Making Tax Digital: What UK accountants must focus on now

With new rules coming into effect from April 2026, Making Tax Digital for Income Tax (MTD for IT) is changing the way sole traders and landlords report to HMRC. UK accountants are at the heart of this shift, helping clients stay compliant and get ahead of the curve.

For self-employed taxpayers earning over £50,000, quarterly income updates and digital record-keeping will soon become the norm. 

A recent survey found over 80% of accountants see MTD as their biggest challenge and opportunity this year. But one in three say they’re not fully ready. There’s still confusion around reporting periods, what HMRC expects, and how to support clients through the change.  

That’s why now is the time to act. Moving to digital tools would not only tick a box for compliance, it helps clients save time, avoid errors, and get better visibility of their finances. Here’s a breakdown of what accountants need to know to stay in control. 

Why Making Tax Digital matters 

The benefits of MTD go well beyond compliance. It is an opportunity to streamline your practice and deliver greater value to clients. 

With MTD-compatible software, manual data entry and silly errors will become a thing of the past. Automated tax calculations and categorisations reduce the risk of mistakes and digital tools provide better visibility into cash flow. 

Digital record-keeping also eliminates the hassle of chasing for missing paperwork or receipts, by keeping everything safely stored online.  

However, many small businesses continue to rely on spreadsheets or fragmented systems. Accountants are in a prime position to guide clients toward suitable systems, helping them to  take proactive steps now so they are prepared for the change. 

Key Deadlines and Compliance Requirements 

With MTD, each taxpayer must submit one update per quarter, due one month after each period ends. For example, income from 6 April to 5 July must be filed by 5 August. Aside from the deadlines, there are 3 key details accountants need to keep in mind. 

1. Clear rollout timelines: HMRC is implementing MTD for Income Tax Self Assessment (ITSA) in stages including: 

1. April 2026: Mandatory for self-employed individuals and landlords with income over £50,000. 

1. April 2027: Threshold drops to £30,000.
   April 2028: Further reduction to £20,000 confirmed. 

1. Quarterly Reporting Simplified: Many accounting platforms allow you to use a cumulative model, reporting year-to-date figures each quarter. HMRC allows (and often encourages) this, as it makes submissions easier to manage and avoids the need to reconcile strict quarter-only totals. That said, quarter-specific submissions are also an option for those who prefer a more granular view.  

1. Calendar Quarters vs. Tax Quarters: Another common question relates to calendar period selection. Even if a business elects to use calendar quarters, HMRC still starts the first year of reporting from 6 April—not 1 April. This five-day discrepancy avoids duplicate reporting and ensures consistency across systems. To handle this, agents can adjust using HMRC’s Business Source Adjustable Summary (BSAS) at year-end, shift transactions into the next quarter (if on cash basis), or apply manual journal entries.  

By knowing these quirks in advance, accountants can keep their clients on track, avoid delays, and navigate the transition with confidence. 

Understanding the Penalties for Non-Compliance 

As your clients shift to Making Tax Digital, it’s essential you understand HMRC’s new penalty framework, and help clients avoid costly slip-ups. The system is now points-based. Each time a client misses a submission deadline, they receive one point. After four points, a £200 penalty kicks in. Additional missed deadlines lead to further fines. 

Points can expire, but only with consistent compliance: for quarterly filers, all points are cleared after 24 months of on-time submissions. A separate structure applies for late payments. If tax is paid more than 15 days late, a 2% penalty is charged, with further increases the longer it remains unpaid. 

By proactively tracking submission schedules and advising clients on payment timelines, you can prevent avoidable penalties and build trust as a reliable compliance partner. 

Why Early Preparation is Key 

Waiting until the last minute could leave your clients scrambling,  and you under pressure. By starting early, you’ll have time to test digital solutions, identify and fix technical issues, and build confidence in the new processes before MTD for IT goes live. 

The rollout is already underway. As of 6th August, QuickBooks had submitted 303 quarterly updates on behalf of 393 pilot participants. Of these, around 30% of the submissions came directly from individuals, not-represented by an agent, showing growing confidence in digital tools. 

Early adopters are already seeing the upside: better data accuracy, fewer manual tasks, improved cash flow visibility, and stronger advisory relationships with clients. One of them, Rob Smith, an electrician from Amber Electrical Services NE, shared his experience. He sees it as an opportunity to stay organised and prepared.

Thanks to the guidance from his accountant and his own willingness to adapt, he felt confident participating in the MTD pilot and continues to value the peace of mind that comes from staying on top of his financial records. For Rob, the greatest benefit of digital tools is the reduced stress that comes with well-kept books. 

With less than a year to go, now is the time to take control. Understand the reporting deadlines, choose software that fits your clients’ needs, and embed new workflows into your practice before you put unnecessary pressure on your operations. 

By Fer Amenedo, Principal Product Manager for MTD at Intuit QuickBooks