This Sage article highlights the importance of segmenting clients and preparing for the changes
With Making Tax Digital (MTD) for Income Tax starting in April 2026, accountants and bookkeepers must be ready to support their clients effectively. This new legislation impacts self-employed individuals and landlords earning over £50,000 from the 2024/25 tax year onwards.
Key points:
Client segmentation
- Identify which clients fall into the April 2026 wave and start conversations early.
- Use digital tools to group clients by wave and automate communication.
Quarterly updates
- Quarterly updates are not tax returns but rolling summaries of income and expenses.
- These updates encourage good digital recordkeeping and real-time tax forecasting.
Testing and preparation
- Start testing MTD for Income Tax now to gain hands-on experience and tailored support.
- Testing helps practices understand processes, pricing and client needs.
Tools and support
- HMRC provides tools and support, including multiple agent access and simplified setup flows.
- Use software like Sage for Accountants to automate data collection and streamline communications.
Benefits of MTD for Income Tax:
- more accurate tax estimates and proactive advice
- opportunities for upselling services like cash flow forecasting and tax planning
- early detection of issues and better use of HMRC nudging and prompts.
Final thoughts:
- Embrace MTD for Income Tax to rebuild workflows, reshape client relationships, and redefine your practice's value.
- Act now to stay ahead of the curve and run a more efficient, profitable, and scalable business.
Read the full article from Sage
Further resources
Professional Conduct in Relation to Taxation (PCRT guidance on MTD ITSA)
ACCA engagement letter templates (Schedule of Services for MTD ITSA)
