What's next for MTD for Income Tax? Key takeaways from our government and industry panel

With momentum for MTD for Income Tax building every day, FreeAgent gathered an expert panel from the government and the accounting world to discuss progress so far, lessons learned and critical next steps to success.

FreeAgent Practice Partners joined James Murray MP (Exchequer Secretary to the Treasury and departmental Minister for HMRC), Craig Ogilvie (Programme Director for MTD) from HMRC and FreeAgent’s CEO, Roan Lavery and Head of Product Management, Jon Martingale in London to share their experiences and discuss what’s needed to move MTD forward.

Here are the four key takeaways from the session.

1. Now is the time to get people engaged with MTD

James Murray began by highlighting how much work is currently being done in order to meet the challenging deadlines that the government has set for MTD for Income Tax. He noted that the government is keen to move away from calling the current voluntary scheme a ‘pilot’, instead referring to it as a ‘test phase’ to signal the certainty that MTD is going ahead. With the majority of business types now eligible to join the test phase, he stressed that it was crucial for software vendors, accountants and HMRC to work together to encourage more people to sign up for MTD and help scale up adoption. 

“MTD comes at just the right time when I think a lot of businesses are already making really big changes in the digitalisation of how they operate, and people are really starting to see the benefits,” he said.

He added that helping businesses see MTD as an benefit rather than a chore - and showing them how it can enable them to operate more efficiently and automatically - was key to driving adoption. The better people understand what MTD is and how it can support their business, the less concerned they will feel about the legislation. 

2. MTD needs to be a shared endeavour

“Collaboration is key” was one of the main strands that ran through the entire discussion, with both the Minister and HMRC’s Craig Ogilvie stressing the importance of working together with accountants and software vendors to educate and engage new audiences about MTD for Income Tax. By aligning messages and working closely together, it’s possible to reduce anxiety among small businesses, build trust, and raise awareness about the legislation.

The panel also heard about recent FreeAgent research highlighting the role of trust in boosting small business confidence around MTD for Income Tax. A comparison between a recent FreeAgent customer poll and a wider YouGov survey found that FreeAgent customers feel much more positive about MTD’s impact on the SME sector (41.2% compared to 23.6% in the YouGov study). This suggests that with good communication, education and support, small businesses are more likely to see MTD favourably and engage positively with it.

3. MTD is a behavioural change, not just a technical one

Small businesses need support to adopt new habits, and that starts with education. Focusing solely on the negatives - such as the potential of incurring fines for non-compliance - isn’t enough. The government, accountants and vendors have to educate small businesses about the benefits of MTD in order to encourage lasting changes to their habits. 

The challenge is that many small businesses are still not fully aware of MTD and its implications for their businesses. As Julie Falchevska from Maslins Accountants highlighted: “Clients might have heard something about MTD, but no one knows what it actually is, what it means, and what they should be doing. And it’s challenging for us to communicate to them why they should be getting ready for MTD now, rather than in 2026 when it will be legally required.” 

Panellists also agreed that the coming months - particularly around September and October when a new HMRC marketing push for MTD for Income Tax is scheduled to take place - will be particularly important for educating small businesses and encouraging the behavioural changes that will be needed to transition smoothly to the new ways of working. 

4. We must not leave unrepresented businesses behind 

The panel was in agreement that businesses who are already proficient with digital accounting software should find the transition to MTD relatively straightforward. In addition, accountants who are already regularly analysing clients’ data (for example, using a quarterly review process, as highlighted by Courtney-Jade Warburton from Gorilla Accountants) will be better placed to incorporate MTD for Income Tax compliance into their existing processes, rather than have to create entirely new services.

However, the challenge will be how to support business owners who have little digital experience and do not understand MTD at all. Typical tools, such as webinars or online educational resources, won’t necessarily have a significant impact on this group, so it’s essential to ensure that they aren’t left behind.

“Unrepresented clients are a huge challenge. How do we engage them? How can we get them to use software in a competent way?” said Russell Frayne from Gravita, with Jon Martingale from FreeAgent also asking: “How do we engage unrepresented businesses who are currently using Excel to manage their accounts and haven’t heard about MTD? Who will they actually listen to - an accountant, software vendor or HMRC?”

Once again, the conversation returned to how collaboration between all parties can achieve the best results. HMRC can share the broader legislative and logistical details, while vendors can highlight the practical steps involved in using technology to comply. Accountants can add the personalised element and explain how digital changes can lead to better business outcomes. Together, this makes educating clients simpler and more effective. 

Ultimately, the goal is to support people as much as possible while they get to grips with MTD. Rather than having small businesses fear the legislation, there needs to be a softer approach that nurtures them into positive compliance. 

As Craig Ogilvie summarised: “We don’t see April 2026 as being the end date for MTD - but rather the start. With more and more people coming into the legislation over the coming years, we need to make sure we get it right - and that will be a collaborative effort between all of us: software, accountants and HMRC.

“The positive thing is that everyone appears to be on-board and fully committed to the reality of MTD. We know it’s coming and when the deadlines are, so it’s just a question of educating and supporting people through it as much as possible.”