who receive a income from self-employment and/or property. From April 2026 Making Tax Digital for Income Tax and Self-Assessment (MTDfITSA) Landlords and sole traders with a total business and property income above £50,000 per year will need to comply with MTD. From April 2027 Landlords and sole traders with a total business and property income above £30,000 will also need to comply with MTD for income tax.

While these are the clients of yours that MTD affects, MTD also affects you—the accountants. With lots of preparation and understanding needed to get MTD ready, accountants are at the heart of a smooth transition to digital tax.

How can you prepare for MTD for income tax?

First, understand which of your clients will be affected by MTD for income tax (MTDfITSA) and start a conversation with them.  

This might include encouraging them to begin digital record keeping and reminding them to register for MTD before the deadline (currently April 2026). 

What do you need to do to be MTD compliant?

1. Set up bookkeeping for MTD for income tax
   
   Ensure your clients are using bookkeeping software or specifically formatted spreadsheet making sure clients know how to keep compliant digital records and that they’re legally compliant with digital linking rules.
    
2. You must be using compliant software
   
   Both your practice and your clients must use HMRC recognised software, such as CCH iFirm, to maintain compliance, otherwise you'll be penalised. You may opt for  a cloud accounting solution, as they offer benefits such as increased accessibility, security, and automation.
    
3. Make quarterly submissions
   
   Under MTD for income tax, it is a requirement to submit the income and expense per business to HMRC quarterly without making any adjustments in the quarterly figures. A business that aligns to the tax year (6 April – 5 April) would need to submit at least the following reports for the 2026/27 financial year:
   
   - 1st: Due by 5 August 2026 (covers 6 April 2026 – 5 July 2026)
   - 2nd: Due by 5 November 2026 (covers 6 July 2026 – 5 October 2026)
   - 3rd: Due by 5 February 2027 (covers 6 October 2026 – 5 January 2027)
   - 4th: Due by 5 May 2027 (covers 6 January 2027 – 5 April 2027)
    
4. Make a Final Declaration submission
   
   Everyone must also submit a Final Declaration by 31 January following the end of the tax year. The Final Declaration should include other sources of taxable income such as investment income, claims and savings that would have formed the complete Self-Assessment tax return. At stage adjustments can be made to the figures submitted in the quarterly updates.

What do you need to do to prepare for MTD?

1. Choose an MTD compliant software provider
   
   Selecting the right MTD compliant software provider means you’ll experience a seamless transition to digital tax submissions.
   
   When evaluating potential software solutions, it’s important to consider several factors.
   
   Compatibility with your existing systems is essential to ensure smooth integration and functionality, and the software should be user-friendly to simplify the recording and submission of tax information.
    
   Look for providers that offer comprehensive support and training to help your team quickly adapt to the new system.
     
   Additionally, robust security measures must be considered for compliance and safety—as well as your firm’s reputation.
   
   And of course, consider the cost of the software to ensure it’s scalable, and offers good value for money within your budget.
    
2. Train your team
   
   Training your team is essential to ensure they are well-versed in using the new MTD compliant software and understand the requirements of the MTD initiative.
   
   Start by organising comprehensive training programs that cover the software’s functionality, data entry, submission processes, and troubleshooting.
   
   Provide ongoing training to keep the team informed about any updates or changes in the software or MTD regulations. Hands-on practice sessions can help build confidence and proficiency among team members. Consider bringing in experts from the software provider or industry specialists to offer additional insights and answer any questions your team may have.
    
3. Assess your client base for income tax
   
   Understanding your client base is important for preparing for MTD for Income Tax Self Assessment (ITSA), so begin by identifying which clients will need to comply with MTD for income tax based on their income sources and thresholds (currently any landlords or sole traders with net incomes above £50,000).
   
   Assess your clients' current record-keeping practices and their readiness to transition to digital systems.
   
   Effective communication is key—inform clients about the MTD for income tax requirements, timelines, and how it will impact them.
   
   We recommend developing personalised plans to help clients transition smoothly, which might include offering training or assistance with setting up digital records.
    
4. Sign your practice up for an Agent Services Accounts (ASA)
   
   An Agent Services Account (ASA) helps you manage your clients’ tax affairs under MTD.
     
   To set up an ASA, register through the HMRC website, providing all necessary information about your practice. Once registered, use the ASA to link your practice to your clients’ tax accounts, ensuring you can manage their submissions under MTD.
   
   It’s important to familiarise yourself with the functionalities and features of the ASA, such as managing authorisations and viewing client information, to efficiently handle your clients' tax affairs.
    
5. Hold one another accountable
   
   Accountability within your team is key to ensuring successful implementation and ongoing compliance with MTD.
   
   Begin by defining and assigning specific roles and responsibilities related to MTD compliance and software use within your team.
   
   Schedule regular check-ins to discuss progress, address challenges, and ensure everyone is on track. Establish performance metrics to evaluate the effectiveness of the MTD processes and identify areas for improvement.
   
   Encourage a collaborative environment where team members support and hold each other accountable, fostering a culture focused on compliance and continuous improvement.

What opportunities can accountants find in MTD?

1. Increased efficiency and accuracy
   
   MTD mandates the use of digital record-keeping and submission of tax returns, which significantly reduces the risk of errors associated with manual processes — particularly when combined with automated solutions that include error-flagging.
   
   This transition offers several benefits such as automated data entry, which reduces human error and saves time by automating the recording and submission of financial data; real-time information that provides accountants with up-to-date financial information; and streamlined processes that simplify tax compliance processes, reducing the administrative burden on businesses.
   
   In short, expect smoother workflows and more time to focus on value added services. 
    
2. Improved financial management
   
   Digital record-keeping and real-time updates offer businesses better visibility and control over their finances.  
   
   This can lead to better cashflow management through timely insights; proactive tax planning using real-time data, and enhanced reporting as you can generate detailed financial reports, supporting strategic business decisions.
    
3. Enhanced client services for accountants
   
   MTD enables accountants to offer higher-quality, more responsive services to their clients. The digital transformation opens several avenues for improved client engagement, such as:
   
   - Advisory services: With more time freed from manual data entry and compliance tasks, accountants can focus on providing strategic advisory services.
   - Real-time collaboration: Digital tools facilitate better communication and collaboration with clients, improving service delivery and client satisfaction.
   - Data analytics: Leveraging digital records and advanced analytics, accountants can offer deeper insights and more tailored financial advice.
    
4. Competitive advantage
   
   Early adoption of MTD can give businesses and accounting firms a competitive edge.  
   
   For example, not only does it demonstrate innovation and confidence, but it also improves customer experience as you can offer streamlined, efficient services that enhance satisfaction and improve loyalty.  
   Digital capabilities also allow you practice to serve clients across wider geographical locations, without the constraints of physical location. For example, CCH iFirm Personal Tax’s Tax Return feature allows you to predefine the documents you send to your clients for them to authorise submission of the return to HMRC.
    
5. Compliance and risk management
   
   MTD’s structured framework ensures better compliance with tax regulations. This results in a reduced risk of penalties, improved audit readiness, and enhanced data security.  
   
   In fact, storing your personal tax data in the cloud comes with benefits such as increased encryption, security, and automation functionalities.  
   
   MTD is coming, and it’s vital to be prepared. But don’t worry, with an understanding of what digital tax means for your business and your clients, you can start to focus on opportunities instead of challenges.  
   
   While it may be one of the biggest changes in the accounting world in recent years, the key to success is understanding how you can get ahead, and work alongside clients to make them feel at ease. As we welcome a digital approach to tax, the future looks more integrated and automated than ever. 

How can Wolters Kluwer support you with MTD?

Wolters Kluwer enables tax and accounting professionals and businesses of all sizes to drive productivity, navigate change, and deliver better outcomes. This is why we’re a trusted partner for your MTD journey.  

Our solutions are optimised by technology and guided by deep domain expertise, as we aim to help you grow, manage, and protect your clients during this journey to the digitalisation of tax.  

“Wolters Kluwer remain committed to delivering a MTDfIT solution to support customers taking part in HMRC’s Public beta program starting in April 2025,” says Dorcas Mbwiti, Senior Product Manager at Wolters Kluwer. “As the go-live dates have been confirmed and we now have certainty around MTDfIT, I encourage anyone who has clients who meet the threshold, to consider joining the HMRC pilot. This will help you understand and refine the MTD process ahead of mandation.”