HMRC expects to write to taxpayers that it anticipates will come into MTD mandation from April 2026, based on 2023/24 tax returns, from April 2025. Prior to that HMRC plans to provide most agents with affected clients with information about MTD commencement and links to the growing range of guidance online about what the process involves, and how to sign up to the testing phase. In this article, I look at what firms will need to do to start the conversations that are needed during the next 12 months.

‘We’re rolling!’

Now that the January self assessment and the February VAT deadlines have passed, many firms will be starting to look ahead to the next tax year. Preparations for the tax year 2025/26 are likely to be overshadowed however by something on the more distant horizon, but which will need a good deal of planning for – the first phase of mandation for MTD income tax.

With just over 12 months to go until the first clients are mandated into the new regime, now is the time to start raising the subject with clients who are likely to be affected and planning how your firm can deliver services to support your client to comply with the new requirements.

It is certainly a good idea to at least raise the topic of mandation for affected clients before they hear about it from HMRC. Highlighting the commencement date and broadly what this will mean for clients will reassure them that your firm is geared up and ready to help them with their new obligations. You will need a clear idea of what range of services you are intending to provide before you get into more detailed communication with individual clients, but the contact points and topics raised might run along these lines – the suggested dates are really the latest window for each type of communication.

• March 2025 – information about MTD in general, covering digital record keeping and quarterly submissions, and that fact that your client is likely to be affected from April 2026. You could consider sharing ICAEW’s video to provide a basic explanation.
• April – September 2025 – information and advice to specific clients about their record keeping, having reviewed what they are currently doing and suggesting what changes will need to be made. You will probably need to tailor this specifically to each client, bearing in mind the client’s needs and capabilities. This will also need to include information about the level of bookkeeping support or training that your firm might provide, as determined by your decisions about service offering.
• Autumn 2025 – advising clients that you have enrolled them into the new service ready for the start in April 2026. This is not an automatic process, and you will need to plan in time for this activity. Note that you will need to start this early enough to be sure of signing up all clients who need to by April 2026 at the latest. Changes to HMRC’s sign up process mean that you may not need the precise date that any mandated source of income (self-employment and property income) started. You only need the precise date if it was within two years of the start of the tax year. For example, if you are enrolling clients for testing in the 2025/26 tax year, you will need to enter the start date if it is on or after 6 April 2023.

You can decide which clients to write to based on their 2023/24 tax returns, but as the 2024/25 returns are completed you will be able to build a confirmed list of those mandated in 2026.

Note that HMRC is also intending to write later in 2025 to those with gross income from mandated sources of more than £45,000 in 2023/24, so that they are aware that they may be mandated in 2026 if their income has increased since 2024.

The sort of recommendations regarding digital records will depend on the precise circumstances of your clients, but conversations will need to cover:

• The need for a separate business bank account (and possibly credit card) and recommending that your client makes every effort to ensure that day-to-day personal transactions are not made through the business account and that business transactions are relocated to the business account. Clients will frequently have ‘old’ direct debits for business expenses going through their personal bank account, so now is the time to recommend that these are moved to the business account, so that the digital records include all of the transactions of the business without the need to make substantial adjustments at the year end. This will also assist with the accuracy of the tax estimates generated by the MTD systems.
• Whether the client will implement cloud based full-function accounting software (potentially with recommendations for products, or the firm providing the licence) or a simple app to analyse transactions, or even whether you will support your clients using spreadsheets to keep their records.
• You may also wish to consider whether some clients are likely to be digitally excluded. You cannot apply for digitally excluded status until the client is mandated, although those clients who have digitally excluded status for VAT will automatically be exempt from MTD income tax.
• Whether and to what extent you will provide assistance with record keeping, or whether you will recommend that they engage a bookkeeper. This will again be determined by your choices about your firm’s service offering. Some firms may recommend a local bookkeeper that they have formed a commercial relationship with.

Fees

Inevitably your client will want to know how much this will cost them. This is very difficult for you to predict so early in the process, as you will not have designed all of your service delivery options as yet. You may wish to give a commitment that you will provide information about your likely charges in the spring of 2026. You may be able to price a software licence, but should caveat that heavily with warnings about supplier price increases – many of the larger suppliers had two price increases in 2024, with a compound increase well in excess of 30% over the year.

The only way you will be able to assess what fees you will charge will be to enrol one or more clients in the testing phase, so that you can experience what precisely is involved in helping clients to meet their obligations. That will inform your thinking and enable you to start predicting workload, staffing needs and pricing with more confidence.