Have you heard of Making Tax Digital for Income Tax? If not, you’re not alone: Research in January 2026 from Sage and IPSE says only around 30% of sole traders have meaningful awareness of MTD for Income Tax.
Even worse, of those who do know about MTD for Income Tax, 39% have taken no preparatory steps to change their processes. MTD for Income Tax starts in April 2026 for millions of Income Tax payers and it’s been called the biggest change in taxes for a generation. But it’s not just a compliance change. It’s a shift in how often businesses look at their numbers, how they manage tax through the year, and who they rely on for support.
A deadline that’s approaching fast
From April 2026, sole traders and landlords with gross income above £50,000 will need to follow MTD for Income Tax rules, with lower thresholds phased in later years.
Annual Self Assessment gives way to digital record-keeping, quarterly updates (at least) submitted via MTD-compatible software, and a final digital tax return by 31 January following the end of the tax year in April. The tax itself doesn’t change, and nor does the way you pay it. But the way it’s reported does.
As April approaches, awareness is improving, but many SMEs are still underestimating what this change means in practice.
Jonathan Athow, Director General for Tax Design at HMRC, described the rollout as “on track”. Yet the same session revealed a challenge that can’t be ignored: around 40% of sole traders and landlords currently operate without an accountant or bookkeeper.
Whilst there will always be those who do it themselves, many others will need to act fast and loop in their bookkeeper and/or accountant to get the fundamentals sorted out ahead of time.
Why SMEs should pay attention now
For many small businesses, tax has historically been something dealt with once a year, often under pressure and with limited visibility in between. MTD entirely changes that.
Quarterly updates are a legal requirement. And this is no bad thing. They encourage more regular engagement with the numbers. Each time an update is made, HMRC will provide you with an estimate of the tax bill. No more setting aside a nebulous amount of cash in the hope of covering the bill. Now you have true insight.
That brings earlier insight into profitability, clearer visibility of tax liabilities, and better cash flow planning. It also spreads the workload across the year, reducing last-minute stress and the risk of errors.
For some, this will feel like a step change. For others, it will quickly become a better, clearer way of working.
The accountant’s role becomes more important, not less
It’s a huge mistake to consider MTD for Income Tax simply a software switch, even if that’s how it appears on paper. It requires a new way of working and, for many, accountants and bookkeepers will continue to be central to making this work.
Experts like this can help businesses understand when they are in scope, monitor points for non-compliance, and provide reassurance that obligations are being met. Quarterly updates also create more regular touchpoints, shifting the relationship from annual compliance to ongoing support and advice.
Technology is doing the heavy lifting
Digital tools sit at the heart of MTD, but the best technology tends to be almost invisible. Automated bank feeds, automated data capture like AutoEntry, and direct links to HMRC all reduce manual effort and improve accuracy.
For example, Sage have been working closely with accountants and small businesses for over 40 years and this becomes key when supporting the move to MTD, with MTD-ready solutions designed to fit naturally into everyday workflows.
A chance to get ahead
It’s easy to frame Making Tax Digital for Income Tax as another obligation.
But for businesses (and especially sole traders and landlords) that prepare early, it’s an opportunity to modernise financial processes and gain better control of the business.
With the right support and the right digital foundations, tax becomes an ongoing, manageable part of running a business, not a once-a-year disruption.
As April 2026 approaches, the businesses that are rewarded with truth growth will be those that see MTD not as a burden, but as a step forward.
