MTD for Income Tax Is Live: How BrightTax and BrightManager Help Practices Manage the First Year

MTD for Income Tax has been in planning, consultation, and deferral for nearly a decade. Its arrival for the first cohort in April 2026 marks the beginning of a long transition that will eventually bring the majority of self-employed individuals and landlords onto quarterly digital reporting. For practices, the first year is both an operational challenge and a template-setting exercise. The workflows, client communication approaches, and software integrations established in 2026/27 will need to scale as the mandate expands.

This blog is part of our series, Making Tax Digital for Income Tax: Your Complete Practice Guide to Multiple Cohorts, Workflows, and Compliance.

The soft landing provision is useful as it means HMRC will not issue penalty points for late quarterly update submissions during 2026/27 for the first mandated cohort. This gives practices and clients time to embed the new process without the immediate pressure of penalties accumulating. But the soft landing is a one-year concession, not a permanent reprieve. The second cohort joins the regime in April 2027, and from that point, penalty points will apply to late submissions for both cohorts.

What MTD ITSA Requires in Practice

The MTD ITSA obligations for mandated clients are more extensive than many initially anticipate:

Digital record-keeping. All income and expenses for the client’s self-employment and property businesses must be maintained in MTD-compatible software or a linked digital system from the start of the tax year.

Quarterly updates. Four quarterly updates per year must be submitted for each source of business income. The quarters follow the tax year (April–June, July–September, October–December, January–March), and each update is due by the 7th of the second month after the quarter end: 7 August, 7 November, 7 February, and 7 May.

Final declaration. The final declaration replaces the self-assessment return. It combines all income sources and calculates the final tax liability. The final declaration must be submitted by 31 January following the tax year (the same deadline as the previous self-assessment return).

The Quarterly Workflow: What Practices Need to Build

The practices adapting most successfully are those that treat quarterly updates as a client-managed bookkeeping review rather than a practice-prepared submission. Where the client maintains their records in MTD-compatible software (such as BrightBooks), the quarterly update can be generated and submitted by the client themselves, or submitted by the practice after a review.

For clients who are not keeping digital records, the practice must do more of the work. Identifying which clients are in this position, and having a migration conversation with them, is the most important practice development activity in the first year of the mandate.

The Soft Landing and What It Does Not Cover

HMRC’s soft landing for the first MTD IT cohort in 2026/27 means that no penalty points will be issued for late quarterly updates during the first year. This applies only to quarterly updates.

The soft landing also does not apply to the second cohort when it joins in April 2027. Practices with clients in both cohorts will be managing penalty risk for the 2027 cohort from day one of their mandate.

The most effective use of the soft landing period is to embed the quarterly workflow (client communication, record review, update submission) before the penalty clock starts. A practice that uses 2026/27 to develop and test its quarterly submission process is well positioned for 2027/28. A practice that treats the soft landing as permission to continue operating as before will face the same disruption in 2027 that it avoided in 2026.

How does Bright’s MTD software suite support your practice?

Bright has built a connected suite of products that covers every stage of the MTD for Income Tax workflow, from the moment a client photographs a receipt through to the final annual declaration. Here is how the four products fit together.

• BrightBooks is where the quarterly updates work happens. It handles digital record-keeping and quarterly submissions to HMRC, with multiple pathways to support MTD IT clients across all levels of digital readiness, including full bookkeeping, Excel bridging, and bank-based filing. For practices managing large numbers of clients through the quarterly cycle, BrightBooks is the engine at the centre of the MTD IT workflow.

• BrightBooks' document capture tool helps practices serve clients who still operate the traditional shoebox approach to record-keeping. Taxpayers photograph receipts and invoices on their mobile phones and forward them; documents arrive at the practice in a digitised format with VAT already split and data extracted, flowing directly into BrightBooks ready for quarterly filing. What would typically require hours of manual bookkeeping arrives as verified data ready to process.

• BrightTax handles the final submission. Where BrightBooks manages the quarterly rhythm, BrightTax ensures the year-end piece is accurate, efficient, and fully compliant with HMRC requirements. Together, BrightBooks and BrightTax cover the complete annual MTD cycle.

• BrightManager is the command centre for practices managing MTD ITcompliance across a large client portfolio. It gives practices a single view of all clients, making it straightforward to monitor who has outstanding submissions, where to send follow-up is needed, and it even send the follow ups for you. For practices facing the challenge of chasing dozens or hundreds of clients through each quarterly deadline, BrightManager makes that process significantly more manageable. Check out BrightManager’s latest MTD IT features to make your accounting firm’s internal MTD IT processes effortless.

Used together, the four products form a complete MTD solution: BrightBooks' document capture tool brings client documents into the workflow, BrightBooks handles the quarterly filing, BrightTax covers the final declaration, and BrightManager keeps the practice in control of the whole picture.

Frequently Asked Questions on MTD IT

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.