With MTD for Income Tax launching in April 2026, here’s how we’re approaching the transition at Shapes. While it won’t affect a huge number of our clients, those who are impacted will get proper support. Our philosophy is simple: bring freedom, relief and delight to those we work with – and that looks different for everyone.
Awareness over assumption
Our biggest priority? Making sure people actually know what’s happening. We’re not assuming people understand MTD or whether it applies to them. Many sole traders and landlords simply aren’t aware of the changes coming.
We’re running a proper communications campaign – clear, straightforward explanations of what MTD is, who’s affected, and the timelines. No jargon, just helpful information that makes sense.
Finding who needs support
We’re identifying everyone falling within the MTD thresholds:
- Sole traders and/or landlords with combined income above £50,000 (April 2026)
- Combined income £30,000-£50,000 (April 2027)
- Combined income £20,000-£30,000 (April 2028)
Once identified, we’re reaching out individually to explain their timeline and recommend the right Xero plan. Personal, practical, and planned well in advance.
Why we’re passionate about Xero
We’ve chosen Xero as our MTD solution, and honestly? We’re genuinely excited. This isn’t just accounting software – it’s a complete game-changer for how clients run their businesses.
Our team knows Xero inside out. But more than that, Xero transforms how clients interact with their finances. Real-time data, bank feeds, mobile access, instant reporting – everything MTD needs and so much more.
For clients already using Xero, they’re ahead of the curve. For those who aren’t, MTD is the perfect catalyst to modernise. We’re setting clients up with a tool that will genuinely change how they run their business. That’s the delight part.
Getting the setup absolutely right
We’re providing hands-on training to ensure clients set up and use Xero properly. The setup has to be correct from day one because they’re reporting directly to HMRC, and mistakes create complications nobody needs.
We’re particularly careful with complex scenarios. A client with both a sole trade and a rental property can manage both in one Xero account. But if that property is jointly owned, the structure is different. These nuances matter. That’s the relief part – knowing it’s done properly.
Ongoing support that actually supports
We’re implementing regular Xero reviews quarterly or six-monthly. This keeps records MTD-compliant and catches issues early before they become problems.
The shift to quarterly reporting changes the rhythm completely. Rather than an annual January rush, we’re building in regular touch points throughout the year. Better for clients, better for us, and much better for cashflow management.
Being straight about penalties
We’re making sure clients understand the penalty points system and the £200 late filing penalties. Clear communication now prevents nasty surprises later. We’d rather have these conversations upfront.
The crucial fifth submission
While quarterly updates are important, the fifth submission (end-of-year finalisation) is where we really add value. We ensure clients have claimed all available reliefs and allowances. We don’t want anyone overpaying tax because they didn’t know what they were entitled to. That’s the freedom part – freedom from paying more tax than necessary.
Learning from VAT
We’ve done this with VAT-registered clients. The lesson was crystal clear: early preparation wins every time. Those who started early transitioned smoothly and saw the benefits. Those who delayed? Stressful and rushed.
We’re starting conversations early, building habits gradually, and giving you proper time to get comfortable before deadlines loom.
Our commitment
At Shapes, we see MTD as an opportunity, not just a compliance exercise. It’s a genuine chance to help people become more organised, financially aware, and in control of their businesses.
We’re committed to making this transition smooth, drawing on our experience and relationship-focused approach. Freedom, relief, and delight – that’s what we’re here for.
