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Every accountant is familiar with the shoebox. The one crammed with crumpled receipts, delivered annually with a sheepish grin. Or the client who stubbornly clings to their trusty spreadsheet, resisting any mention of cloud-based software.
Working in a service-led profession, you’ve likely adapted to these ways of working in an effort to support your clients, even when better tools are available. But with Making Tax Digital (MTD) for Income Tax looming, it’s time to shake things up, not just for clients but for your practice too.
In this guide, we’ve collated all the information you need to help you and your practice prepare for the changes ahead, including:
- Segmenting your clients
- Teaming up with the right tech
- Nailing your communication
- Perfecting your pricing
- Using MTD as an opportunity to grow your practice
You can use the links above to dive straight into a specific section or read the guide in full.
What’s changing?
As a reminder, here’s what’s changing under the new rules. MTD for Income Tax will replace the current Self Assessment system for business owners and landlords in stages, depending on their incomes (not profit):
- From April 2026 (tax year 2026/27) - all self-employed individuals and landlords with qualifying income over £50,000
- From April 2027 (tax year 2027/28) - all self-employed individuals and landlords with qualifying income over £30,000
- From April 2028 (tax year 2028/29) - all self-employed individuals and landlords with qualifying income over £20,000
What counts as qualifying income?
Qualifying income is the money made in a tax year from self-employment and rental properties.
Other types of income reported on a Self Assessment - like a salary (PAYE), money from a partnership, or dividends - don’t count towards this.
HMRC looks at income before expenses. They’ll use gross income (also known as turnover), which means the total amount earned before taking off any business or property expenses.
Here’s an example. If a client earns:
- £30,000 from rental income
- £27,000 from self-employment
their total qualifying income would be £57,000.
To comply with MTD for Income Tax, self-employed individuals and landlords will have to take these actions:
- Keep records of their business income and expenses in a digital format.
- For each type of revenue (self-employed business or property), send quarterly updates of business income and expenses to HMRC.
- Finalise business income by submitting a final declaration.
- Pay the tax owed by 31st January of the following tax year (so no change from the current Self Assessment process in this area).
This isn’t just another regulatory hurdle; it’s a generational shift that demands a new approach.
Out of 5.5 million UK businesses, only about 2 million are using accounting software. And of the 2.75 million that need to switch to MTD-compliant software by April 2028, just 1.23 million have made the move so far.
That’s a staggering gap! It’s a goldmine of potential, yes, but also a stark reminder of the challenges accounting professionals face. Why the slow uptake? Is it resistance, cost or simply a lack of awareness? Whatever the reason, the reality remains: MTD for Income Tax is coming, and practices will need to act as the navigators, guiding clients through this digital sea change.
So, how can you help your clients make the leap and ensure your firm is ready for the changes ahead? In the rest of this guide, we’ll explore the steps to take, the hurdles to consider, and the ways to set your practice up for success. First up: segmenting your clients.
