In a recent series of Sage webinars, involving 100s of accountants and bookkeepers, the question was asked: Have you started creating your MTD income tax proposition yet?
Half reported they haven't started. Of the remaining 50%, it was evenly split between those who had plans in their head and those who had begun writing them down.
Which category are you in?
2025: The year MTD really starts
The public beta opens in just five months (April 2025) and this will be the starting horn for the years of work and adaptation for practices and their clients.
One lesson from MTD VAT was that many clients, and indeed many practices, started too late.
Therefore, getting at least some clients onto the public beta before the April 2026 initial mandation date is not only sensible but should be a key goal to avoid future issues like stress and struggling to get support.
Do you understand the scale?
You should rely on your MTD VAT knowledge and experience this time around, but also appreciate the vastly larger scale of those affected by MTD income tax. It is expected that around 780,000 people with business or property income over £50,000 will join the MTD for ITSA service in from April 2026 with a further 970,000 joining from April 2027.
Landlords are expected to be a significant growth area for practices in the coming years, while some sole traders who currently do it themselves may need help adapting to MTD—providing an opportunity to upsell your services.
Even if you have a small number of clients, it's essential to start preparing now. Here are three basic steps to kickstart planning.
3 steps to get started today
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Communication
Communication within the practice is going to be vital. Talk to any staff members and collate your experiences from MTD VAT. Moving forward, MTD income tax is going to fundamentally change how different areas within practices operate as they will need to work much more closely together to share responsibility and workloads. Look to create awareness and upskilling where required.
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Start segmenting your client list
Key to surviving MTD’s introduction for VAT back in 2019 was understanding how clients felt about technology.
For instance, some clients will be tech-savvy and welcome MTD income tax without a second thought, requiring hardly any input from you. However, there will be a sizeable proportion who find accounting and the associated technology daunting. These clients will require the most work, and you'll need to allocate time for them.
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Strengthening your tech stack
There’s no way to avoid redefining your tech stack and ecosystem. There’s the same requirement for a fully digital journey as there is for MTD VAT, so no copying/pasting is allowed, and no manual typing to move figures from one system to another.
It might help to put clients into two broad camps: those who want you to do it all for them, and clients who want you to do it with them.
Sage has solutions for both. With AutoEntry’s new AccountsPrep add-on https://www.autoentry.com/accountsprep, you can take bank statements or other client data through to trial balance by fast-coding transactions as an alternative to using Microsoft Excel. It’s ideal for clients who don’t and never will use accounting software.
For clients that want you to do it with them, collaboration becomes the name of the game—and Sage Accounting https://www.sage.com/en-gb/accountants/bookkeeping-and-digital-record-keeping/ is perfect, offering a variety of plans for client needs ranging from simple to sophisticated, with price tags to match. Sage is one of only 11 software companies already recognised by HMRC as ready for MTD income tax.
