Making Tax Digital (MTD) for income tax is poised to reshape the UK accountancy sector in 2025, emerging as both the industry’s most significant challenge and its greatest opportunity, according to a recent Accountex survey.
The survey, which gauged accountants’ perspectives on the digitalisation of tax and Self-Assessment, revealed that 81.70% of respondents view MTD as their primary concern for 2025.
Other notable challenges include tax changes (44.44%), AI adoption (38.56%), client servicing (33.33%), and recruitment (20.26%).
Despite these concerns, 79.08% of accountants also see MTD as a major opportunity.
The top five opportunities identified were MTD (79.08%), AI (46.41%), tax changes (46.41%), client servicing (41.83%), and new business acquisition (21.57%).
Accountants noted that MTD’s requirement for more frequent communication will provide greater visibility into clients’ businesses, enabling upselling, stronger relationships, and expanded advisory services.
However, preparedness remains a concern, with 34% of accountants stating they are not ready for MTD for income tax, set to take effect in April 2026 for sole traders and landlords with qualifying income from self-employment and property exceeding £50,000.
While previous MTD mandates in 2019 and 2022 saw more than 90% of businesses adequately prepare, 11.15% of agents still rely on the HMRC platform for filing returns, an option that will not be available for self-assessment returns above the £50,000 threshold in 2026.
HMRC figures highlight the benefits already being realised, with 45% of businesses reporting time savings of up to 40 hours per year, 40% noting improved operations and finances, and 20% crediting MTD with driving digital transformation.
The total estimated value of time saved ranges between £603m and £915m annually.
Key changes under MTD for Income Tax include mandatory digital record-keeping, the use of MTD-compatible software, and quarterly submissions of income and expense summaries to HMRC.
Accountants estimate that the initial £50,000 threshold will affect 20% of their clients, with the impact expected to grow significantly in April 2027 for those with qualifying income above £30,000 and in April 2028 for those above £20,000.
Accountants also view AI as a tool to streamline processes, improve client servicing, and attract new business.
The survey suggests that the shift to MTD is not solely about software or compliance but requires a cultural change in how tax and Self-Assessment are approached.
Early preparation, client education, and internal team alignment are seen as critical for accountancy firms to navigate and capitalise on this digital transition.
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