Why Non-Digital Clients Are the Biggest MTD IT Challenge (and How to Solve It)
Why Non-Digital Clients Are the Biggest MTD IT Challenge
Making Tax Digital for Income Tax (MTD IT) is one of the most significant shifts UK accountants have faced in years. While many firms feel confident about the software and compliance requirements, research and industry feedback point to one consistent issue: a large proportion of clients are still not fully digital.
In fact, recent industry research suggests that over 40% of accountants say more than half of their clients are not fully digitally prepared for MTD IT, according to surveys published by ICAEW and ACCA.
Industry estimates suggest that between 30–40% of self-employed individuals and landlords affected by MTD IT continue to rely on non-digital record keeping, such as paper receipts, handwritten logs, or basic spreadsheets. For accountants, this creates a widening gap between HMRC’s digital expectations and the day-to-day reality of client behaviour.
Non-digital clients are not a single group. Patterns consistently show that:
- Older clients (typically 55+) are more likely to rely on paper records or offline spreadsheets, often due to lower confidence with technology or a preference for long-established habits.
- Micro-businesses and sole traders with low transaction volumes often see little immediate value in changing systems and view digital tools as unnecessary or complex.
- Landlords, particularly those with one or two properties, frequently manage records manually because property income feels “simple” and infrequent.
- Even digitally capable clients may behave non-digitally when accounting feels unfamiliar, time-consuming, or stressful.
At the same time, accountants report that clients who already use digital tools year-round are far easier to support under MTD IT. Their data is cleaner, deadlines are more predictable, and quarterly submissions become routine rather than disruptive. The contrast between these two groups is stark, and it’s why non-digital clients represent the biggest operational risk as April 2026 approaches.
This challenge isn’t about unwillingness alone. Common reasons clients remain non-digital include:
- Fear of making mistakes with new software
- Concerns about cost or perceived complexity
- Lack of time to learn new systems
- Misunderstanding what MTD IT actually requires
- A belief that their current approach “works well enough”
As MTD IT moves from concept to reality, these behaviours can no longer be ignored. Without a clear strategy to address non-digital clients, firms risk higher admin workloads, squeezed margins, and unnecessary stress, even if the technology itself is ready.
The good news? With the right approach, non-digital clients don’t have to become a bottleneck. They can be transitioned gradually, supported effectively, and brought into MTD compliance without overwhelming your practice or your clients.
Why Non-Digital Clients Are Such a Challenge Under MTD IT
MTD IT requires all affected clients to:
- Keep digital records
- Submit quarterly updates to HMRC
- File a final end-of-year declaration
- Use MTD-compatible software throughout the process
For clients who already use cloud tools, this is a natural evolution. For non-digital clients, it’s a fundamental shift in how they operate.
According to HMRC’s own MTD research, digitally confident businesses adapt more quickly and report fewer errors, while those relying on paper or manual processes experience significantly higher compliance friction.
The main challenges accountants face include:
- Poor or inconsistent record keeping
- Increased admin time converting paper or manual records
- Resistance to change or fear of technology
- Higher risk of errors and missed deadlines
- Pressure on fees when extra work isn’t clearly defined
It’s no surprise that over half of UK accountants list “client readiness” as their top MTD IT concern, ahead of software or technical compliance, based on multiple UK accounting industry surveys.
Left unmanaged, these issues can quickly eat into margins and create unnecessary stress as April 2026 approaches.
The Key Mistake: Treating All Clients the Same
One of the biggest pitfalls firms fall into is assuming there’s a single “right” MTD solution for every client.
In reality, client readiness varies massively. Research from ICAEW highlights that firms using segmented client approaches report smoother MTD onboarding, lower support costs, and better client satisfaction.
Successful MTD preparation starts with segmentation, not software.
Ask yourself:
- How digitally confident is this client?
- How complex is their income?
- How price-sensitive are they?
- How involved do they want to be day to day?
Once you answer these questions, the solution becomes much clearer.
Practical Strategies to Onboard Non-Digital Clients
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Start with Hybrid Workflows
For spreadsheet-based or paper-heavy clients, a hybrid approach is often the most effective first step.
HMRC guidance explicitly allows bridging and transitional workflows, making them a practical compliance-friendly option. Firms adopting hybrid models report faster onboarding and lower client resistance, according to industry feedback from early MTD pilots.
Think of this as a stepping stone, not a permanent compromise.
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Introduce Digital Changes Gradually
For clients willing to move away from paper, simplicity is key.
Rather than overwhelming them with full accounting systems, start with:
- Basic digital record keeping
- Simple bank feeds
- Mobile receipt capture
- Clear dashboards showing income and expenses
Studies into digital adoption consistently show that small, incremental changes are far more likely to stick than full system overhauls introduced too quickly.
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Educate Without Overloading
Non-digital clients don’t need technical explanations, they need reassurance.
According to HMRC user research, clients are more likely to engage with MTD when communication focuses on outcomes, not software.
Focus on:
- What MTD means for them
- How it reduces last-minute stress
- Why quarterly updates are not four tax bills
- How digital records protect them from lost paperwork
Short guides, checklists, and simple walkthroughs consistently outperform long, jargon-heavy explanations.
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Be Clear About Pricing for Conversion Work
One of the most common frustrations around MTD is unpaid extra work.
Industry benchmarking data shows that firms who clearly price MTD onboarding and quarterly support are significantly more profitable during compliance transitions.
Extra admin, data conversion, and client hand-holding should be:
- Clearly defined
- Properly priced
- Explained upfront
Many firms are now introducing MTD onboarding fees, tiered service packages, or revised engagement letters to reflect the reality of quarterly reporting.
Clear boundaries protect both your team and your profitability.
Turning a Challenge into an Opportunity
While non-digital clients may feel like a burden right now, they also represent an opportunity.
MTD IT gives accountants the perfect reason to:
- Review client profitability
- Improve record quality
- Introduce more efficient workflows
- Strengthen advisory relationships
- Standardise systems across the practice
Evidence from early MTD adopters shows that clients who transition successfully often become more engaged, more organised, and easier to support long term.
The Bottom Line
Non-digital clients are the biggest practical challenge of MTD IT, but they don’t have to be the biggest risk.
With the right mix of:
- Client segmentation
- Flexible digital pathways
- Clear communication
- Structured pricing
- Supportive onboarding
You can meet MTD requirements without burning out your team or alienating clients.
MTD IT isn’t just about compliance. It’s an opportunity to modernise how your practice works, one client at a time.
The firms that plan now will be the ones who feel calm, confident, and in control when April 2026 arrives.
How are you preparing your non-digital clients for MTD IT? Let us know in the comments below.
