How should you segment MTD clients for quarterly work?

Segment Making Tax Digital for Income Tax (MTD IT) clients by who populates their records each quarter, not by which software they own. A client with a well-kept spreadsheet needs a bridging tool and a reminder, while a client with a shoebox needs someone to turn paper into records every quarter. In Bright’s August 2026 survey, 53% of respondents named software choice as the main reason they succeeded with MTD IT, and 42% named client segmentation.

Why segment MTD for Income Tax clients by who keeps the records?

The workload of a quarterly update depends on who enters the figures, so the person entering them is a better dividing line than the software name. In Bright’s August 2026 survey, 70% of respondents’ MTD clients used no bookkeeping software, split roughly 33% Excel and 37% paper records.

Bright’s respondents did not describe spreadsheets as a problem to fix. A client who keeps a well-organised spreadsheet can be connected to HMRC through bridging software with little friction. The extra work arrives when the practice is the one filling in the spreadsheet every quarter.

What are the four groups of MTD for Income Tax clients?

How do you find out which group each client belongs to?

Ask each client one question: who will enter your income and expenses each quarter? The answer places the client in a group and tells you whether the practice or the client carries the data entry. Record the answer wherever your practice tracks client set-up, so a colleague opening the file sees it.

How should you communicate differently with each MTD group?

Each group needs a different message at a different point in the quarter. The first group needs a deadline reminder and a request to confirm filing. The client-kept spreadsheet group needs the date the spreadsheet must be ready before the quarterly update is due. The practice-kept group needs a records request soon after each period ends. The paper group needs a capture routine that starts well before the period ends.

In BrightManager, the MTD Quarterly Filing service can send record-request emails automatically, with the number of days after the period end set in the practice’s automation settings.

Which spreadsheet clients should move to bookkeeping software?

Clients with well-kept spreadsheets do not need to move. HMRC accepts spreadsheets connected through bridging software or MTD-recognised software, and the problem to look for is who populates the spreadsheet. Move a client to bookkeeping software where the practice is keying data in every quarter and the client can take over the entry. For how bridging works in practice, read how bridging tools work for spreadsheet-based MTD clients.

How do BrightBooks and BrightManager support each group?

BrightBooks covers each group with a different route into the same quarterly update. It supports full bookkeeping, an Excel import that works as a bridging tool for self-employment, UK property and foreign property updates, and generates the quarterly figures from ledger transactions and imported Excel data. BrightManager can filter clients by the income thresholds of £50,000, £30,000 and £20,000, which helps a practice see which clients come into MTD for Income Tax in which year.

Frequently asked questions

This content may have been developed with the assistance of AI tools. Content is reviewed by a member of the Bright team before publication. Guidance on legislation can be obtained from your industry body.