Making Tax Digital for Income Tax: automation for accountants

Making Tax Digital for Income Tax requires sole traders and landlords with qualifying income over £50,000 to keep digital records and send HMRC a quarterly update from recognised software, starting 6 April 2026, with the threshold falling to £30,000 from April 2027 and £20,000 from April 2028. For a small practice, that turns one return a year per client into four quarterly updates plus the return, and automation helps most with the work around the software: collecting papers, categorising transactions and chasing clients.

This is general information from HMRC's guidance, not tax or legal advice.

Who is in scope, and when?

HMRC decides each year from the client's Self Assessment return. Qualifying income is total self-employment and property income before expenses, added together:

Employment income, a partner's share of partnership profit, dividends and pensions do not count. HMRC's own example: £25,000 of rent plus £27,000 of self-employment turnover is £52,000, so that client is in. Some people can get an exemption, for example if they are digitally excluded.

What changes for each client?

• Digital records of self-employment and property income and expenses, kept in software HMRC has recognised. Other income still goes on the return but needs no digital records.
• Four quarterly updates. For standard periods they cover the year to date ending 5 July, 5 October, 5 January and 5 April, and are due by 7 August, 7 November, 7 February and 7 May. Clients whose accounts run 1 April to 31 March should switch to calendar periods before the first update. Each update is a set of category totals, not a tax return.
• A tax return through the software by 31 January after the tax year. Payment dates do not change.
• Penalty points. For 2026 to 2027 HMRC will not give points for late quarterly updates. From the next year, each missed update earns a point, and four points bring a £200 penalty.

The second deadline of the first year, 7 November 2026, has just passed. If that one was a scramble, the 7 February update for the quarter to 5 January will be harder, because it lands a week after the 31 January return deadline.

Where does the extra work land in a small practice?

Agents need an agent services account, and each client, and each income source for clients with several, is signed up individually. From September 2026 HMRC also began signing up people who should be using MTD but had not. Then the cycle starts:

1. Chasing. Four times a year, every in-scope client has to send bank statements, sales invoices and receipts, or confirm their app is up to date.
2. Sorting. Transactions need categories that match the self-employment or property headings before a quarter can be sent.
3. Tracking. Someone has to know, at any moment, which clients have sent papers, which quarters are ready to review and which have been submitted.
4. Year end. Adjustments, the return and the payment, as before.

The professional work is the same. The volume of small, repetitive steps is what quadruples.

Where automation helps, and where it does not

The submission itself belongs in HMRC recognised software, whether a full product or bridging software that sends from a spreadsheet. HMRC does not recommend any product, and we do not sell one. We build the automation around the software your practice has chosen:

• Reminders. A workflow knows each client's quarter dates and sends a polite request by email or WhatsApp a week before the period ends, then follows up on what is still missing. Staff see one list instead of a calendar of chasers.
• Document collection. Clients send photos and PDFs to one address or number. Each file is tagged to the client and quarter automatically.
• Reading receipts and invoices. OCR and document intelligence pulls out supplier, date, amount and VAT, and sends anything it is unsure about to a person.
• Bank data and categories. Statement lines, from a bank feed or an exported CSV, get a suggested category based on how that client's similar transactions were treated before. A bookkeeper confirms or corrects each suggestion.
• A status board. For every client and quarter: papers received, categorised, reviewed, submitted.

What we do not automate is judgement. Whether an expense is allowable, how to treat a mixed-use cost and what goes on the return stay with your team, and nothing is posted until a person confirms it. That is the same rule we apply to the systems on our accounting and CA firms page.

Working with us from the UK

Our team is in Chennai with no UK office, and your morning overlaps our afternoon. Client records are personal data under UK GDPR, so we prefer to build against anonymised samples and deploy into your own UK hosting, with transfer terms in the contract wherever data does reach India. The United Kingdom page sets out how that works, and AI workflow automation describes how we build and hand over workflows.

If quarterly chasing is already eating your team's week, tell us which software you use and how clients send you papers today. Book a consultation.