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If you’ve recently received a notification from HM Revenue and Customs (HMRC) notifying you that you’re included in Making Tax Digital (MTD) for Income Tax, you might have many questions.

To clear things up, we’ve structured this blog as a comprehensive question-and-answer guide specifically for people like you.

Note that we already have a general FAQ about MTD for Income Tax that answers many questions.

Here’s what we cover:

If HMRC has recently written to you about Making Tax Digital (MTD), it’s very likely that two things are true:

• You run one or more sole trader businesses, or are a landlord, or both.
• You’re registered for Self Assessment, and your 2023/24 Self Assessment tax return reported gross income above £50,000.

If your 2024/25 Selt Assessment tax return also shows gross income above £50,000 then, from 6 April 2026, you’ll no longer be able to meet your income tax obligations through the traditional Self Assessment process.

Instead, you’ll be legally required to use the Making Tax Digital for Income Tax to tell HMRC about your income tax.

Under MTD for Income Tax, you’ll need to do the following via MTD-compatible software:

• Keep digital records of your business/property income and expenses.
• Submit quarterly updates to HMRC of the income and expenditure.
• Submit a tax return to confirm your income each year

HMRC’s letter is essentially a heads-up to help you understand your new responsibilities. The aim is to ensure you have plenty of time to prepare, so you’re not caught off guard when the deadline arrives.

You’re not alone in receiving the letter. There are estimated to be just under 800,000 taxpayers required to switch to MTD as of April 2026, with hundreds of thousands more switching in the following years as the qualifying gross income threshold is lowered.

2. What exactly is MTD for Income Tax and why does it affect me?

MTD is part of HMRC’s broader initiative to modernise and digitalise the tax system, making it more efficient, accurate, and easier to manage.

Initially rolled out for VAT-registered businesses back in 2019, the MTD system and its requirements is now expanding to income tax for sole traders and landlords with turnovers above £50,000 as of April 2026. As of April 2027, those with turnovers above £30,000 will be included and, as of April 2028, those with turnovers above £20,000 will be included, too.

It’s important to note that MTD for Income Tax is separate from MTD for VAT. So, even if you’re already using MTD for VAT – or aren’t VAT registered at all – this change may still affect you.

3. What do I have to do for MTD for Income Tax?

In summary, the legal requirements are as follows:

Digital records

You will need to keep income and expenditure records digitally. For most people, this means using MTD-compatible accounting software.

Good practice is to digitise records immediately e.g. issuing invoices through accounting software like Sage Accounting, or scanning receipts when you receive them using a data entry automation tool like AutoEntry.

However, you could create the required digital records at any point ahead of creating the quarterly update for that period (see below) and still be within the rules.

You also need to keep the tax records and your tax return digitally for the mandatory five-year period after 31 January following the end of the tax year.

Quarterly updates

In addition to a single yearly digital tax return (see below), you or your accountant/bookkeeper are now required to digitally submit updates about income and expenditure to HMRC every three months/90 days. In other words, you’ll need to do this four times each tax year.

Quarterly updates must be submitted via MTD-compatible software, like Sage Accounting.

The goal is to provide better insights into your tax affairs and liability.

If you have more than one sole trader business, then you’ll need to provide individual quarterly updates for each of them.

All rental income is also a separate update, but can be included in the same individual quarterly update if you have more than one property (note that foreign property rental income requires its own individual quarterly update).

Digital tax return

On 31 January, you’ll be required to digitally sign and submit a tax return for the tax year that ended the previous April. This is also known as a digital tax return and covers all your income from any of your sole trader or landlord income for the year. It’s very similar to the existing Self Assessment tax return and again must be submitted via MTD-compatible software.

The tax return can detail not just your income and expenditure but other income sources and tax reliefs, or allowances and charges that formerly you may have submitted on Self Assessment supplementary forms. Some will be drawn from HMRC’s systems, if it’s available.

MTD-compatible software

Because of the above requirements to submit information digitally to HMRC, you (or your accountant or bookkeeper) will need to use software approved by HMRC as being MTD-ready. 

Furthermore, once your income and expenditure data are in the accounting ledger, you must ensure any other software you use – to calculate adjustments, as an example – is digitally linked to the ledger software.

Signing up

You will need to sign up for MTD for Income Tax ahead of April 2026. Enrolment isn’t automatic, and failure to sign up in time runs the risk of attracting penalties from HMRC. As April 2026 approaches, signing up can be done by following HMRC’s instructions.

You will need to configure your accounting software, too, so it knows you’re using MTD for Income Tax. Consult your vendor for support if you’re unsure how to do this.

4. The letter from HMRC talked about signing up early. What does this mean?

As of April 2025, HMRC began a large-scale public beta test of the MTD for Income Tax system for the 2025/2026 tax year. You can sign-up here and thereby start following MTD for Income Tax’s requirements before it becomes a legal requirement.

Joining the public beta is optional but encouraged. Doing so is a good idea because you can test drive MTD for Income Tax and adapt your processes ahead of time. You’re at less risk of making a mistake when MTD for Income Tax begins and attracting a penalty.

It’ll be easier to access support from HMRC and your software vendor ahead of the rush in April 2026, too.

You’ll need software that’s compatible with MTD for Income Tax, such as Sage Accounting. See Sage’s Income Tax for Public Beta page for more details.

Note that, despite signing up to MTD for Income Tax, you will still need to submit a Self Assessment tax return for the 2024/2025 tax year on or before 31 January 2026.

5. Despite what HMRC says in the letter, my income for the current year will probably be below £50,000. Do I still need to follow MTD for Income Tax?

Yes, if HMRC has identified you as meeting the income threshold for MTD for Income Tax based on your Self Assessment tax return, you will be required to join MTD from April 2026, even if your income drops below £50,000 in the following year.

However,  if your qualifying gross income remains below £50,000 for three consecutive years then you can contact HMRC to ask to go back to the Self Assessment tax return system.

Bear in mind that the MTD for Income Tax qualifying gross income threshold falls to £30,000 as of April 2027, and then £20,000 as of April 2028. So, unless your income drops below these levels, it’s likely you’ll still be required to follow the MTD for Income Tax rules despite earning below £50,000.

Because 2023/24 was a transition year for basis period reform, in which the tax year might’ve been extended for your sole trader business, you might find that your income was unusually high and not representative of your normal yearly income. You might feel MTD for Income Tax therefore shouldn’t apply to you. You should contact HMRC to discuss this.

6. Isn’t MTD for Income Tax going to make my accounting more complicated?

Not at all. In fact, using MTD compatible software may help streamline your accounting and reduce the time spent on manual admin – especially once you’re familiar with the new processes.

For example, you should find that each quarterly update is populated automatically based on the income and expenditure data already within the ledger. All you need to do is check and click to submit. Software like Sage Accounting will remind you when this required.

Similarly, submitting the digital tax return on 31 January should be easy because everything will again be automatically completed. You simply need to review, make manual adjustments/input missing details if they’re required, and click to submit. 

The software you use will need to be recognised by HMRC as MTD-ready. Existing software from many major providers, such as the various Sage Accounting plans, is already compatible with MTD for Income Tax. So, all you will need to do moving forward is register for MTD for Income Tax ahead of April 2026, and activate MTD for Income Tax within the software.

8. Can I opt out of MTD for Income Tax?

MTD for Income Tax is a legal requirement for those who fall within scope and you can’t choose to opt out, or delay signing-up.

However, there are personal circumstances that mean people can request exemption, as follows:

• Your disability or age means it’s not practical for you keep or submit digital records.
• Your beliefs as part of a practicing religious society or order are incompatible with keeping or submitting digital records, or using electronic communications.

You will need to apply to HMRC for exemption and explain why.

If you’ve already been granted exemption from MTD for VAT then this will be automatically carried across. There will be no need to apply afresh for MTD for Income Tax.

If any of the following apply to you then you are automatically exempt from MTD for Income Tax. You will continue using the Self Assessment system and do not need to apply for exemption:

• You’re a foster carer or shared lives carer, and the only income you receive is qualifying care income.
• You don’t have a UK National Insurance (NI) number as of 31 January before the first tax year for MTD for Income Tax (e.g. 31 January 2026 for April 2026’s launch of MTD for Income Tax).
• You’re a trustee, including charitable trustees and those for non-registered pension schemes.
• You’re a personal representative of somebody who has died.
• You are a Lloyd’s underwriter, but only in relation to your underwriting business.
• Yours is a non-resident company.

9. My accountant or bookkeeper handles my tax. Will MTD for Income Tax affect that?

Your accountant or bookkeeper can continue handling your tax affairs under MTD for Income Tax, including undertaking the quarterly updating on your behalf, and creating the digital tax return. However, you remain legally responsible for reviewing and approving the digital tax return before it’s submitted.

Contact them as soon as possible to discuss the changes, and any new requirements they may need. For example, you will probably need to work with them to create a process to pass them details of your income and expenditure every three months ahead of the quarterly reporting deadline (see “What are the initial MTD for Income Tax dates I need to know about?”, below), or start using data entry automation software to automatically send them details from paperwork and PDFs you receive.

10. Does MTD affect how much I pay in income tax?

No – MTD does not change how much Income Tax you pay. It is simply a new way of keeping records and reporting income and expenses to HMRC if you’re a sole trader or landlord with a qualifying gross income that brings you within scope. Everything else about the income tax system remains the same, such as income tax personal allowances, what you can claim as expenses, and so forth.

You will continue to pay any outstanding tax liability on 31 January, and will continue to pay twice yearly on account based on your estimated earnings if HMRC has requested you do so.

11. Is MTD for Income Tax a new tax system?

No. MTD for Income Tax is just a new way of reporting income tax for sole traders and landlords. It replaces the Self Assessment tax return for those affected.

12. My accounting is simple, and I just don’t need to make quarterly updates. Am I still included in MTD for Income Tax?

There are several kinds of individuals whose income might, at first glance, not seem relevant for quarterly reporting.

Examples include seasonal businesses or workers, such as farmers or holiday lets, where the bulk (or all) of the income arrives in a short period within the tax year. This means some quarterly updates for these people may have to list near-zero income, for example.

Landlords with regular and static monthly incomes and limited expenses might also wonder if quarterly reporting makes sense given their income is predictable.

However, in all cases, you must still follow the MTD for Income Tax rules – and this includes making quarterly updates to HMRC using MTD-approved software.

It’s worth remembering that quarterly updates require only basic details of income and expenditure. They don’t require details of adjustments or charges etc., as with the digital tax return. Furthermore, quarterly updates are cumulative. In other words, you can correct any misstated or lower incomes from an earlier period in the following quarterly report.

13. Can I use spreadsheets for MTD for Income Tax?

Yes, spreadsheets can be used for MTD for Income Tax provided you also use MTD-compatible bridging software to allow communication with HMRC in order to submit the quarterly updates and digital tax return.

You can also use spreadsheets for non-ledger activities such as adjustment calculations once the data is in the ledger – although you should ensure there’s a legally-compliant digital link. In other words, you cannot cut/copy and paste data between the accounting software and the spreadsheet, or hand type it.

However, using spreadsheets for your accounting is not a good idea. It’s very easy to accidentally overwrite cells in a spreadsheet, for example, and spreadsheets easily become corrupted. If that happened then not only would you lose data but you’d fall short of the legal requirements of MTD for Income Tax, and could attract penalties from HMRC.

Furthermore, you will be legally required to securely keep the digital records contained within the spreadsheets for five years following 31 January after the end of the tax year. Keeping any file for that long can be a challenge. Using dedicated accounting software takes care of this for you, and is simply easier and much less prone to errors.

14. I run a business with employees. Does MTD for Income Tax apply to me?

Regardless of its complexity, if yours is a self-employed sole trader business (i.e. you’re registered for Self Assessment) and you have income above £50,000 then you’re legally required to follow MTD for Income Tax will apply for you as of April 2026.

Having employees does not exempt you from MTD. What matters is your business structure (i.e. being a sole trader) and your qualifying income level, not how many people you employ or how complex your operations are.

15. I’m employed full-time but run a side hustle business. Does MTD for Income Tax apply to me?

If you’ve been contacted by HMRC about MTD for Income Tax then you will be registered for Self Assessment and the income from your side hustle will have been above £50,000 on your recent tax return. Therefore, you’re considered be running a sole trader business, and MTD for Income Tax applies.

The same is true if you’re a landlord who’s employed full time. If rental income you receive is above £50,000 and you’re registered for Self Assessment, then you need to follow the MTD for Income Tax rules.

Being employed full-time does not exempt you from MTD if your self-employment or rental income is above the qualifying income threshold.

One of the benefits of MTD for Income Tax is that the tax data from your P60 employment tax statement should automatically flow into your digital tax return in the MTD-compatible software. 

16. Can I switch my business or landlord properties to a limited company to avoid MTD for Income Tax?

Incorporated businesses like limited companies are not affected by MTD for Income Tax, so, incorporating your business or transferring property to a limited company could mean MTD for Income Tax no longer applies to you for that income. However, whether it’s right and beneficial for you will depend on your personal circumstances and you should seek professional advice from an accountant or similar.

17. What are the initial MTD for Income Tax dates I need to know about?

Generally speaking, and assuming your tax year begins on 6 April, these are the dates you need to know for the 2026/2027 tax year, which is the first year under the MTD for Income Tax rules:

• Quarterly update #1: 7 August 2026
• Quarterly update #2: 7 November 2026
• Quarterly update #3: 7 February 2027
• Quarterly update #4: 7 May 2027
• Tax return: 31 January 2028

Remember that good accounting software will remind you of these dates in advance, and prepare the updates/tax return for you.

18. I already use MTD for VAT. Do I need to do anything for MTD for Income Tax?

MTD for VAT and MTD for Income Tax are entirely separate systems. If you fall within scope of MTD for Income Tax, you will need to sign-up for it separately, and understand its unique requirement (unless you’re excluded – see above).

Notably, the penalty points systems applied to MTD for VAT and MTD for Income Tax are also separate. In other words, if you have penalty points applied for a matter relating to VAT, they won’t affect any separate points tally for MTD for Income Tax (and vice versa).

19. I used a three-line account on my Self Assessment tax return. Can I continue doing this with MTD for Income Tax?

With MTD for Income Tax, if you are eligible to use a three-line account (because your income is below the VAT threshold), you can continue to report just your total income, total expenses, and profit in your quarterly updates and your tax return. MTD-compatible software will help you submit these summaries each quarter and will use this information to help you complete your tax return at the end of the tax year.

Final thoughts

Learning about MTD for Income Tax might have come as a shock, especially if you’ve been using Self Assessment tax returns for some time.

But there’s a lot to be said for remaining in a positive frame of mind. HMRC is introducing MTD for Income Tax for the benefit of all, and following its rules provide the opportunity to take control of your accounting and gain the insights you need to grow your business.

Your football club becomes the beating heart of your town or city—where communities come together, stories are passed down through generations, and buzz begins long before the stadium doors open.

That’s why Sage is the official accounting software partner of the English Football League (EFL), a competition built on the spirit of local communities—powered by the small businesses, volunteers, and everyday legends who make football what it is.

Matchday starts days or weeks earlier, in the bakery, the barbershop, the ticket office, or the pub.

Accounting has always been built on trust, precision, and sound judgment. But the way accountants must deliver value is changing – fast.

At Sage Future 2025, Sage CTO Aaron Harris revealed a powerful shift in thinking: the future of AI in finance won’t be about faster answers. It’ll be about encouraging smarter, more autonomous action.

That’s the promise of agentic AI: intelligent systems that don’t just respond to your prompts, but monitor, interpret, and act independently across your many tasks and workflows.

Here’s what we discuss in this article:

What agentic AI means for accountants

In the first article of this series, we unpacked this agentic AI shift for finance professionals. For accountants, it means moving from a reactive service to real-time, anticipatory insight.

Whether you support sole traders or have scaled to serve mid-sized businesses, this new class of AI could transform how your practice operates, how clients engage, and how you grow.

As an accountant, you are already familiar with automation – tools that speed up tasks – or generative AI, which can write, calculate, or summarise on request.

But agentic AI is different. It’s always running in the background, learning, monitoring, and – crucially – taking initiative. Like an expert PA that pre-empts tasks before you’ve assigned them, it will change the speed and quality of your day-to-day routine.

Think of it like this:

• Automation completes a task when you ask it to.
• Generative AI creates something when prompted.
• Agentic AI notices something’s off and starts solving it before you even ask.

In a practice setting, that could support you to:

• Monitor client books and behaviours in real time.
• Spot anomalies or errors as soon as they appear.
• Flag compliance risks or gaps in documentation.
• Suggest or initiate next-best actions – like reconciliation or client follow-ups.

Agentic AI is where you have a digital practice assistant that never sleeps, never forgets, and never needs chasing.

Let’s say a client misses their quarterly VAT deadline. Instead of relying on reminders or your team spotting it manually, your AI assistant could:

• Detect the missed deadline.
• Flag the account.
• Draft a personalised follow-up email – automatically.

Multiply that across your entire client base, and you begin to see the value: scale, consistency, and speed.

From reactive to proactive: A mindset shift

Traditionally, accountants have worked in hindsight – reviewing past transactions, fixing issues after they occur, and responding to client questions after the fact.

Agentic AI changes that.

Prepare for intelligent systems that surface problems early, initiate workflows before deadlines are missed, and alert you without being prompted. The result? Less firefighting, more foresight.

Instead of scrambling through the month-end close, you can deploy agentic AI that pulls in data from banking feeds, sales platforms, and payroll systems, automatically reconciling totals, applying journal entries, and highlighting exceptions before anyone logs in.

You can use an AI agent to ping clients for missing invoices, start drafting emails, and maintain consistency in reminders, all without human input.

Perhaps most importantly, agentic systems provide continuous oversight.

Agentic AI monitors transactions 24/7, flags anomalies against historical norms, and even recommends changes – like adjusting a tax strategy or updating compliance workflows – based on patterns and preferences.

This isn’t just about saving time. You’ll shift your practice from response to prevention.

Try it yourself: A glimpse into agentic AI in action

Agentic AI is beginning to emerge in tools like Microsoft, Chat GPT, and Sage Copilot, making it possible to build and interact with autonomous workflows.

• Microsoft Copilot and ChatGPT now let you build specialist agents with tools, memory, and predefined goals.
• Sage Copilot is evolving toward the agentic model, building ways to automate workflows, surface alerts, and trigger actions without you needing to prompt the software manually.

To understand the difference a tailored tool can make, try this prompt in ChatGPT or Microsoft Copilot to see how the LLM responds. Then compare it to how agentic AI would handle the same input – proactively, without being asked.

Prompt:

You are an AI assistant for a small business accountant. The client has just closed June and uploaded their ledger. Review the data, flag any issues, and recommend next steps.

Then, offer to draft a follow-up email or automate part of the workflow. Here’s a simplified ledger view you can enter:

Here’s the difference between what generative AI and agentic AI would do:

This comparison highlights a simple truth: agentic AI changes the relationship between you and your accounting software.

Where traditional AI needs a prompt, agentic AI is already working. It’s monitoring your ledgers, surfacing issues, and nudging next actions before you even log in.

That’s a major shift – from tools you control, to systems that collaborate with you.

It doesn’t just save time. It changes the nature of the work:

• Less admin. More insight.
• Fewer missed deadlines. More proactive care.
• Less chasing. More leading.

When your software starts handling tasks proactively – flagging errors, nudging clients, tracking workflows – you’re free to focus on what matters: advising, building trust, and growing your practice.

Agentic AI isn’t just more efficient. It’s more accountant-shaped.

A look ahead: How to automate MTD proposals with agentic AI

Agentic AI is emerging just as accountants face the next phase of Making Tax Digital for Income Tax – bringing quarterly updates and tighter compliance checks. The timing couldn’t be better.

Rather than manually managing every step, agentic systems could soon:

• Monitor client submissions.
• Flag missing or late data.
• Recommend tailored advice or services.
• Reduce admin across dozens – or hundreds – of clients.

One potential high-impact use case? Automating MTD service proposals.

Traditionally a time-consuming task, it’s easy to imagine an AI assistant handling the process end-to-end – so accountants can focus on value-added advice.

Here’s what that workflow might look like:

1. Lead creation: A prospect contacts the firm. Agentic AI builds a draft lead profile using size, location, and needs.
2. Smart qualification: The AI asks key questions, checks MTD eligibility, and prepares structured records.
3. Proposal generation: A tailored MTD service proposal is auto-drafted and ready for review if eligible.
4. In-portal Q&A: Clients ask follow-up questions directly – tracked and stored for compliance.
5. Insights and optimisation: Agentic AI monitors the funnel, tracking conversion rates and drop-offs.

The building blocks are already here: context-aware, goal-driven AI capable of acting without prompts.

Soon, it won’t just support the proposal process – it could run it.

Moving from busy work to better work with agentic AI

Today’s accountants face pressure from every direction:

• Clients want more value – without higher fees.
• Governments are tightening digital compliance.
• Admin tasks still swallow hours that could be spent advising.

Agentic AI offers a way forward – not by replacing accountants, but by freeing them.

This shift is already happening. Sage software tools can create space for deeper, more meaningful client conversations – not just faster data entry.

In a world of agentic systems, the goal isn’t simply automation – it’s better use of human time and expertise.

Agentic AI supports firms in three critical ways:

1. Anticipation, not reaction: spot risks, gaps, and opportunities before they escalate.
2. Automation with context: let systems act with intent, not just speed.
3. Capacity without burnout: scale your service without sacrificing quality.

This isn’t just good for practices. It’s better for clients, too.

These moments – advice, empathy, forward-thinking – are where accountants create real value. Agentic AI doesn’t take that away. It helps you make more space for it.

The shift is clear: agentic AI frees up time, surfaces insights, and takes care of the repetitive and the real-time – so accountants can focus on what matters most.

As Marcus Denning, a senior compliance lawyer at MK Law, puts it: “The accountant is no longer an operator – they’re becoming an overseer. Clients won’t expect raw data processing, but interpretation, scenario planning, and advice triggered by the actions of the AI.”

In this new model, accountants are empowered to lead – not only respond. Clients will come to expect more than reporting – they’ll want foresight, clarity, and partnership.

A glimpse into a mid-sized customer future

Mid-sized businesses are under pressure, with complex data, tighter margins, and rising stakeholder expectations. The old model of monthly closes and backward-looking reports can’t keep up.

Agentic AI opens a new path – for finance teams and the accountants who support them.

Imagine offering clients the following:

• Daily reconciliation instead of monthly cleanups.
• Live cash flow forecasts that adapt to every new invoice or spend.
• Real-time revenue alerts based on contract activity.

With agentic systems you’ll find:

• Risks are flagged early.
• Forecast health is monitored passively.
• Recommendations are triggered automatically – from budget shifts to scenario modelling.

For accountants, it’s a shift from reporting partner to real-time advisor.

“We taught models to find anomalies in reports on expenses and income. What used to require hours of examining spreadsheets is now immediately brought to our attention,” said Mihaela Ceornoava, Chief accountant, Omniconvert.

AI-driven tools can:

• Spot errors before they hit the client.
• Cut reconciliation time from days to minutes.
• Surface insights using natural language.
• Apply internal accounting policies to act like an internal advisor.

“AI doesn’t just speed things up. It changes how decisions are made. Accountants are evolving into AI supervisors,” said Berkay Kinaci, COO at Speaktor.

This is more than efficiency. It’s a new mindset – where accountants lead with insight, not hindsight.

As Sage CEO Steve Hare recently wrote, “We didn’t start with hype. We started with solving your challenges.”

That philosophy drives how Sage is building agentic AI – not as a flashy bolt-on, but as authentic intelligence, built with accountants, for accountants. It has created AI that acts purposefully, earns your trust, and helps you lead beyond your daily routine.

Agentic AI can only be useful if it’s safe, explainable, and built with accountants in mind. That’s why Sage has trained its own AI models to ensure its expertise in financial services – not just use bolt-on general-purpose tools.

These models are:

• Trained on accounting standards and Sage product data.
• Designed with auditability and compliance at the core.
• Embedded directly into Sage tools like Sage for Accountants, Sage Copilot, and Sage Intacct.

And with the new AI Trust Label, accountants can see exactly how a model was trained, what data it uses, and how accuracy and bias are managed.

Final thoughts: Questions every accountant should ask

Agentic AI is a practical toolset, grounded in real-world use and working inside products you know.

So, as you look ahead, ask yourself:

• Are we still waiting for insight – or is insight finding us?
• Are we spending time on judgment – or just data entry?
• Are we building a firm that reacts – or one that leads?

The next generation of accounting won’t just rely on dashboards.

It’ll run on agents – trusted, intelligent, and built to act.

HR teams face many challenges in our modern world.

Lifelong learning, development, and wellbeing are notable examples that have a significant impact.

For example, reskilling of employees ranked as the second biggest pain point in the IDC HR Leaders’ Road Map for 2025.

Add-in compulsory learning and development (L&D) for compliance and the tip of a large iceberg comes into view. Ensuring adherence to regulations can’t be sidelined.

In this article, we look at how to identify the core L&D issues your organisation may be facing—and what you can do to solve them.

Here’s what we cover:

Why Learning & Development struggles to win today

According to the Digital Learning Realities 2024 research report from HR industry analysts Fosway Group, 74% of L&D teams say building skills is becoming a high priority to the future success of the organisation.

Drilling down into this ambition, many professionals suggest employee-led learning is a way forward. Indeed, according to Gartner’s Leadership Vision for 2025, 61% of L&D leaders agree this is critical to success.

Unfortunately, this determination isn’t reflected in reality.

The LinkedIn Workplace Learning Report 2024, for example, highlights struggles around measuring return on investment (ROI) that may sound familiar: only 16% of L&D professionals measure specific business improvements that are tied to learning for new skills (per learner).

Elsewhere, research from the Society for Human Resource Management (SHRM) suggests 25% of training materials are forgotten immediately by employees.

SHRM’s research adds that, from an organisational perspective, 35% of HR managers struggle to find the right training content to fit their needs, while 32% report difficulty in keeping content that’s up to date amid always-on workplace transformations.

This highlights a key issue facing HR teams and L&D: the pace of change continues to accelerate, requiring every working person to continuously improve their skills and meet compliance goals.

But catering to this can seem like pie in the sky if teams are struggling with even the basics.

Is your L&D team truly capable of being a strategic partner while being held back by legacy technology deployments?

Meeting Learning & Development challenges head-on

What challenges exist and where do they originate?

• Low engagement: Legacy top-tier learning management systems (LMS) or Learning Experience Platforms (LXP) are flooded with outdated content, difficult to navigate, and can be so complex and cumbersome that it takes employees minutes just to even start a course.
• Return on investment for training expenditure: L&D managers face challenges when trying to measure the ROI of their training spend, such as poor data availability, and having multiple learning technology solutions and delivery methods. As such, it can be difficult if not impossible to ensure alignment with business goals.
• Multiple and disparate solutions: Research has shown that the average number of solutions businesses have for learning, career development and wellbeing is just over 16, with half of organisations using multiple platforms to deliver training. Not only is managing and maintaining disparate solutions effectively creating extra work, there’s also no unified view of data.
• Compliance knowledge: L&D teams need to constantly produce and maintain several types of compliance training to ensure employees understand and adhere to relevant laws, regulations, and company policies. Yet some employees perceive the content as boring, irrelevant, and filled with jargon, leading to low engagement. Finding or creating content in a timely manner is also a challenge for L&D teams.

How microlearning is solving the L&D challenge

Microlearning is transforming the way L&D teams deliver training, offering a flexible and engaging alternative to traditional, long-form programmes.

Instead of requiring employees to block out hours for classroom sessions or lengthy e-learning modules, microlearning breaks content into short, focused lessons—often just five to 10 minutes each—that can be accessed on demand.

Information is also better retained by learners in this format.

Add in a mobile-first approach, which ensures the bite-sized content is available 24/7 for the employee—whether on a mobile phone during a commute or in between meetings—and this approach directly aligns with how we all consume information today.

It balances better with busy work schedules. Engagement is dramatically improved, as employees can control when and how they learn.

Microlearning also encourages a culture of continuous learning. By delivering bite-sized lessons consistently, L&D teams can reinforce a growth mindset and help employees build resilience in a fast-changing workplace. Staff can adapt quickly, stay current with new skills, and view learning as an ongoing journey rather than a one-time event—strengthening both individual capabilities and organisational agility.

Furthermore, with the ease of creating such short snippets, it’s easier to create bespoke training that helps bring your brand to life. You can celebrate a diverse culture and connect remote employees to your company purpose and brand.

What to consider when choosing the right L&D platform

With the above in mind, we can start to construct what an ideal L&D platform looks like:

• Microlearning: Examples of your content could include quick five-minute lessons and tips that help employees gain valuable insights from books, documentaries, and courses. As a result, speed-to-skill performance can be increased.
• Translation and localisation: If your organisation works across borders, look to ensure seamless global scalability is built-in, to help localise your resources. With the use of AI, translations can be instant and of a high quality.
• All-in-one solution: Cut costs by dropping multiple vendors and streamlining the L&D tech stack. Replace your complex array of tools—from LMS and Employee Assistance Programmes (EAP) to learning content and training providers. Look to ensure your L&D microlearning is just one component of a powerful, broad people-management solution. This not only helps maximise ROI because there’s no need to pay for costly disparate licenses, it also enables the easy generation and collection of metrics.
• AI analytics and reporting: AI is changing everything, and in the world of people management, it’s providing extraordinary insights into measures such as learner progress, compliance completions, and engagement levels—not to mention other employee measures.

Final thoughts

The path forward for L&D isn’t more complexity. It’s to be smarter and to simplify. This is also a route to better ROI and per-employee cost savings.

Microlearning is a modern and effective route forward and when implemented as part of a broader, all-in-one people management solution, it can bring meaningful change.

Next steps? Audit your current learning tools, identify content that can be repurposed into micro modules, and explore platforms that unify training, analytics, and wellbeing support.

By starting small and scaling quickly, you’ll lay the foundation for a culture of continuous growth and long-term workforce resilience.

Making Tax Digital (MTD) is the government’s ongoing plan to bring tax accounting and collection into the 21st century.

As the name suggests, it does this by legally requiring the use of software. As such, it also requires key accounting records relating to tax are kept digitally, and that these are communicated regularly to HMRC.

In return, it’s possible to see throughout the year how much tax you owe before payment becomes due at the usual times. This aids better cash flow calculations, among other things.

And the use of accounting software can be revolutionary, reducing or even removing much of the drudgework of administration. This frees up people to do more of what they love within their business.

In this article, we take a look at Making Tax Digital (MTD) for Income Tax and try to answer some questions by way of an introduction for the general reader. Don’t worry, this isn’t a technical deep dive!

We start with a brief overview of MTD before diving into some questions and answers to help you navigate what MTD for Income Tax will mean for your business.

It should be noted that we already have blogs that look in-depth at certain kinds of business impacted by MTD for Income Tax:

Background on Making Tax Digital

The first wave of Making Tax Digital became law in 2019 when MTD for VAT was introduced. This was expanded out to more businesses in 2022.

But it’s four years later – in April 2026 – when arguably one of biggest changes is set to arrive.

MTD for Income Tax will affect millions of sole traders and landlords, with those with qualifying income over £50,000 falling within scope from 2026, those with qualifying income over £30,000 from 2027, and those with qualifying income over £20,000 from 2028.

Qualifying income is simply your gross income from self-employment and/or property (before expenses, in both cases). It is not your net income.

MTD has been called the biggest shake up in tax for a generation. But even this might be too conservative an estimate of the impact it will have for millions of people.

You owe it to yourself to get ready sooner, rather than later.

To be clear, Making Tax Digital for Income Tax is known by several titles, but they all refer to the same thing:

• Making Tax Digital for Income Tax Self Assessment, or MTD for ITSA
• MTD for Income Tax, MTD for IT, or MTD IT.

You might also hear it referred to as ‘phase 2’ of MTD, but care should be taken because this means different things to different people.

1. What is Making Tax Digital for Income Tax in a nutshell?

Here is MTD for Income Tax summarised in as few words as possible:

• MTD for Income Tax’s requirements replace the need for a Self Assessment return, and affects sole traders and landlords who currently use the Self Assessment income tax system.
• In the first phase, it will only affect those listed above with qualifying income over £50,000. In the second phase, it will affect those with qualifying income over £30,000, and in the third phase those with a total qualifying income over £20,000.
• For each sole trader business, and for total rental income, it requires at least updates every three months to be submitted to HMRC.
• Each individual must also submit a tax return by 31 January following the end of the tax year in the previous April, using their accounting software.

We look into all of this in more depth below.

2. Who does MTD for Income Tax affect?

MTD for Income Tax will affect any of the following individuals who currently use the Self Assessment system and whose qualifying income is higher than the threshold:

• Sole traders.
• Landlords receiving rental income (including furnished holiday lettings, and foreign property).

The thresholds will apply to the income of an individual, rather than to individual businesses.

For example, if an individual is both a sole trader and also a landlord receiving rental income, then the income from these two businesses is added together to determine if that person crosses the threshold.

Similarly, if an individual owns several sole trader businesses then the income from each should be added up to see if that person crosses the threshold.

If the individual does not cross the threshold then they should continue using submitting a Self Assessment tax return, as currently is the case. Anybody just starting out as a sole trader or landlord will use the Self Assessment system until such time as HMRC tells them otherwise (e.g. when their income for a tax year crosses the threshold), or if they choose to voluntarily sign-up for MTD for Income Tax.

3. What are MTD for Income Tax quarterly updates?

Quarterly updates are a regular requirement of MTD for Income Tax. They help you better understand your tax and National Insurance liability across the year.

The rules are simple. At a minimum every three months across the tax year, and for any business you own, you’re required to submit updates about your business income and expenses to HMRC, using software.

Landlords need to submit these updates for their rental income but only one is required, regardless of how many properties are owned and from which rent is collected.

It has to be emphasised that four updates each accounting period is a minimum. You can submit more if you think it will assist your accounting.

A business that earns more than £50,000 would need to submit at least the following updates for the 2026/27 tax year:

• 1st: Due by 7 August 2026 (covers 6 April 2026 – 5 July 2026)
• 2nd: Due by 7 November 2026 (covers 6 July 2026 – 5 October 2026)
• 3rd: Due by 7 February 2027 (covers 6 October 2026 – 5 January 2027)
• 4th: Due by 7 May 2027 (covers 6 January 2027 – 5 April 2027)

Some businesses can also use calendar update periods if their basis period ends 31 March, rather than 5 Aptil. In other words, the first quarterly update for such a business would still be due by 7 August but would cover the period 1 April – 30 June.

The updates will contain information about your accounting such as your income and allowable expenses.

There’s no legal requirement for the updates to be accurate. Nor will you ever need to go back and correct anything that was wrong in an earlier quarterly update.

However, accurate updates will mean HMRC is able to best estimate your tax and National Insurance liability, so you can be sure about cash flow and the amount of money that you’re putting away to pay your eventual tax bill.

These updates might sound foreboding but good accounting software will automate much of it. It’s likely all you will have to do is review the information before tapping or clicking to submit it. If you have an accountant or bookkeeper, they can do this for you.

Updates need to be submitted in this way for each business you own, and for any property income. This could mean submitting several updates each quarter.

4. What are MTD for Income Tax end of period statements (EOPS)?

If you’ve been following MTD for Income Tax for over the years since its inception, you may have heard of End of Period Statements, or EOPS.

These are no longer a part of MTD for Income Tax.

HMRC now only requires quarterly updates and the digital tax return in terms of submissions.

Similarly, the term Final Declaration was once used to refer to the digital tax return HMRC requires as part of MTD for Income Tax. The term is no longer used but you might still hear some people referring to it.

5. What is the MTD for Income Tax digital tax return?

By no later than 31 January following the end of the tax year (5 April), you need to sign a digital tax return, in a similar way to you might currently with Self Assessment. However, this is done within the MTD-compatible software.

This replaces the Self Assessment tax return, along with anything else you may have heard about, such as a Final Declaration or end of period statements (EOPS).

It means bringing together all the data including business and non-business income needed to finalise your tax position and reach your final tax liability. You (or your accountant) should also include any applicable reliefs and adjustments.

As with Self Assessment, HMRC will then tell you via the MTD software how much tax and National Insurance you’re liable for. You then digitally sign this (notably, your accountant or bookkeeper cannot sign it on your behalf).

The tax return applies to you as an individual, so you only need to submit one, regardless of whether your income comes from multiple sole trader businesses and/or property rental. Its deadline is fixed each year on 31 January.

6. Can my accountant or bookkeeper create quarterly updates and the tax return for me as part of Making Tax Digital?

They can prepare and submit both, and also submit the quarterly updates on your behalf. But as with the current Self Assessment system, you will need to review and digitally sign the tax return within the MTD-compatible software.

Your accountant or bookkeeper can also sign you up to MTD, if you wish, rather than you doing so yourself. Discuss this with them ahead of time.

You will need to ensure your accounting software is digitally linked to that of your accountant and/or bookkeeper. and let HMRC know when you sign up that your accountant will act on your behalf.

Speak to your accountant ahead of time to ensure this is the case.

Note that it’s possible to have both a bookkeeper and a separate accountant digitally linked to your MTD account and software in this way.

7. When do I pay my tax and National Insurance contributions under MTD for Income Tax?

You should pay any outstanding tax liability by 31 January following the end of the tax year on 5 April. You will know the amount due because of your tax return.

If you pay on account then a further payment will then be due by 31 July, just like with Self Assessment.

8. How do I sign up for MTD for Income Tax?

Right now this isn’t possible outside of the MTD for Income Tax beta programme (see ‘What’s the MTD for Income Tax beta programme?’ below).

HMRC is contacting people to tell them if they need to follow the MTD for Income Tax rules as of April 2026, based on their most recent tax return.

Following this, you must sign up via the HMRC website. You must ensure you have MTD-compatible software in place and sign-in to your MTD for Income Tax account within the software. Speak to your software vendor if you have any questions.

Your accountant or bookkeeper might be able to sign you up to MTD for Income Tax, if you wish to avoid the task yourself. Speak to them ahead of time about this.

9. Is Self Assessment ending because of MTD for Income Tax?

No. For those who are required to use MTD for Income Tax, the digital tax return replaces the need to file a Self Assessment return.

However, for everybody else required to file a Self Assessment return and who are outside the scope of MTD for Income Tax, there will be no change. Self Assessment will continue to be used. Examples might include company directors or those needing to declare pension income.

Furthermore, those new to being a sole trader and/or renting out property will not go straight to MTD for Income Tax, even if they’re sure their income will be above the threshold. Instead, they will sign-up for Self Assessment and then switch to MTD for Income Tax as and when HMRC notifies them in writing. Alternatively, they could voluntarily sign-up to MTD for Income Tax after signing-up to Self Assessment, but this will mean they will still need to complete a year of Self Assessment.

10. What’s the MTD for Income Tax beta programme?

HMRC is running an optional beta programme that you can sign up to in order to take part in MTD for Income Tax between now and its mandation in April 2026.

There are some limitations on who can join.

You need to be up to date with your taxes, for example, with no outstanding liabilities. Those who claim Married Couple’s Allowance or Blind Person’s Allowance cannot sign-up, and nor can those who are bankrupt or insolvent (or know they will be soon).

Those who use averaging calculations for their income, such as seasonal businesses like farmers, also can’t sign-up to the beta.

You’ll need software compatible with MTD for Income Tax, of course, such as Sage Accounting. This has plans for all kinds and sizes of sole traders and landlords, including Sage Accounting Individual Free.

11. Is MTD for Income Tax delayed?

MTD for Income Tax was intended to be among the first of the Making Tax Digital schemes, back in 2015.

Obviously, that did not happen. Brexit, the pandemic, consultations with stakeholders by HMRC, and other factors, all contributed to Making Tax Digital being fundamentally rescoped by the government.

Even after its official launch, the scheme was delayed twice, most recently following an announcement from the government in December 2022.

However, it’s very unlikely at this point there will be any further delays given that the launch date of April 2026 is so close.

12. Is there free software for MTD for Income Tax?

Yes. A good example is Sage Accounting Individual Free, which lets you simplify your finances with free accounting software that makes bookkeeping, transaction tracking, and both MTD for Income Tax and Self Assessment easy.

There are other Sage Accounting plans for other types and sizes of business.

The government considers the purchase of compatible MTD accounting software to be a legitimate business expense that businesses are expected to pay.

13. Can I use spreadsheets for MTD for Income Tax?

The use of spreadsheets is allowed for sole traders and landlords that fall within the scope of MTD for Income Tax.

However, there are complicated guidelines around the cutting/copying and pasting of the tax records, which falls under the digital linking rules. In short, while spreadsheets can be used for MTD, care must be taken.

You’ll will be breaking the law if you copy and paste certain values from a spreadsheet into your accounting software to complete a quarterly update, for example. Instead, the link between the spreadsheet and the accounting software must be both digital and automated, according to the digital linking rules.

Spreadsheets have inherent limitations, such as poor data security measures, and the ease at which a simple mistyping can accidentally erase a critical formula. You must maintain your digital records for five years as part of the income tax rules.

Can you be sure that you’ll be able to do this if you’re using spreadsheets?

Those using a spreadsheet for MTD for VAT require bridging software to file their returns with HMRC. This is available from software vendors. The same kind of software is likely to be available for MTD for Income Tax, and will probably link into a broader cloud-enabled service.

However, most experts agree that it’s simpler easier and more effective to use cloud accounting software.

14. What’s the MTD for Income Tax threshold?

The first phase of MTD for Income Tax will apply only to self-employed businesses’ income and/or property income of more than £50,000.

The second phase will apply to those earning over £30,000. The third phase applies to those earning over £20,000.

Here’s how to determine when you might need to use MTD for Income Tax:

• As of April 2026: If you have qualifying income over £50,000 in the 2024/25 tax year and subsequent tax years.
• As of April 2027: If you have qualifying income over £30,000 in the 2025/26 tax year and subsequent tax years.
• As of April 2028: If you have qualifying income over £20,000 in the 2026 /27 tax year and subsequent tax years.

15. How long do I have to keep my old accounting records as part of MTD for Income Tax?

This doesn’t change compared to the existing Self Assessment system. You should keep records for at least five years. The difference with MTD is that these must be kept digitally. You cannot print out your accounting records and stash them in a filing cabinet, for example.

16. Where can I learn more about MTD for Income Tax?

HMRC is running webinars about MTD for Income Tax. The MTD for Income Tax beta government pages also provides some information about how the scheme will work.

The government’s overview of Making Tax Digital contains higher-level information about its plans.

We’ll share more details on Sage Advice whenever any new information becomes available, including guidance on how to comply.

Final thoughts on MTD for Income Tax

Key to getting ready for MTD for Income Tax is to stay ahead of the curve when it comes to learning about it, and also adoption.

Aim to sign up as soon as you can. This way you’ll be ahead of the millions of others doing the same thing, and who are likely to cause substantial congestion when it comes to receiving support from HMRC and also their software vendor.

If you need to switch to using accounting software to comply with MTD for Income Tax then this is also best done as soon as possible, so you can adapt and improve any of your admin processes ahead of the legal requirements of MTD for Income Tax coming into force.

Cloud accounting software will be updated in time, and you can start using it today.

MTD for Income Tax might seem like a big change but by splitting out the required tasks into chunks, you can introduce the requirements gradually for the benefit of you—and your business.

Editor’s note: This article was first published in September 2021 and has been updated several times for relevance.

Changing from day-shift to night-shift is notoriously hard on employees, but even planning shift structures can be quite a headache.

Some shift patterns require multiple teams, with potential for confusion if you draw on one team to cover for an absence in another.

You can feel like your head is in three different places!

However, today we’ll demystify shift planning, looking at the different patterns commonly used and how the right set-up can actually improve motivation and wellbeing.

This guide will also provide practical steps for implementing a new system, one that works for your business while also supporting your team.

Here’s what we’ll cover: