In partnership with HMRC, here is the first of a series of tips on preparing for MTD.

As the UK gets ready to transition to Making Tax Digital (MTD) for Income Tax, accountants and bookkeepers play a crucial role in helping clients adapt.

With mandatory changes rolling out from April 2026, now is the time to prepare. This three-part series will help you get ready for these changes, providing top tips on:

• getting ready – laying the groundwork
• getting set – tools and sign-up
•  go live – managing MTD in practice.

Success starts with planning and prioritisation to get yourself ready for MTD. Let’s break down how you and your firm can stay ahead of the curve.

Understand the key changes to MTD for Income Tax and penalty reform

Before you can support your clients, make sure you're up to speed on the essentials:

• from 6 April 2026, some sole traders and landlords must use MTD compatible software to record income and expenses, based on their total annual income from self-employment and property.
• they will need to use software that works with Making Tax Digital for Income Tax to:
  - create, store and correct digital records of self-employment and property income and expenses
  - send quarterly updates to HMRC
  - submit a tax return by 31 January the following year.
• penalty reform: a new points-based system that targets persistent non-compliance rather than occasional mistakes – designed to be fairer and more proportionate.

Understand how HMRC will calculate qualifying income

It’s important you understand what counts as qualifying income from self-employment or property for your clients ahead of MTD mandation.

Qualifying income includes:

• self-employment income
• property income (eg rental income).

Find out more about understanding your client’s qualifying income

It excludes:

• PAYE income
• dividends (even from your own company)
• partnership income.

HMRC uses gross income (turnover) before deducted expenses to assess eligibility.

To measure whether you exceed the threshold for a tax year, HMRC looks at your client’s Self Assessment return from two years earlier. If your client has a non-standard accounting period, HMRC may annualise the income to assess eligibility.

For new businesses, MTD won’t apply until your client has to submit a tax return. However, it is a good idea to sign your client up early to help them get used to the process.

If your clients want to find out more, you can send them to this page which explains how they can get ready for the new way to do tax returns.

Compatible software: update

HMRC has been working to enhance the support available to users selecting Making Tax Digital (MTD) for Income Tax compatible software. We’re excited to launch a new and improved Software Choices tool (MVP: Minimum Viable Product), designed to help users find the right product for their needs.

This new tool builds on the existing Software Choices guidance page, which has also been significantly updated. It reflects extensive user research and close collaboration with external delivery partners and stakeholders, ensuring it is shaped by real user needs and experiences.

Further resources

Visit ACCA's Making tax digital hub

Don’t miss these MTD webinars:

MTD and property by Rebecca Benneyworth
2 September, 12.30pm-1.30pm

MTD for income tax: how to prepare by Ros Martin
9 September, 9.30am-12.30pm