MTD for Income Tax: Why Accountancy Firms Need Capacity, Not Just Software
Making Tax Digital for Income Tax is often spoken about as a software change.
For accountancy firms, the bigger issue is capacity.
From 6 April 2026, sole traders and landlords with qualifying income over £50,000 will need to comply with MTD for Income Tax. The threshold then reduces to £30,000 from April 2027 and £20,000 from April 2028.
This means firms will need to deal with more frequent bookkeeping, quarterly updates, client chasing, software support and review work.
The question is not just:
“Which software should we use?”
The better question is:
“Who is actually going to do the work?”
Software will not solve everything.
Software can help with digital records and submissions, but it will not:
- chase clients for missing information;
- review poor bookkeeping;
- fix disconnected bank feeds;
- explain errors to clients;
- or protect your team from extra workload.
MTD will create more touchpoints with clients throughout the year. Without the right process and support, this can quickly become another pressure point for already busy firms.
The risk for accountancy practices
Many firms are already stretched.
Adding quarterly MTD work on top of existing accounts, VAT, payroll and tax return deadlines could create real pressure.
The risks are clear:
- staff become overloaded;
- deadlines become harder to manage;
- service quality drops;
- partners spend more time firefighting;
- and extra work is absorbed without extra fees.
MTD should not become unpaid additional work.
It needs to be treated as a new service line with clear pricing, clear responsibilities and a clear delivery process.
The opportunity
Handled properly, MTD can be positive for firms.
It gives practices a reason to speak to clients more regularly, improve bookkeeping quality and move towards more recurring monthly services.
Better records also create better conversations around tax planning, cash flow, profitability and business decisions.
But this only happens if the compliance work is under control.
What firms should do now
Before MTD begins, accountancy firms should:
- identify which clients are likely to be in scope;
- review the quality of their bookkeeping;
- decide who will handle quarterly updates;
- update fees where extra work is required;
- create a repeatable internal workflow;
- and consider whether the existing team has enough capacity.
Waiting until the first quarterly deadline will make the process harder.
Where outsourcing can help
Outsourcing gives firms flexible capacity without immediately hiring more staff.
For MTD, outsourced support can help with:
- bookkeeping;
- bank reconciliations;
- transaction reviews;
- chasing missing records;
- quarterly preparation;
- accounts production;
- and Self Assessment support.
This allows firms to protect their internal team, maintain service standards and build a profitable MTD process.
Final thought
MTD for Income Tax is not just about digital records. It is about how accountancy firms organise and deliver recurring compliance work. The firms that prepare early will be in a much stronger position. The firms that leave it too late may find themselves under pressure.
Need support preparing your firm for MTD?
AIR Outsourcing helps accountancy firms increase capacity, improve workflow and deliver compliance work efficiently.
Get in touch with AIR Outsourcing to discuss how we can support your practice.
