How Will Making Tax Digital Affect Accountants?

Making Tax Digital for Income Tax(MTD) is a significant shift in UK tax administration. HMRC’s phased approach means changes are already underway, with more to come. From VAT submissions that started in 2019 to the upcoming Income Tax Self-Assessment (ITSA) requirements, MTD will likely affect every aspect of your practice operations. You’ll need to help clients adapt to digital record-keeping and deal with quarterly submissions.

So, how will Making Tax Digital affect accountants? There will be challenges, no doubt, but MTD also opens the door to stronger client relationships, streamlined processes, and greater advisory value. The key is preparation, and that work starts now.

Understanding Making Tax Digital Requirements

MTD is about reducing tax errors by requiring digital record-keeping and quarterly submissions through HMRC-approved software. HMRC is moving away from traditional annual returns to real-time tax management.

For accountants, it changes how records are kept, how often they’re submitted, and how clients engage with their finances. Client data must be captured, processed, and submitted through MTD-compatible software, creating new technical requirements and compliance obligations that extend far beyond simple digitisation.

What MTD covers today

Right now, Making Tax Digital applies mainly to VAT-registered businesses. Those with taxable turnover above £85,000 are required to keep digital records and submit VAT returns via MTD-compatible software (that can connect directly to HMRC’s APIs). There are strict penalties for late or incorrect submissions. Even businesses under the threshold can opt in.

Future expansion (ITSA and beyond)

From 6 April 2026, MTD will extend to Income Tax Self-Assessment (ITSA) for sole traders and landlords whose annual income is above £50,000. Quarterly digital reporting will also replace annual self-assessment returns, which is sure to add to some clients’ tax administration burden. From April 2027, the threshold will lower to £30,000. Corporation Tax will follow in due course, although HMRC hasn’t confirmed exact timelines. The phased approach allows practices to adapt gradually – you’ll find an increasing number of clients will be affected, who will need consistent guidance and support.

How Will MTD Change Accountants’ Workflows?

Traditional accounting workflows built around annual cycles are on the way out, and you’ll likely need to touch base with clients more frequently, especially those clients who need more support to get up and running with digital software…

Technology and software integration

One of the biggest shifts under Making Tax Digital is the requirement to use MTD-compatible software, i.e. accounting platforms that can link directly to HMRC’s systems to submit digital records and tax returns. Popular examples include Xero, QuickBooks, FreeAgent, Sage, and TaxCalc, all of which have developed functionality specifically for MTD compliance. There are many more, though – HMRC has a tool to help you find the right software.

For many clients, this will mean moving away from spreadsheets or manual record-keeping and into a cloud-based system for the first time. That’s where you’ll play a critical role. You’ll need to:

• Recommend the right platform – not every tool suits every business, so it’s about matching clients with software that fits their size, industry, and digital capability.
• Support setup and migration – whether it’s moving data across from spreadsheets or importing years of historic records, clients will look to you to get them started smoothly.
• Provide training – many clients won’t be confident with cloud tools. Even simple screen-share tutorials or group workshops can help them get comfortable with tasks like uploading invoices or reconciling bank feeds.
• Review and monitor usage – it’s not enough to just set it up; you’ll need to check that clients are actually keeping their records correctly in line with MTD requirements.

You may need to review your own internal systems and train your team on new platforms as part of this process.

Administrative burdens vs. efficiency gains

The initial Making Tax Digital implementation will create additional administrative overhead. Staff will need training, clients will require education, software will need to be set up, and quarterly reporting means more submissions. The expectation is, though, that digital record-keeping will help to reduce errors and streamline the process to avoid the inevitable annual rush. Real-time data processing can help make reconciliation faster, and automation should deliver efficiency gains.

Making Tax Digital for Accountants

It will take some time to set everything up, and that might initially feel onerous, but ultimately, you can look forward to long-term benefits: reduced manual data entry, fewer errors, and stronger insights for advisory work. The difference from the old way of working is clear – instead of year-end shoeboxes of receipts or last-minute spreadsheet uploads, records are now kept live and accurate throughout the year.

That makes compliance smoother for clients, and it positions you as the trusted guide through this digital transition. Starting early gives you time to properly prepare without the pressure of approaching deadlines or panicked clients.

Practical steps to take now

1. Audit your client base – identify who will be affected first (e.g. sole traders earning £50,000+).
2. Review the different software platforms – evaluate functionality, integration capabilities, and support quality. Test platforms with pilot clients before full rollout to identify issues and refine procedures.
3. Plan your client communications – create clear, jargon-free guides to explain MTD requirements, timelines, and service changes. Host workshops or webinars to prepare clients for the shift.
4. Build review checkpoints – schedule quarterly or monthly check-ins to ensure digital records are maintained properly.

How ICPA supports members

ICPA members don’t have to face MTD alone. Membership includes access to Tolley+ Guidance, including specialist material from leading tax experts on Making Tax Digital for ITSA, as well as ICPA’s own MTD guide written specifically for independent accountants. This guide covers:

• Quarterly reporting
• Finalisation statements
• Who is affected and from when?
• Exemption from MTD
• Qualifying income
• Landlords and jointly owned property
• Information required by HMRC
• Reporting categories
• Adjustments and claims
• Software, spreadsheets, and submissions
• Income sources
• Payment of tax

On top of that, ICPA members benefit from expert advice lines and CPD resources to keep your MTD knowledge current. ICPA support is designed to take the pressure off and give you confidence in every client conversation.

How Will Making Tax Digital Affect Accountants?

MTD is likely to reshape compliance, change workflows, and demand greater client support. But for practices that prepare, it’s also an opportunity to streamline your processes, strengthen client relationships, and move into a more valuable advisory role.

While the deadlines for ITSA may feel a ways off, waiting until the last minute will only create stress for both you and your clients. By starting now (auditing your clients, upskilling in digital tools, and leaning on resources like those available through ICPA), you’ll be ready to navigate the changes with confidence. Join ICPA to ensure your practice is fully equipped for the digital future of accounting and tax compliance.