How to prepare to make your taxes digital

The next phase of HMRC’s Making Tax Digital (MTD) scheme goes live in April 2026, marking the biggest disruption to the tax system in years.

MTD for income tax will require self-employed people with qualifying income over £50,000 per year to keep digital records, use MTD-compatible software and submit quarterly summaries of income and expenses to HMRC.

A new survey by leading accountancy conference Accountex has revealed that 80% of finance professionals believe that MTD is the biggest challenge – and also the biggest opportunity – in the financial space in the next 12 months.

Challenges and opportunities of going digital

According to HMRC, 54% of income tax submissions are completed using third-party software, with just 3% of submissions not involving a financial agent. This highlights a clear issue with digitalisation when it comes to tax record keeping and submissions.

With the government requiring digital record keeping in time for the new rules next April, self-employed solicitors are under pressure to adapt their processes to accommodate the new system.

Using third-party software and submitting tax information four times a year will also involve extra business costs and time, even for those who have an accountant. This aspect of the scheme has faced criticism, with bodies like the Institute of Chartered Accountants in England and Wales (ICAEW) claiming that quarterly filing, “adds significant cost for no significant benefit.”

There are also those who see quarterly submissions as one of the key opportunities of MTD, with online publication AccountancyAge highlighting, “the transformative impact real-time data and automation can have on operations and growth.”

Access to real-time financial data can lead to improved financial health and the ability to plan more effectively, rather than waiting for the January deadline to review business health.

Additionally, HMRC’s research into MTD for VAT in previous years found that some of the main benefits were more confidence in tax accuracy and improvements in managing tax affairs.

Understanding your obligations throughout the year will allow for more confident decision-making, which is essential for self-employed workers.

A period of testing

Testing for MTD for income tax is now available for those who qualify.

HMRC’s Director of Making Tax Digital, Craig Ogilvie, said, “We urge those who meet the mandated criteria to join our testing programme on GOV.UK now to help shape the final service and make your transition smoother.”

The testing programme is available for the 2026 cohort and will give businesses the opportunity to experience the new process and software and find out what works for their business before it becomes mandatory. The testing programme also gives exclusive access to HMRC’s dedicated support team to get to grips with the system and provide feedback during its implementation.

While the April 2026 deadline is for those earning over £50,000, the following years will see the scheme rolling out for those earning £30,000 and then £20,000. This means the majority of self-employed legal professionals will need to adapt to digital software.

Starting the change to digital

Digitalisation can be a complex process, and with the additional costs involved, it’s important to make the right decisions for your business. One of the most effective ways to begin the process is to talk about MTD with people in the legal industry.

Trialling software options is another step. The list of HMRC-approved software platforms includes bridging and full-service software. Bridging software allows users to transfer their existing management processes, like spreadsheets, into digital submissions. Full-service involves everything being managed and completed within the software.

Our survey found that almost 60% of accountants are prepared for the transition, meaning the majority of the industry is ready and available to support legal professionals and set them up for success when April 2026 comes around.