Wolters Kluwer Survey: UK Accountancy Firms Brace for Delivery Pressure as Making Tax Digital for Income Tax Begins

WHY THIS MATTERS
This research shows that the challenge of Making Tax Digital (MTD) has fundamentally shifted—from understanding regulation to executing it at scale. With up to two-thirds of clients still non-digitalised, accountancy firms are now facing a practical bottleneck: onboarding clients, ensuring data quality and managing quarterly reporting cycles without overwhelming internal capacity.

It also highlights a broader transformation in the sector. The pressure is no longer about compliance alone, but about building scalable, digital-first operating models. Firms that can standardise workflows, integrate the right software and manage client transitions effectively will be better positioned not just to meet MTD requirements, but to operate more efficiently in the long term.

New research commissioned by Wolters Kluwer Tax & Accounting shows that for the accountancy sector the biggest risks to successful Making Tax Digital (MTD) for Income Tax implementation are not awareness or understanding of the regulation, but the practical challenge of supporting large numbers of non‑digitalized clients while embedding scalable digital processes as firms enter the first mandatory MTD for Income Tax reporting period in April 2026.

Half of respondents estimate that between 50% and 69% of their income tax clients remain non‑digitalized, increasing pressure on firms to manage software decisions, data quality, and client onboarding at pace. With quarterly submissions now coming into effect, firms are focused on whether their client onboarding, data capture and workflow processes can scale consistently across reporting cycles. The first submissions will test technology choices, data quality and client communications at pace.

“As firms move into the first mandatory MTD for Income Tax reporting period, the conversation has clearly moved on. The challenge is no longer whether firms understand what’s coming, but whether they can execute at scale, particularly when so many income tax clients are still not digitally enabled,” said Mohammed Sidat, Associate Director, Product Management, Wolters Kluwer. “However, this also creates a real opportunity for firms to streamline processes, standardise technology, and strengthen long‑term client relationships.”

Confidence remains high, but readiness is uneven
While sentiment toward MTD remains broadly positive the survey highlights a growing gap between confidence and readiness. More than two thirds of accountants (69%) believe MTD will be positive for their business overall, and over half (56%) say it will be positive for clients. However, respondents rated overall client preparedness at a moderate level (64 out of 100). The majority of accountants (71%) also report that the generational cohort that appears to be more prepared for MTD are those aged under 45.

Non-digitalized clients remain a persistent challenge
Non-digitalized clients continue to present a significant barrier to smooth adoption. Half of respondents indicate that more than half of their income tax client base is still not using digital records or accounting software. Compared with earlier Wolters Kluwer research, this suggests that the scale of the non‑digitalised client challenge has not diminished as the deadline draws closer, reinforcing the operational burden faced by firms as quarterly reporting requirements approach. This partly explains why data quality and reconciliation (47%), client onboarding and digital migration (44%), client communication and education (43%), and software integration (43%) are ranked among the most significant operational challenges, highlighting that MTD readiness is being shaped more by systems and workflows than by rule interpretation.

Software complexity outweighs regulatory concerns
Software selection has emerged as a persistent pressure point. Nearly half of respondents cited finding the right software as their primary concern (46%), ahead of worries about not understanding rules and regulation (30%). Clients being unhappy with the change (40%) non‑compliance risk, penalties or fines (39%) and additional time and expenses (39%) incurred were also other relevant concerns cited by accountants.

Barriers shift from skills to capacity
The nature of adoption barriers also appears to be changing. While client resistance to change and their preference for paper (47%) and the cost of software or migration (45%) remain significant, fewer respondents now cite lack of digital skills as an obstacle (39% in 2026 versus 50% in 2025). Instead, time and resource constraints within firms are more prominent (33% in 2026 vs 22% in 2025), suggesting that capacity, rather than willingness, may be the limiting factor as firms move from preparation into delivery.

MTD accelerates a more pragmatic operating model
Despite these pressures, the survey shows that accountancy firms continue to see long term value in MTD. Time savings is now the most frequently cited benefit of MTD for Income Tax (60%), ahead of improved bookkeeping efficiency (59%) and enhanced financial forecasting and data analysis (58%). Fewer respondents frame MTD primarily as a relationship building opportunity (28% in 2026 vs 41% in 2025), pointing instead to a more pragmatic focus on automation and operational resilience.

Opportunities extend beyond compliance
This practical focus is also shaping how firms view commercial opportunity. Bundled compliance and bookkeeping services (44%), workflow automation (43%), and digital migration and onboarding projects (39%) were identified as the strongest opportunities created by MTD for Income Tax. App advisory and software selection (34%) and quarterly advisory services such as cashflow and forecasting (31%) also ranked highly, signalling a shift toward integrated, value led service models that extend beyond annual compliance.

FF NEWS TAKE
This is less about regulation—and more about operational reality. MTD is exposing the gap between firms that are digitally ready and those still reliant on manual processes, with client migration emerging as the true pressure point.

At the same time, it creates a clear opportunity. Firms that embrace automation, streamline onboarding and rethink their service models can turn MTD into a growth driver. The shift is already happening—from compliance providers to digitally enabled advisors offering more integrated, scalable services.