Contents
- How the work changes from annual to quarterly
- Pressures MTD puts on a firm
- What to do now
- MTD and your own plans for the firm
- Questions
General information for practice owners, current at the time of writing (July 2026). Figures are as reported by industry sources; rules and deadlines change — check the current position and take your own advice.
Making Tax Digital for Income Tax (MTD for IT) becomes mandatory from 6 April 2026 for sole traders and landlords with qualifying income above £50,000, with lower thresholds following in later years. For clients it means new software, digital records and quarterly submissions. For practice owners it also changes the firm: its workflow, its capacity and its economics.
How the work changes from annual to quarterly
Under the old system, a sole trader's tax was in effect a once-a-year job: gather the records, prepare the return, file it. MTD for IT replaces that with digital record-keeping, quarterly updates and an annual finalisation for every affected client. A job the firm did once a year now needs contact with the client several times a year. The work happens more often, and each quarterly cycle brings its own coordination, chasing and review.
Pressures MTD puts on a firm
1. Capacity
Quarterly cycles across a large part of your client base, on top of existing work, need a lot of extra capacity. They arrive while good staff are hard to recruit and retain. An already-stretched team cannot absorb four times as many client contacts without help.
2. Software and process
Firms need compatible software, reliable digital record-keeping and a repeatable quarterly routine that is written down and does not depend on one person. Firms that standardise the process before the volume arrives will cope better than those that work it out as they go, and the first quarter will show the difference.
3. Pricing
More frequent work at the same annual fee erodes margin fast. Affected clients will usually need re-pricing to reflect the quarterly service, and MTD gives the firm a clear, defensible reason to raise it with them.
The capacity maths
Say 120 of your clients fall into the first MTD wave. If each quarterly cycle adds even an hour of coordination, review and submission per client, that's ~120 hours a quarter — roughly three extra full weeks of work every quarter, or a meaningful slice of a full-time person, purely in added process. The figure grows as thresholds fall and more clients come into scope. The firm has to find that capacity through new hires, automation, outsourcing, or re-pricing to fund it.
What to do now
- Sort your clients by start date: who is in scope from April 2026 (over £50k) and who follows as thresholds fall.
- Standardise the quarterly process before the volume arrives, with a documented, repeatable routine.
- Re-price the affected work to reflect the new frequency and service level.
- Free capacity by moving routine production away from your senior team, through automation, a delivery partner or both. See outsourcing your back office.
MTD and your own plans for the firm
MTD is also a sensible point to consider your own plans. If the next few years look like constant quarterly compliance on thin margins, ask whether the firm is set up for that, and whether you want to run it for another decade. For some owners the answer is yes, with the right systems and capacity. For others, the rising burden is a reason to start planning succession. In both cases the first steps are to free capacity, standardise and re-price. A firm that handles MTD calmly is easier to run and more valuable to sell.
