Accountants have no time to waste in getting their clients signed up for Making Tax Digital (MTD) for Income Tax. That was the warning from Mercia’s latest Insight from the Experts event, MTD: Getting Ready. Those with qualifying income over £50,000 in the 2024/25 tax year will need to use MTD from next April. Attendees at the event, which was available free to Mercia Members, heard what they need to do to prepare for the introduction of MTD for Income Tax.
Qualifying income
For the first phase of MTD for Income Tax the mandated income types are property (including foreign property) and self-employment for those not in a partnership.
Those that qualify will legally be required to use MTD from the following dates:
- April 2026, if qualifying income is over £50,000 in the 2024/25 tax year
- April 2027, if qualifying income is over £30,000 in the 2025/26 tax year
- April 2028, if qualifying income is over £20,000 in the 2026/27 tax year.
Running out of time
Rebecca Benneyworth, lecturer and writer on small business tax issues and sole practitioner, says: ‘Every client will need to be signed up. You need a list of your 2026 clients, if you’ve done their tax returns you know who they are. You probably know who they are even if you haven’t down their 2024/25 return.
‘You will need to be signing them up. It takes about five minutes and it is not good leaving it all to February if you have 200 clients to sign up because you’ll run out of time.
‘You only ever sign everyone up once. You can let clients sign up themselves but I don’t recommend it.’
Make a list
Benneyworth recommends making a list of those clients that qualify for the first phase of MTD. For each client their National Insurance number, date of birth and Unique Taxpayer Reference number is needed.
Once that information has been gathered accountants will need go to their Agent Services Account, scroll down to MTD and follow the link to sign up.
MTD will introduce the need to keep digital records and file quarterly updates. A final MTD return will be used instead of the current HMRC online return but the deadline for submission of the final return and the payment dates will stay the same.
Largely identical
Benneyworth says: ‘Filing by 31 January is pretty much identical to what we do now. The picture as a whole between the update and the end of year filing will result in the same outcome. That is all income will need to be declared to HMRC, all claims will have to be in, the tax will have been calculated by HMRC and the taxpayer will know how much to pay.
‘The end result is largely identical but the route by which you get there will differ. That’s going to impact on us particularly as advisors to our clients because we’ll have to think about how we will manage doing things in a different way.’
Looking really healthy
Sam Wood, MTD: Agent Lead at HMRC provided an update at the event on the current state of beta testing for MTD for Income Tax.
Wood says: ‘Testing numbers are looking really healthy. We have about 3,500 testing at the moment and another couple of thousand ready to join next year. If you sign up then you have the option to join testing. We’ve got more people signing up because they want to do the testing.
‘We’ve had a really good spread of income types, which is important. It wouldn’t be right if we had 3,000 people who just had property, or who just had a sole trade. We want a spread for testing.
‘We’ve had a good spread of software as well across our 30 software providers.’
How we can help
HMRC has resources available for accountants who need more information and guidance on MTD for Income Tax. Agent accounts can be created here, while more information on quarterly updates can be found here.
Mercia’s MTD - What you Need to Know in 2025 course is available online now. It covers practical points to consider in the run up to April 2026, an update on regulations and an overview of penalties for late submission and late payment.