With Making Tax Digital for Income Tax starting in April 2026 for many sole traders and landlords, accountants and bookkeepers need to be more than aware of the new legislation.
You need to be ready for it to support your clients in the best possible way and help your practice thrive.
Some accountants are already testing and segmenting their clients, and reshaping how they deliver services.
The real question now isn’t when MTD for Income Tax will impact your practice, but how well prepared you’ll be when it does.
At Accountex London 2025, the message came through loud and clear—from HMRC, industry leaders, and accountants alike.
While it may bring some challenges, MTD for Income Tax is an opportunity to modernise your practice, elevate client relationships, and run a smarter, more profitable practice.
Here’s what we cover in this article:
1. Know your mandate, segment your clients, and get ahead
MTD for Income Tax comes into force in April 2026 for self-employed individuals and landlords earning over £50,000.
This applies to income earned from the 2024/25 tax year onwards—so many of your clients are already on track to fall into scope, even if they haven’t realised it yet.
Practices ahead of the curve have already segmented their client base and are providing tailored MTD communication and support.
As Chris Downing, director for accountants and bookkeepers at Sage, said, “If you’ve not started yet, it’s not a disaster. But if you don’t start soon, you risk falling behind.”
Client segmentation is the foundation of any strong MTD for Income Tax plan.
To help, you need to ask three questions of your clients:
- Who is mandated in April 2026?
- Who comes in later waves (in April 2027, self-employed individuals and landlords with incomes over £30,000 will need to follow MTD for Income Tax; from April 2028, it will include those with incomes over £20,000)?
- Who might benefit from more proactive support or advisory services?
Carianne Pope of Pope Accountancy Services is a Sage customer. She explained how she uses spreadsheet mapping and now AI-powered tools such as Sage for Accounting to help tag and prioritise clients by MTD for Income Tax wave.
This allows her to have the right conversations at the right time, with the right level of support.
Carianne says, “Some clients are receptive, others not so much—it depends on the industry. Construction’s been one of the more resistant ones. But if you stay positive and show the benefits, they come around.”
Regular quarterly updates—enabled by MTD for Income Tax-recognised software—make it easier to:
- Surface bookkeeping gaps before they become problems
- Track income trends and any seasonal fluctuations in real time
- Step in with cash flow or tax planning advice before your clients need to ask.
For your clients with MTD for Income Tax obligations, Carianne says, “You’ll be speaking with them more often, staying in regular contact, and that means you can provide better business insights on a consistent basis.”
That’s not just better compliance—it’s better advisory.
Practical tips for your MTD for Income Tax segmentation plan
Use software to segment clients and speed up communicating with them:
- Use digital tools (such as tagging features in Sage for Accountants) to group clients by wave
- Automate communication using AI-driven email templates and task tracking.
Classify clients based on service need:
- “Do it for me” (full-service)
- “Do it with me” (collaborative)
- “Show me how” (DIY with guidance).
MTD for Income Tax requires quarterly updates—built-in moments to engage with clients. Use segmentation to focus those conversations where they matter most.
Sam Mitcham of SJCM Accountancy is a Sage customer. She pointed out that segmentation is essential for client readiness when it comes to MTD for Income Tax.
She said, “You need to be looking at your client base. You need to be segmenting the client types and then you need to be taking a stepping stone approach with clients.
“You don’t want clients to be receiving HMRC correspondence before you’ve approached them.”
Sam also emphasised the importance of managing change positively.
She said, “MTD is happening. HMRC is writing to clients. So, for us, it’s about saying ‘we’re ready, we’re here to support you, and we’re going to simplify this step by step’.”
Visit the Sage MTD for accountants and bookkeepers help centre for advice and tools on segmenting your clients.
2. Quarterly updates: Not tax returns but a real shift in behaviour
There’s still a lot of confusion around what MTD for Income Tax’s quarterly updates actually mean.
At Accountex London, HMRC clarified that quarterly updates are not tax returns.
Instead, they’re rolling summaries of income and expenses, designed to:
- Encourage good digital recordkeeping
- Enable real-time tax forecasting
- Shift practices toward a more agile, advisory-led service model.
Sam pointed out that quarterly updates are much less daunting than many clients fear.
She said, “The quarterly update really is just a click of a button—so long as we’re getting the information in from the client in a timely manner.”
Craig Ogilvie, director of Making Tax Digital at HMRC, explained that these quarterly updates were deliberately designed to spark behavioural change—encouraging clients to build digital habits and improve record accuracy throughout the year.
He said, “They are cumulative and adjustable. If you get something wrong, fix it in the next update. The point is to support good digital habits, not punish mistakes.”
MTD’s quarterly updates encourage clients to keep records up to date, making it easier for accountants to review and submit data, reducing last-minute admin.
The shift to MTD is a chance to build a better practice
More accurate, real-time tax estimates
Clients gain early visibility into their likely tax bill, helping them plan and avoid last-minute panic.
HMRC is also starting to prepopulate tax liability estimates using submitted quarterly data and information from payroll, CIS, and other sources, making these estimates more comprehensive.
Regular touchpoints enable proactive advice
Rather than speaking to clients once a year, accountants can shift to quarterly check-ins—turning compliance into an advisory opportunity.
Upsell opportunities
More frequent contact creates natural openings to offer cash flow forecasting, tax planning, and budgeting services (among others)—especially when positioned as risk-reduction or strategic planning.
Early detection of issues
Quarterly reviews help you spot anomalies such as missing data, miscategorised expenses, or underreported income long before year-end.
This means fewer problems for you to solve down the line and a better experience for your clients.
Better use of HMRC nudging and prompts
With more timely data, HMRC can alert practices to missing submissions or late filings—giving accountants and bookkeepers even more reason to stay ahead.
As Craig from HMRC summarised, “It’s not just a filing requirement, it’s about unlocking better conversations.”
Ultimately, quarterly updates will support better decisions, deeper relationships, and a more modern, responsive practice model for you and clients alike.
3. Why you should start testing now
One of the strongest and most consistent calls to action at Accountex London was this: start testing MTD for Income Tax now.
Joining the pilot programme is about future-proofing your practice.
As Craig from HMRC explained, practices that participate in testing gain real-time insight, hands-on experience, and tailored support that won’t be available during the full rollout of MTD for Income Tax.
He said, “Testing helps you understand your processes, pricing, and how to better serve clients.
Chris from Sage echoed this sentiment: “If you don’t commit to testing, I think you will be less prepared.”
What practices get from testing
- Dedicated HMRC support—including a priority phone line and guidance from experienced customer service teams based in the UK.
- No penalties for late filings during the test period, offering a low-risk space to learn.
- Practical insight into how your practice operates under MTD for Income Tax—before it’s mandated.
Testing helps you answer critical operational questions
- How will we structure our MTD for Income Tax pricing—fixed fee, bundled, or usage-based?
- What level of bookkeeping will clients expect or need?
- Who does what? Will clients enter their own records, or will my team manage it all?
- Can our current tech stack handle MTD for Income Tax submissions smoothly, or do we need to change software or retrain staff?
Craig also highlighted that participating in testing gives you access to automated reminders, HMRC prompts, tax estimation tools, and visibility over cumulative quarterly updates—allowing you to shape a more predictive, not reactive, service.
Sam’s practice is part of the MTD for Income Tax beta programme, so she’s seen the system evolve in real time.
She said, “We’ve had a client in the beta with HMRC right from the start.
“There have been some issues along the way, but HMRC and Sage have worked together to make sure the transition is as smooth as possible.”
Carianne Pope from Pope Accountancy Services advised: “Start now, even if it means giving up some time to take part in the beta testing.
“To make things easier for my clients, I’m making sure I’m involved in the beta to gain the knowledge and support them moving forward.”
One of the most reassuring takeaways from the MTD Q&A session at Accountex London was this: you’re not expected to do it alone.
HMRC has made significant strides to ensure that practices have the tools, support, and flexibility to succeed.
From HMRC:
- Multiple agent access: changing the game for collaborative practices. Bookkeepers (as “support agents”) can handle day-to-day updates, while accountants manage the final submission. As Craig from HMRC put it: “It’s been one of the strongest pieces of feedback we’ve had. We’re building it now so you can allocate access across roles before mandation begins.”
- Agent services account upgrades: a simplified setup flow for linking existing clients and gaining MTD for Income Tax access—removing previous friction.
- New penalty system: a fairer, points-based approach to late filings and payments, designed to encourage learning, not punish early mistakes.
For example, a single missed quarterly update doesn’t trigger a fine, but multiple misses will accumulate points, leading to a penalty.
During testing, no penalties are applied, giving you space to learn.
How to simplify MTD for Income Tax workflows
Whether you’re supporting sole traders, landlords, or complex hybrid clients, the software ecosystem is ready to help:
- Client segmentation and tagging: group clients based on their MTD for Income Tax wave, track progress, and automate follow-ups, all from one view, without switching between spreadsheets.
- Prebuilt communication templates: use Sage for Accountants to notify clients about deadlines, request missing information, or explain the impact of MTD.
- Practice success managers: one-to-one support is still key. Sage experts work directly with practices to tailor MTD rollout plans, blending technology with a personal touch.
- AutoEntry for record-keeping: receipt capture and invoice entry are no longer manual chores. With AutoEntry, practices automate digital recordkeeping—helping clients meet the new requirements without friction.
- Sage Accounting: real-time dashboards, seamless quarterly submissions, and built-in AI insights give practices a complete picture.
- Sage Copilot: you can use it to tailor emails, flag missing data, address upcoming client deadlines, and identify new advisory opportunities, surfacing the correct info before you need it.
Together, these tools give you back what matters most: time—to spend advising clients, growing your practice, or simply breathe easier during tax season.
Sam from SJCM Accountancy shared how her practice tailors software onboarding based on client needs.
She said, “We can put clients into software that starts at a suitable level.
“If they’re growing their business, they can move into the next level once they’re comfortable and confident.”
Top tip
Before April 2026, consider doing a tech audit:
- Is your software integrated and ready for MTD for Income Tax workflows?
- Do your clients know which tools or software they’ll work with, such as Sage Accounting?
- Have you turned on multiple-agent access for bookkeepers and internal teams?
Final thoughts: The time to act is now
Making Tax Digital for Income Tax offers you the perfect opportunity to rebuild workflows, reshape client relationships, and redefine your value as a modern accountancy practice.
Practices that embrace MTD for Income Tax today will not only stay compliant but also use it as a springboard to run more efficient, profitable, and scalable businesses.
As the experts at Accountex London 2025 made clear, the support, tools, and insights are already here, but you need to act.
“This is our opportunity to really work with clients to push forward—and get our practices running exactly how we want them to”
Sam Mitcham, SJCM Accountancy
Your 3 step action plan
1. Segment your clients
Use digital tools to identify which clients fall into the April 2026 wave and start those conversations now.
2. Join the MTD for Income Tax testing programme
Get hands-on experience, early access to support, and a stress-free space to refine your approach.
3. Use digital tools to remove friction
Automate data collection, streamline communications, and prepare your team for advisory-led service.
“In five years, I think we’ll look back and say this transformed the way we work, for the better”
Chris Downing, Sage
The only question is: will your practice be ahead of the curve or playing catch up? Now’s the time to act.
The accountant’s guide to Making Tax Digital for Income Tax
Download this free interactive guide to developing your practice approach to Making Tax Digital for Income Tax.
Download here
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