MTD ITSA Is Coming in 2026: What Small Firms Must Do Now to Avoid a Client Crisis

MTD ITSA will bring a fundamental operational change for many sole traders and landlords: digital records and quarterly updates instead of a single end-of-year return. HMRC’s published material sets out the staged approach and explains what regulated digital filing will require. Preparing early reduces the risk of last-minute onboarding, missed submissions and stressed clients.

Who’s likely to be affected first

The rollout is phased and targeted by income bands. The initial cohorts include taxpayers above the higher qualifying thresholds, with further groups brought in over subsequent years. Practices should assume a progressive widening of scope and plan capacity accordingly. Keeping abreast of HMRC guidance and the technical publications is essential as detail continues to be published.

Practical step-by-step checklist for the next 90 days

1. Identify and segment clients. Use the latest returns to flag those whose combined self-employment and property income puts them in the first cohorts, and group them by readiness: digital, partially digital, manual. This allows targeted comms and prioritised action (ICAEW).
2. Agree a simple client communications plan. Send a short, jargon-free note outlining what MTD ITSA will mean for them, the likely timetable, and whether you’ll assist with software selection and sign-up. Set up 15-minute review calls for high-priority clients (Gov.UK).
3. Shortlist compatible software and pilot early. Compile a small list of HMRC-recognised/MTD-compatible packages you will support. Migrate a handful of clients to a controlled pilot to test data flows, common mapping issues and agents’ submission steps (Gov.UK).
4. Create internal SOPs and allocate roles. Map the journey from client data capture to quarterly submission: who chases receipts, who prepares, who reviews, who files. Automate reminders in your practice management system where possible (ICAEW).

Messaging and fees — get the conversation right

Set expectations with clients about time and cost changes now, not during a March-time scramble. Consider a fixed onboarding fee and a simple ongoing quarterly price so clients understand the value and you protect margins. Frame MTD as a service upgrade (more regular oversight, earlier cash-flow insight), not merely an HMRC obligation (ICAEW).

Final takeaway

MTD ITSA is an operational shift that rewards early action. Identify in-scope clients, run a small migration pilot, tighten internal workflows and communicate clearly. Firms that act now will avoid crises and can use the change to deliver more timely advisory services.

Practitioners need accurate, trustworthy guidance to keep their clients compliant. Tolley+ gives you the confidence to navigate MTD with expert-written content, practical steps, and AI-powered search that brings the right answers instantly.