MTD Income Tax: The 5 Questions Clients Are Asking | Receiptflow
MTD for Income Tax: The 5 Questions Your Clients Are Already Asking You
Tanvir Alam•Jun 27, 2026•8 min read•Tax & Compliance
Making Tax Digital for Income Tax is now mandatory for sole traders and landlords earning above £50,000, and your clients are asking about whether they're affected, what they need to do, what happens to receipts, whether they'll pay tax more often, and what the penalties are. This guide gives you the ready-to-share answers.
MTD for Income Tax questions from clients aren't coming. They're already here. Since April 2026, sole traders and landlords above the £50,000 qualifying income threshold have been legally required to keep digital records and submit quarterly updates to HMRC. For most of your clients, this is the biggest change to how they manage their tax affairs in a decade.
And they're not reading the HMRC guidance. They're calling you.
This post is designed to be useful in two ways: as a reference for you, and as something you can send directly to the clients who keep asking the same five questions. Forward it, link to it, print it. Whatever works for your practice.
The 5 MTD Income Tax Questions Clients Are Asking Right Now
Question 1: "Do I actually have to do this?"
This is the most common starting point, and the anxiety behind it is usually about threshold confusion rather than genuine resistance.
The threshold for the April 2026 phase is £50,000 of qualifying income. Qualifying income means the gross income from self-employment plus gross income from UK property, combined. It is turnover, not taxable profit. A landlord earning £35,000 in rent with £20,000 in expenses still has qualifying income of £35,000 for MTD purposes (more on how MTD applies specifically to landlord clients).
The figure HMRC uses is from the most recent tax return filed before the mandation date. For the April 2026 phase, that means the 2024/25 return which reports gross qualifying income above £50,000 on the return filed by January 2026.
The phased rollout continues: above £30,000 from April 2027, and above £20,000 from April 2028. Clients who are currently below £50,000 but growing need to understand they may come into scope in future years.
One important exception worth flagging: a genuinely new business started during the 2025/26 tax year with no prior self assessment return does not come into MTD from April 2026, even if turnover exceeds £50,000 in that first year. The requirement is based on a declared return, not a projection.
The answer for clients: Check the gross income figure on your 2024/25 self assessment return, not your profits, your gross income. If it's above £50,000, you're in for 2026/27. If it's between £30,000 and £50,000, you'll join in April 2027 unless income changes.
Question 2: "What do I actually have to do differently?"
This question often arrives with a subtext of "how much more work is this going to be?"
MTD for Income Tax has three core obligations:
Keep digital records of all income and expenses using HMRC-compatible software. Spreadsheets are only compliant if used with bridging software that submits to HMRC via an API.
Submit quarterly updates to HMRC. The deadlines are the 7th of August, November, February, and May - aligned with the quarterly periods ending 5 July, 5 October, 5 January, and 5 April.
File a final declaration (the equivalent of the self assessment return) by 31 January after the tax year end.
The quarterly updates are not full tax returns. They are summaries of income and expenses for the quarter; what HMRC calls "totals-only" reporting. Clients do not need to submit every individual receipt or transaction. However, the underlying digital records must exist and be accurate, because they feed into the quarterly submissions.
The first quarterly deadline for clients who entered MTD in April 2026 is 7 August 2026. That deadline is now weeks away.
The answer for clients: You need compatible software, you need to keep your records up to date through the year rather than all at once in January, and you need to submit four summaries a year plus your end-of-year declaration. Your accountant will guide the process but you need to get your records in order now.
Running MTD quarterly updates alongside your existing bookkeeping workload? Receiptflow makes it easier to get client receipts processed and categorised without the manual data entry. Start a free trial →
Question 3: "What do I do with my receipts?"
This is where clients who have been operating informally start to feel the weight of change. Many sole traders are still storing receipts in shoeboxes, forwarding photos on WhatsApp, or relying on a once-a-year clear-out.
MTD requires digital records. That means each transaction must be recorded in compatible software either entered directly or captured via an automated process. A photograph of a receipt is not a digital record unless it is processed through software that extracts and stores the underlying data.
The practical implication for your clients is that they need a habit, not a one-off effort. Receipts processed weekly or in real time are far easier to manage than three months' worth dropped in your lap the week before the quarterly deadline.
This is also where the right tooling matters. HMRC-compatible software includes practice editions of tools like Xero, QuickBooks, and Sage for managing multiple clients from a single dashboard. For practices handling large volumes of receipts and expenses across many clients, automated receipt processing reduces both the manual effort and the error rate.
The key point to communicate to clients: their job is to get you the information. Your job is to process it. But that only works if they're sending receipts consistently through the year, not in one panicked batch.
The answer for clients: You need to capture and record every business receipt and expense digitally throughout the year. Apps and email forwarding tools can make this straightforward. Speak to your accountant about the best approach for your situation.
Question 4: "Will I have to pay tax every quarter?"
This is the question driven by fear more than anything else. Clients hear "quarterly submissions" and immediately assume HMRC is coming for their money four times a year.
The answer is straightforward: no. The payment dates for income tax are not changing under MTD. Tax is still due by 31 January after the end of the tax year, with payments on account due 31 January and 31 July as currently. HMRC confirmed this explicitly and there are no plans to change it.
What changes is the reporting rhythm, not the payment schedule. The quarterly updates give HMRC a running picture of income and expenses through the year. The actual tax liability is still calculated and settled in the same annual cycle as before.
For many clients, this will be genuinely reassuring once they understand it. The concern about cash flow is real, and it is worth addressing it head-on rather than letting the misconception persist. Clients who believe they face quarterly tax bills may hold back cash unnecessarily or, worse, disengage from the process entirely out of anxiety.
The answer for clients: Your tax payment dates are not changing. You still pay tax by 31 January (and payments on account by 31 January and 31 July as usual). The quarterly submissions are reporting obligations only, not payment triggers.
Question 5: "What happens if I get it wrong or miss a deadline?"
The penalty question comes in two forms: clients who are worried they have already missed something, and clients who want to understand the consequences before committing to the new process.
During 2026/27, HMRC is operating a soft landing period. There are no penalty points and no financial penalties for late submission of quarterly updates in the first year. This is consistent with how HMRC handled the early stages of MTD for VAT. The soft landing is specifically designed to allow teething issues to surface without penalising firms and clients who are making a genuine effort to comply.
From April 2027, the penalty regime moves to a points-based system, similar to the VAT late-filing rules introduced in 2023. Under this system, each late submission earns a penalty point. When points accumulate to a set threshold, a financial penalty of £200 applies and the threshold resets once compliance is demonstrated for a sustained period.
The year-end final declaration still carries the same 31 January deadline and the same late-filing consequences as the current self assessment regime.
For clients who were in scope from April 2026 and have not yet signed up or begun submitting, the practical advice is: get it sorted now. The soft landing gives breathing room, but it does not last. The 7 August 2026 deadline for the first quarterly update is the point at which most in-scope clients will start to see whether their setup actually works.
The answer for clients: During 2026/27, there are no financial penalties for missing quarterly update deadlines. HMRC is operating a soft landing period. But from April 2027, a points-based penalty system applies. Get set up now while there's still time to iron out any issues without consequence.
A Note on Receipts, Records, and the Quarterly Habit
The thread running through several of these questions is the same: MTD changes when clients engage with their finances, not just what they report. The annual rush to compile everything for a January return does not translate to quarterly reporting.
Clients who keep records well through the year will find MTD manageable. Clients who leave everything until the last moment will find it stressful, and that stress lands on your desk.
The practices that adapt best to MTD are the ones who get their clients into a consistent record-keeping rhythm, and put in place the tools to make that rhythm low-friction. That means software that clients can actually use, clear expectations about what they need to submit and when, and a process for handling receipts and expenses that does not rely on a box of paper at year end.
At Receiptflow, we help bookkeepers and accountants manage client receipt processing without the manual overhead. Clients forward receipts by email, no app, no friction, and the data lands in your workflow, ready for reconciliation. See how it works →
FAQs
Common Questions with Clear Answers
Does qualifying income for MTD include PAYE earnings?
No. PAYE income does not count towards the MTD qualifying income threshold. Only gross income from self-employment and UK property is included.
Can clients still use a spreadsheet for MTD records?
Only if the spreadsheet is connected to HMRC-compatible software via a digital link (bridging software). A standalone spreadsheet does not meet the digital records requirement.
Will clients have to pay tax every quarter under MTD?
No. Tax payment dates are not changing under MTD. Tax is still due by 31 January after the end of the tax year, with payments on account due 31 January and 31 July as currently.
What is MTD qualifying income?
Qualifying income is the combined gross income from self-employment and UK property. It is turnover, not profit. PAYE income is excluded. A landlord earning £35,000 in rent with £20,000 in expenses still has qualifying income of £35,000.
What happens if a client misses the first MTD quarterly deadline in August 2026?
During 2026/27, HMRC is not issuing penalty points or financial penalties for late quarterly updates. The soft landing period gives breathing room, but the penalty regime activates from April 2027 with a points-based system.
