MTD Readiness: 5 Questions to Ask Your Accountant Right Now

By Sam

The landscape of UK taxation is undergoing its most significant shift in a generation. If you are a sole trader, a landlord, or an SME owner, the acronym "MTD" (Making Tax Digital) is likely already on your radar. However, as we approach the critical April 2026 rollout for Income Tax Self Assessment (ITSA), "knowing about it" is no longer enough. You need to be ready.

Making Tax Digital isn't just a change in how you file; it’s a fundamental change in how you manage your daily business finances. Gone are the days of the "shoebox of receipts" at the end of the year. From 2026, digital record-keeping and quarterly updates will be the law for millions.

But here is the catch: not every accounting firm is moving at the same pace. Some are proactive, transitioning their clients early to avoid a last-minute scramble. Others are taking a "wait and see" approach, which could leave you in a difficult position when the deadline hits. To ensure your business is protected, you need to have a serious conversation with your financial advisor today.

Here are the five essential questions you should ask your accountant right now to gauge your MTD readiness.

1. "Based on my 2024–25 figures, will I be mandated into MTD ITSA from April 2026?"

The first step in any preparation plan is knowing whether the rules actually apply to you in the first wave. The 2026 rollout specifically targets individuals: not limited companies: who have a total qualifying income from self-employment or UK property that exceeds £50,000.

It is vital to ask your accountant to calculate your "qualifying income" based on the 2024–25 tax year. This isn't your profit; it is your gross turnover before expenses. If you have multiple sole-trade businesses or multiple rental properties, these figures are aggregated.

If your income falls between £30,000 and £50,000, you aren't off the hook; you will likely be brought into the fold in April 2027. By asking this question now, you can build a timeline that doesn't involve a panic in March 2026. If you find that your current advisor is vague about these thresholds, it might be time to find an accountant in the UK who specializes in MTD transitions.

2. "Which MTD-compatible software should I use, and how will we manage digital records?"

Under MTD, paper records are no longer sufficient. You must use "functional compatible software" to keep your records and communicate with HMRC. This is the heart of the new system.

Ask your accountant which platforms they recommend: whether it’s Xero, QuickBooks, FreeAgent, or Sage: and why. More importantly, ask how the workflow will look. Will you be responsible for scanning receipts via an app, or will they handle the data entry?

Moving to digital isn't just about compliance; it’s an opportunity to gain better insights into your cash flow. For a deeper dive into how this works for specific sectors, read our guide on Digital Records for MTD: Best Practices for Sole Traders and Landlords. Transitioning to these systems now gives you a "soft landing" period to get used to the software before the mandatory filing begins.

3. "How will the move to quarterly updates change our working relationship and my tax planning?"

The biggest practical change for most SMEs will be the move from one annual tax return to four quarterly updates, plus a final declaration. This means you will be interacting with your tax data: and potentially your accountant: much more frequently.

Ask your accountant:

• How will you notify me of upcoming quarterly deadlines?

• Will you review my data every quarter, or just submit what is in the software?

• How will these updates help us forecast my tax bill more accurately?

One of the benefits of MTD is that you should never be surprised by a tax bill again. Because you are reporting every three months, your accountant can provide real-time advice on how much to set aside for HMRC. To get ahead of the curve, you should review your MTD quarterly update checklist to see what information you’ll need to have ready every 90 days.

4. "How will your fees and service packages change to accommodate the extra reporting?"

Let’s talk about the elephant in the room: cost. Under the old system, an accountant might have seen you once a year to do your "books." Under MTD, there is more work involved in ensuring quarterly accuracy and filing multiple updates to HMRC.

It is highly likely that your accountant will adjust their fee structure. Some may move to a monthly subscription model that includes software costs and quarterly filings. Others may charge a per-submission fee.

You need to know these costs upfront so you can budget accordingly. This is also the perfect time to compare accountant services across the market. Some firms have automated their MTD processes so efficiently that they can offer these extra services at a very competitive rate, while others may still be using manual processes that drive up the price.

5. "Are there any structural changes I should consider before the 2026 deadline?"

Finally, MTD is a prompt to look at the "big picture" of your business structure. For some sole traders on the edge of the £50,000 threshold, it might actually make sense to incorporate as a Limited Company. While Limited Companies will eventually face MTD for Corporation Tax, they are not currently part of the 2026 ITSA rollout.

Ask your accountant if your current structure is still the most tax-efficient and administratively simple option. They should be able to run a "what-if" scenario comparing the costs and reporting requirements of staying as a sole trader versus moving to a company structure.

A proactive accountant won't just tell you how to follow the rules; they will tell you how to use the rules to your advantage. If your current advisor isn't offering this kind of strategic thinking, it’s a red flag.

Why MTD Readiness Cannot Wait

The 2026 deadline might feel far away, but the data that HMRC will use to decide if you belong in that first wave is being generated right now. Waiting until the end of 2025 to start your digital transition is a recipe for stress, higher fees, and potential filing errors.

The transition to digital accounting is an empowering move. It gives you back control over your numbers, reduces the "January dread," and ensures your business is fit for the future. However, this empowerment depends entirely on having the right partner by your side.

If you’ve asked these five questions and didn't like the answers: or if your accountant seems overwhelmed by the upcoming changes: it is time to look at your options. At Accountant Search, we specialise in matching SMEs and sole traders with forward-thinking professionals who are experts in MTD.

Don't let the 2026 rollout catch you off guard. Take the time to find an accountant in the UK who views MTD not as a hurdle, but as a way to help your business thrive.

Final Thoughts

MTD for ITSA is the future of UK tax. By asking these questions today, you are doing more than just ticking a compliance box; you are ensuring that your business is built on a foundation of clarity and modern efficiency. Whether you need to overhaul your bookkeeping or simply need a second opinion on your tax structure, the right advice is only a few clicks away.

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