Changing the way accountancy practices work

Making Tax Digital (MTD) is already changing the way many accountancy practices work, but the introduction of further qualifying income thresholds means that another significant group of clients will soon be affected. For accountants, this represents more than simply adapting to new reporting requirements. It creates opportunities to improve client relationships, introduce more efficient working practices and provide additional value to the businesses and individuals they support.

With the next phase of Making Tax Digital for Income Tax due to begin in April 2027, now is a good time for accountancy practices to consider how they will manage the additional responsibilities and prepare their clients for the changes ahead.

Who Will Be Affected by the Next Phase of Making Tax Digital?

Making Tax Digital for Income Tax is being introduced in stages, with the qualifying income threshold gradually reducing.

The current timetable is:

• 6 April 2026: Sole traders and landlords with qualifying income above £50,000.
• 6 April 2027: Sole traders and landlords with qualifying income above £30,000.
• 6 April 2028: Sole traders and landlords with qualifying income above £20,000.

Qualifying income is the combined gross income from self-employment and property, before expenses, rather than profit.

This means that practices which have already prepared clients in the first phase will need to extend their preparations to a considerably larger group. It is also worth remembering that partnerships will be brought into MTD for Income Tax in the future, although a timetable has yet to be announced.

For many practices, the challenge will be identifying affected clients, explaining their responsibilities and ensuring that suitable processes are in place before the relevant start dates.

1. Identify Which Clients Will Be Affected

One of the first steps should be to review your existing client base and identify those who will fall within the next qualifying income thresholds.

Rather than waiting for clients to ask questions, practices should take a proactive approach to identifying who will need to comply and when.

Consider:

• Reviewing Self Assessment returns to identify qualifying income.
• Identifying clients with both self-employment and property income.
• Establishing which clients are likely to need additional support.
• Identifying clients who may struggle with digital record keeping.
• Considering whether any clients may qualify for an exemption.

Having this information available will allow practices to plan their workload, allocate resources and communicate with clients well in advance.

2. Help Clients Understand What Making Tax Digital Means for Them

Although accountants are becoming increasingly familiar with MTD, many clients will have little understanding of what the changes involve.

Some may assume that it simply means submitting their tax return online, while others may be unaware that they will need to maintain digital records and provide quarterly updates.

It is important to explain that MTD for Income Tax introduces several new responsibilities, including:

• Keeping digital records of business and property income and expenses.
• Using HMRC-compatible software.
• Submitting quarterly updates to HMRC.
• Completing an annual tax return using compatible software.
• Continuing to meet the existing tax payment deadlines.

Quarterly updates are summaries of income and expenditure rather than four separate tax returns. Clients will still need to complete their annual tax return and make any necessary adjustments and claims.

The more effectively practices explain these changes, the less time they are likely to spend answering the same questions repeatedly.

How your website can help

Your website could become an important source of information for clients preparing for MTD. A dedicated Making Tax Digital information section could explain the requirements, answer frequently asked questions and provide links to useful HMRC resources.

Rather than having to explain the same information individually to dozens of clients, you can direct them to a comprehensive online resource that is available whenever they need it.

3. Review Your Software and Internal Processes

Making Tax Digital is not simply a change in the way information is submitted to HMRC. It also requires practices to consider how they collect, process and manage client information.

Now is a good time to review whether your existing accounting software and internal processes are suitable for the additional reporting requirements.

Consider:

• Whether your software supports all the required MTD functionality.
• How clients will provide their income and expenditure information.
• Whether clients will maintain their own digital records or rely on your practice.
• How quarterly updates will be reviewed and submitted.
• Whether existing bookkeeping arrangements need to change.

It is also worth reviewing the different levels of support you intend to offer. Some clients may be comfortable maintaining their own digital records, while others will expect their accountant to manage much more of the process.

Having clearly defined service options will help avoid misunderstandings about responsibilities and fees.

4. Consider the Additional Workload and Its Effect on Profitability

One of the biggest challenges for accountancy practices will be managing the additional workload without allowing it to adversely affect profitability.

Although quarterly updates may eventually make information more readily available throughout the year, they also introduce more frequent contact and reporting requirements.

For practices with hundreds of affected clients, the cumulative administrative burden could be considerable.

It is therefore worth considering:

• Whether existing staffing levels will be sufficient.
• How much additional time each client is likely to require.
• Whether additional MTD services should attract separate fees.
• Which processes could be automated.
• How to manage quarterly reporting deadlines efficiently.

There may also be opportunities to use more frequent financial information to provide clients with additional advisory services, such as cash flow monitoring, budgeting and business performance reviews.

Rather than viewing MTD purely as a compliance burden, practices could use it as an opportunity to strengthen their advisory offering and develop more valuable client relationships.

5. Improve Client Communication

Preparing clients for MTD is likely to involve considerably more communication than simply sending an occasional email.

Clients will need to understand what is changing, when they will be affected and what they need to do. Some will require more assistance than others, particularly those who are less confident using digital technology.

A structured communication strategy could include:

• Initial announcements explaining the changes.
• Personalised notifications identifying when individual clients will be affected.
• Regular reminders about preparation and registration.
• Guidance on choosing suitable accounting software.
• Instructions on how and when information should be provided.
• Regular updates as the implementation dates approach.

It is important that communication is not left until the last minute. Giving clients sufficient notice should make the transition considerably easier for both parties.

How your website can help

Your website can support your wider communication strategy by providing a central location for MTD announcements, guidance and updates.

You could create a dedicated resource centre containing articles, downloadable checklists, instructional guides and answers to common questions.

You could also use your website to direct clients towards specific information relevant to their circumstances, reducing the need to repeatedly distribute the same guidance.

6. Make It Easier for Clients to Work With Your Practice

The introduction of MTD provides a good opportunity to review the overall client experience.

If clients are going to be interacting with your practice more frequently, it makes sense to make those interactions as straightforward and convenient as possible.

Consider whether your existing arrangements make it easy for clients to:

• Contact the right person within your practice.
• Arrange appointments or consultations.
• Submit documents and financial information securely.
• Access important guidance and resources.
• Find answers to common questions.
• Understand what information you need from them and when.

Small improvements to these processes can make a considerable difference when dealing with a large client base.

How your website can help

Modern accountancy practice websites can offer considerably more than information about services and contact details.

Online appointment scheduling, secure document-sharing facilities, client portals, enquiry forms and automated notifications can all help streamline communication and reduce routine administration.

If you are considering how these facilities could be incorporated into your own practice website, take a look at our accountant website packages, which offer a range of options for developing a more capable and functional website.

7. Use MTD as an Opportunity to Strengthen Client Relationships

Although MTD introduces additional responsibilities, it also provides an opportunity for accountants to have more meaningful conversations with their clients throughout the year.

With more regular financial information available, practices may be able to identify potential problems earlier, discuss business performance more frequently and provide more timely advice.

For example, rather than simply preparing an annual tax return, accountants could use the information available to help clients understand their financial position, manage cash flow and make better-informed business decisions.

This creates opportunities to move beyond traditional compliance services and demonstrate the wider value of having an accountant.

Your practice’s website can help support this positioning by showcasing advisory services, publishing useful business guidance and demonstrating the expertise available to clients.

8. Turn Your Website into a Making Tax Digital Resource Centre

One of the most useful steps a practice could take is to develop a dedicated Making Tax Digital section within its website. If your website is based on the very popular WordPress platform, then simply creating a category for Making Tax Digital, will allow you to group all related articles within a dedicated sub-directory on your website.

Instead of relying entirely on individual emails and telephone conversations, you could create an online resource that clients can refer to whenever they need information.

This could include:

• An introduction to Making Tax Digital.
• An explanation of who is affected and when.
• Frequently asked questions.
• Guidance on choosing compatible software.
• Instructions for maintaining digital records.
• Information about quarterly reporting.
• Important dates and deadlines.
• Links to relevant HMRC guidance.
• Contact details for clients requiring additional assistance.

You could also publish regular updates as new guidance becomes available, helping to establish your practice as a knowledgeable and reliable source of information.

There is an additional benefit from a marketing perspective. Useful, well-written information can attract visitors through search engines, introduce prospective clients to your practice and demonstrate your expertise before they even make contact.

Preparing for MTD Is Also an Opportunity to Modernise Your Practice

The introduction of Making Tax Digital is another reminder that the accountancy profession is becoming increasingly dependent on digital technology.

Practices that prepare early should be better placed to manage the additional reporting requirements, communicate effectively with clients and identify opportunities to improve their services.

However, preparation should not be restricted to accounting software and internal procedures. It is also worth considering whether your website is equipped to support the changing needs of your practice.

A modern accountancy website can help educate clients, reduce repetitive enquiries, streamline administrative processes and provide convenient access to information and services.

Rather than simply telling visitors what your practice does, it can actively support the way your business operates and the way you look after your clients.

At The Holt Partnership, we believe an accountancy practice website should be much more than an online brochure. With the right planning, content and functionality, it can become a valuable business tool that helps your practice operate more efficiently, deliver a better client experience and make the most of the opportunities created by changes such as Making Tax Digital.