MTD for Income Tax: How to switch your practice from Self Assessment

The era of MTD for Income Tax is upon us. But Self Assessment isn’t going away anytime soon.

The goal moving forward for practices is to find a way to support all sole traders and landlords, regardless of which HMRC path they’re following—while also supporting client growth.

Practices need to find a way to somehow deliver what clients require: from a light touch, collaborative approach for those more confident in business finances, to a full-service offering for those who have traditionally relied heavily upon their accountant. Even in the MTD era, the latter is still entirely possible—and still desired by some clients, of course.

Providing this broad support is what this article is all about. Here’s what we discuss.

MTD for Income Tax: Redesigning your procedures and workflows

What we’re discussing is technology-driven.

Not only is the clue right there in the title with MTD—it’s about digitalising tax, after all—but applied and smart use of technology is the only way accountants and bookkeepers are going to get through without serious stress.

This means deploying the right software and going digital-first to transition from Self Assessment to MTD as the decade progresses—and as the various milestone deadlines are passed in 2026, 2027 and 2028 (and possibly beyond).

Meanwhile, as an accountant, you’ll also have to help many of your clients along the same journey. Their success is your success. Their growth is your growth.

Your overarching digital strategy needs to be able to deliver for the “do-it-with-me” clients, who need a partner, and a full service “do-it-for-me” approach for clients who need that, too.

Others will prefer support based on “show me,” in which you’ll offer them guidance but, essentially, they’ll do the majority of work themselves.

You need to support MTD’s quarterly check-ins, bearing in mind these can (and maybe should) be more frequent if clients desire it. You need to support the MTD tax return, as well as traditional yearly tax return checkpoints for Self Assessment happening at the same time. All while meeting ongoing quarterly and monthly VAT deadlines, of course.

The fundamental truth is this: MTD for Income Tax shifts accountancy to a continuous process rather than one that leads up to the final end of year calculations. This is a monumental shift, and it needs to form the basis of any changes.

Whatever support your clients require, you should already be redesigning your own procedures and workflows, your data processing, and the way you interact with your clients to make them all digital-first.

Where technology helps with old vs new

Technology increasingly allows for light touch reconciliations.

Whereas under the old systems, you would typically review and match every item manually, the vast majority of these reconciliations can now be carried out automatically.

This is particularly true for your clients whose businesses include high transaction volumes and those who produce simple, clear, consistent data. It works well for data sets such as bank account and credit card statements.

While they let technology manage the majority of transactions, your teams can look out for exceptions and anything that might raise a red flag.

However, groundbreaking agentic AI technology such as that provided by Sage Copilot can even handle this element.

It’s worth adding, though, that light touch reconciliations require high quality, accurately collated data—via technology that can easily and correctly identify these anomalies. This will enable it to approve only those transactions that are legitimate.

The decades old mantra of technology has always been “garbage in, garbage out,” and so it’s essential that your clients record and submit data correctly.

Direct bank feeds from clients can help here, as they create accurate, timely digital records, as can data entry automation tools like AutoEntry, that can take snapshots of receipts or bills and then automatically transfer the data to you for processing (or, more often than not, can be automatically processed via AI rules).

You can use technology like this to help automate processes and reduce the chance of manual data entry errors that can occur when human beings have to copy from one statement or spreadsheet to another.

You can then set up this software to categorise the various items that pop up on a bank feed for your HMRC submissions and interactions.

For instance, you’ll need to strip out your clients’ non-taxable income and any personal expenditure they might have. You should also adjust any items of income that are net of fees, commissions, or charges before doing clients’ tax returns to ensure that you’re declaring gross income but then netting off these expenses.

Build a digital recordkeeping stack

The fundamentals are that you need to build an end-to-end digital record keeping stack.

If you’ve already got one in place, you’ll need to ensure not only that it’s fit for purpose in the age of MTD, but that it’s allowing your practice to run at optimal efficiency. There simply isn’t likely to be any spare human capacity.

This end-to-end digital outlook is important. It’s one step beyond traditional, stand-alone technologies, and the end of processes to which paperwork is fundamental.

Instead, you’ll need to ensure that you’ve got technologies in place that are integrated with each other. This means that they can work together as a single system to manage and process your digital records and those of your clients efficiently and in ways that comply with regulations and cybersecurity protocols. Digital linking is as important as it ever was!

As a result, client income and expenditure can be recorded fully digitally, from the start to the finish.

Your technology stack should ensure that these records of income and outgoings are automatically ingested into quarterly updates before going through to the final year end declaration.

You’ll need to ensure that this happens automatically and seamlessly. Manually typing in figures and details and even copying and pasting them from one source or spreadsheet to another is not only inefficient—the digital linking rule is enter once, and use digital links after. That means no copy and paste, and no rekeying, of the core tax records.

Instead, you should be deploying software that is fully integrated and offers an end-to-end solution for you and your clients so that there are no messy transfers or transitions between your systems and those of your clients.

Bridging software: A stopgap measure only

You might find that some clients on spreadsheets are struggling with the transition, in which case you could consider using bridging software.

This provides a link between old style accounting and record-keeping procedures such as spreadsheets and HMRC’s systems on the other.

But, at this stage in the MTD for Income Tax journey bridging software can be regarded as only a stopgap. This is what HMRC says:

“Keep in mind, spreadsheets won’t have the same timesaving, user-friendly features as many all-in-one bookkeeping apps.”

If clients do have to use it, make it clear that they still need to go through the full digitisation process including the use of bookkeeping software as soon as possible. Half measures are only going to make life worse for them, and you.

As you implement the digitisation process, you might find that other clients also have their own, specific requirements.

Sole traders and smaller landlords, for instance, will probably find mobile-first bookkeeping most useful. This is entirely feasible. The days of always requiring a desktop PC are gone.

Similarly, you should already be encouraging other clients whose work means that they’re out and about to use apps on their smartphones. This can be useful for making and taking payments that feed directly into the system in real time and, as mentioned earlier, for taking photos of receipts whose amounts, details and dates can be automatically read by the technology and fed into the system.

Implementing Client Management Software

As you move to a digital-first way of working, it’s also a good idea to implement client management software.

This can manage tasks and workflows such as notifications for deadlines for submissions as well as automatically recording billable hours.

Increasingly, specialist agentic AI can take care of critical tasks. Sage’s MTD for IT Agent can automatically complete many tasks.

This streamlines the entire MTD process by automating complex, interconnected tasks. For example, it anticipates needs, organises data, and highlights anomalies—without you needing to ask. Practices can save an average of five hours per week and focus more on strategic work. It significantly reduces admin by up to 80% with features such as autogenerating quarterly submission reports, proactive document chasing via multiple communication channels, and a 40% reduction in manual invoice handling.

Other parts of client management software provide insights into staff workloads and performance as well as revealing the profitability of particular clients. You’ll be able to identify more quickly and accurately whether you’re charging enough—or even overcharging—for each account.

As communication with clients becomes more frequent and data is shared more often, client management systems can help with client management. Routine emails, requests for permissions and approvals plus notifications can be managed automatically.

Similarly, client management systems can enable you to share documents and data with clients as well as managing e-signatures more quickly and easily. You can also use it to set up client interaction portals so that your clients know how to submit data and share documents as well as signing them digitally.

Making Tax Digital: What your teams need to know

As well as implementing these new technologies, you should be training staff and helping them to develop a new mindset.

They need to become familiar now with cloud bookkeeping software and to be ready to review and understand data rather than simply inputting it manually and using it to carry out calculations. They should be ready to identify exceptions to this data and their significance as well as understanding more generally how they should interact with MTD for Income Tax technology.

Your teams need to be ready to answer clients’ questions and to guide them on how to comply with the new deadlines, requirements and ways of working. They should be showing clients how to use the new technologies and checking on their progress as they provide ongoing support.

This is a major change to the way that accountants work and interact with their clients. However, you can lead them through the process and cement your role as business advisors as well as ensuring that you’re compliant with HMRC’s new digital technology and requirements. Better still, reducing repetitive, manual processes will free up your teams to carry out more interesting, fulfilling tasks and to add more value.