Everyday agentic AI: How Sage is reshaping the future of accounting with MTD

Agentic AI is transforming accounting and bookkeeping right now.

Across Sage, intelligent agents are already planning, reasoning, and acting alongside professionals—amplifying their expertise and unlocking new capacity.

In simple terms, agentic AI refers to software that doesn’t just analyse data. It can plan actions, make decisions, and carry them out autonomously under human guidance.

The launch of the MTD for Income Tax Agent marks a decisive step change: routine work handled in the background, more time for strategy, clients, and growth.

And that’s what we explore in this article, as follows:

Why AI agents are a game-changer for MTD

MTD is exposing a truth the profession already knows: accountants are running out of capacity.

Quarterly updates, digital record-keeping, and client demands are set to stretch firms further than ever before.

Practices are already under immense pressure. Rising client expectations, increased regulatory complexity, and squeezed margins leave little room for error. Finding enough time to maintain service levels is a daily challenge.

MTD for Income Tax brings a step change in workload: quarterly submissions, continuous data capture, and tighter reporting timelines. Practices must rethink how they manage client data, ensure accuracy, and deliver advice, at scale and speed.

And 2026 is only the start.

In 2027, payrolling Benefits in Kind replaces P11Ds, while Companies House reform will make digital filing and more detailed accounts mandatory.

Practices will face an unprecedented surge in client queries and additional admin, all while talent remains tight and margins thin.

Without automation and AI support, many small and mid-sized firms risk reaching breaking point.

This is where agentic AI makes the difference.

It takes on the repeatable, rules-based work—reconciliations, submissions, and follow-ups—freeing up human capacity for judgement and strategy.

As Chris Downing, Director for accountants and bookkeepers at Sage, said at Accountex North:

“In a few months, MTD for Income Tax will become a reality. More deadlines, more conversations, but also an opportunity—an opportunity to simplify, create capacity, anticipate and automate the work we do.”

AI agents for MTD matter because it lays the groundwork for an AI-first future, helping firms build confidence in automation, spot anomalies faster, and create capacity when they’ll need it most

Simplify, create capacity, automate

“Twelve months ago, we were convincing people [MTD] was happening,” said Emma Rawson, Director of Public Policy at the Association of Taxation Technicians, also speaking at a keynote at Accountex North.

“Now the conversation has shifted to readiness: software choices, client planning, and thorny real-world questions.”

Accounting and bookkeeping face key collision points on the horizon:

• Reporting requirements: The first quarterly update is due 7 August 2026 for sole traders and landlords with gross income over £50,000.
• Threshold expansion: New bands of £30,000 as of April 2027, and £20,000 as of April 2028, bringing hundreds of thousands more clients into scope. (Plus, don’t forget that clients can sign up to MTD voluntarily.)
• Payrolling of benefits-in-kind: Mandatory from April 2027, increasing reporting frequency.
• Companies House digital filing: Full transition to software-only submissions, ending web form filing.
• Ongoing VAT cycles: Overlapping workloads, most often quarterly, that test practice capacity year-round.

Quarterly updates are a digital handshake to HMRC. They don’t crystallise a tax liability, but they build a habit of working digitally and keep clients closer to real-time information.

Chris Downing, Director for accountants and bookkeepers, Sage

Downing calls out the “hidden work” that clients never see—the chasing, corrections, and compliance housekeeping that consume hours every week.

These aren’t side issues. They’re the silent drain on growth and service quality.

The takeaway:

• Accountants aren’t short on deadlines. They’re short on capacity.
• Capacity creation isn’t a side effect of automation. It’s the strategy.
• Agentic workflows are how you get there

Meet the MTD for Income Tax Agent

The MTD for Income Tax Agent, announced at Accountex North, is built to automate setup, quarterly updates, and submissions while ensuring accountants remain at the helm.

It uses guardrails so accountants decide how far automation runs. High-confidence tasks are handled automatically, while anything ambiguous is routed for review.

Here, AI thinks in workflows rather than single tasks:

• Preparation and authorisation: The agent anticipates what needs doing and prompts action, such as reminding you to move client authorisations into the HMRC Agent Services Account (ASA), linking organisations to individuals, and verifying authority. Authorisation with HMRC is then completed manually through the official ASA.
• Guardrails by design: You decide how far the Sage MTD Agent runs on its own. It automates where confidence is high, but routes anything ambiguous for human review.
• Quarterly updates with context: Instead of repetitive data entry, the Sage MTD Agent reviews incoming information, highlights anomalies, requests missing items, and can submit updates once the accountant gives the green light.
• A guided client experience: For do-it-for-me clients who won’t adopt software, the agent provides simple, repeatable approval and upload flows, while your default motion remains bringing clients into software for full visibility.

As Georgina Timothy, Director of Product Management, Sage for Accountants, explained: “We’ll automate the end-to-end workflow, but you stay in control. The agent takes care of the heavy lifting so you can focus on your clients.”

This isn’t testing the waters. It’s a real leap into agentic workflows purpose-built for MTD, a signal of what the next decade will look like.

Intelligent systems handle background processes such as authorisations, checks, and submissions, while accountants can move up a layer into proactive, insight-driven work.

The shift goes deeper. As HMRC redefines how tax is calculated and reported, automation will change not just how work gets done, but what “doing the work” really means.

The first release of the MTD for Income Tax Agent focuses on reliable, rules-based automation, streamlining set-up, updates, and submissions with precision.

From Spring 2026, Sage plans to enhance these capabilities with AI-powered learning loops, enabling the agent to reason and adapt to client workflows over time.

What changes in client tax returns

MTD digitalises and redefines the tax return.

In the new model, HMRC generates estimated tax calculations based on quarterly data submitted through the software.

It’s essential to remember, however, that humans are ultimately responsible for preparing and validating the final tax returns, ensuring accuracy and compliance.

You will need to accept your role shifting from generating the numbers to validating and interpreting them.

“The software providers aren’t doing the tax calculation,” explained Downing. “HMRC is. Your job becomes validating and reconciling that information, making sure what HMRC holds matches what your clients have.”

A fundamental change in accountability

Software will surface missing information, reconcile PAYE, CIS, and other data sources, and support end-year adjustments through the business source adjustable summary (BSAS)—the mechanism that ties quarterly updates to final tax adjustments so client records and HMRC’s view stay in sync.

That means less time keying in figures and more time shaping what those figures mean.

The tax return era is evolving into a continuous data exchange—a living process rather than a one-time event.

And that shift sets the stage for the next evolution: agentic workflows that not only automate but anticipate how and when that work gets done.

Your agentic AI playbook: 5 steps to take

Whether you’re already experimenting with AI assistants or preparing for MTD for Income Tax, the steps are the same: segment clients, digitise early, test your workflows, and measure where automation genuinely adds value.

1. Segment and sequence

Start with your £50,000+ sole traders and landlords for pilot testing:

• Segment clients by their preferred working style.
• This segmentation isn’t only operational. It’s strategic. It determines how far you automate, how you price, and where you’ll free the most capacity.

2. Digitise records early

Don’t wait for MTD to force the issue:

• Move laggards onto digital bookkeeping as soon as possible: cloud ledgers for sole traders, bridging or prep tools for CSV and bank-only clients.
• Every early migration compounds the benefit: smoother quarterly updates, fewer manual reconciliations, and a cleaner testing ground for AI-driven workflows.

3. Automate the quarterly cycle

Start shaping how automation will fit into your workflow – even before full configuration features arrive.

• Identify which tasks your team can safely hand over to automation when available: data reviews, report generation, and client chases.
• Use HMRC’s defined windows around quarter-end to flatten peaks and establish a repeatable rhythm.
• Remember, automation isn’t about speed; it’s about flow – turning four mini tax seasons into one.

Block out your quarter-end weeks now. This isn’t four mad months and eight quiet ones—it’s a continuous rhythm.

Rebecca Benneyworth, Rebecca Benneyworth & Co

4. Price your new service model

MTD isn’t simply a compliance shift. It’s a pricing one:

• Package quarterly reviews and year-end reconciliations into modern, data-driven service tiers.
• Publish clear scope, service levels, and value communication so clients see the benefit of your automation investment.
• Update letters of engagement and schedules of work now, while the transition window allows flexibility.

5. Reinvest the capacity you create

This is where automation pays off:

• Ring-fence the hours you free for cash flow check-ins, tax-planning nudges, and advisory conversations.
• Use quarterly cycles as the backbone for more frequent, proactive engagement, of the kind that builds client trust and long-term revenue.
• Protect that dividend: calendar the time you win back, or it will vanish.

Real clients love quarterly tax forecasts. They know it’s indicative, but it stops the ‘I haven’t got the money’ conversation – and turns forecasting into an advisory moment.

Rebecca Benneyworth

By getting ahead of MTD, you’re not only getting ahead of April 2026. You can use it as a test to perfect agentic AI processes.

Start small, document what works, and keep that one principle in mind: capacity creation isn’t a by-product of automation; it’s the goal.

Final thoughts: Authentic Intelligence, in practice

This isn’t AI for AI’s sake.

It’s authentic intelligence—people and agents, each doing what they’re best at.

Agents give you back time. You decide how to use it, whether that’s for judgment, relationships, or growth.

The question isn’t how we cope with more deadlines. It’s what we do with our capacity. Spend more time with clients. Spend more time thinking about strategy. Use that time to grow your practice.

Chris Downing

That’s the real promise of agentic AI: not replacing accountants and bookkeepers, but expanding what you can achieve.

MTD is the test case. Authentic Intelligence is the destination.