Making Tax Digital for ITSA: How accountants can prepare sole trader clients

With Making Tax Electronic for VAT in complete swing, for accountants, attention is turning to the following stage of MTD: Generating Tax Digital (MTD) for Money Tax Self Evaluation.

This is often referred to as MTD for ITSA.

The policies are straightforward, but it is as soon as once more heading to be the accountancy career having their noses dirty at the proverbial coalface in helping consumers adapt—especially hundreds of thousands of sole traders who are over the £10,000 threshold.

In this short article, we emphasize some considerations that could assist kickstart your processes when it arrives to supporting these persons.

Here’s what we cover:

Why accountants need to start off making ready their sole trader clientele now

As considerably as most clients are worried, MTD for ITSA has a number of fronts for which sole traders should prepare:

  1. Transitioning to accounting computer software, if they have not now. Alternatively, sole traders may well use some form of bridging resolution if they insist on making use of spreadsheets (even though taking actions to be lawfully compliant with the electronic linking policies, of course—remember that copy and pasting quantities into a spreadsheet from somewhere else will likely be legally prohibited).
  2. Switch to electronic report-keeping for their revenue tax accounting relating to self-employment, including compliance inside all procedures connected to this (e.g. facts capture from files this sort of as invoices or expenses), yet again inside of the necessities of digital linking.
  3. Basis interval reform for sole traders, for the minority that needs it. It could theoretically be important for a company to put into action this for the tax calendar year 2023/24.

Arranging must start now due to the fact each and every component in the above record is likely to demand from customers time and resources. As stated, some of the deadlines requiring action could be right here quite before long.

For most practices, the pretty very first job will be to segment their consumer lists in accordance to these standards. That in itself will be time-consuming.

When that is accomplished, methods really should dedicate sources close to educating and utilizing. And this will be a continual approach up to and even further than the commence day of MTD for ITSA in April 2024.

This predicament is complicated by the pursuing, which should be taken into account through any arranging:

  • Some sole traders will also be landlords, so they could have to also use MTD for ITSA for home earnings even if their sole trader profits is beneath £10,000 (that is, their sole trader as well as rental money is larger than £10,000).
  • Standard partnerships join MTD for ITSA in April 2025, so will require their have education and learning and onboarding procedures foremost up to that time. It is not still clear when other revenue tax-spending people today and companies will be demanded to indicator up to MTD for ITSA but, if MTD for VAT is a guideline, this will probably be staggered across the yrs next 2024. In other phrases, MTD for ITSA is persistently going to involve scheduling and methods, probably all the way to the close of the 10 years.
  • Foundation interval reform affects all sole traders, not just those higher than the £10,000 threshold for MTD for ITSA, so the filtering for that certain job ought to be drawn from your whole sole trader customer base.
  • Those people under the MTD for ITSA threshold may perhaps still make contact with you and call for aid when they discover of MTD for ITSA (e.g. from ads). Despite the fact that the remedy may well be simple for these purchasers, it will however eat time and means. In other words, the times following an HMRC mail-out might established your phones on hearth!

Be certain your purchasers fully grasp the worth of adopting the compliance modify faster relatively than later on. Transfer now and the cost stays the very same, but go later and they are most likely to incur greater fees.

Encourage your clientele to acquire edge of any pilot techniques, these kinds of as that accessible for MTD for ITSA.

Keep in mind that they will will need compatible software, as will you if you would like to maximise your provider providing for them.

Ideas to connect the adjustments to sole traders

Though chat of digitalisation in accountancy is very little new, practices that are eager to embrace reducing-edge systems are heading to accomplish efficiencies when it comes to conversation.

With out using these technologies, procedures threat staying confused.

So, let us just take a glimpse at a couple of suggestions—starting with the much more ground breaking way of driving engagement.

Instagram/Facebook Live

Nearly all your customers will have social media accounts of some form, and your exercise will ideally already have its personal social media presence to join with this.

Facebook Are living (also on Instagram in a broadly identical way) is merely a way of broadcasting dwell movie, just like a information reporter on Television.

Viewers are minimal to commenting (and you can approve comments in advance of they’re observed), but you also can share polls and screen internet hyperlinks (e.g. to HMRC internet sites that describe far more).

You can stay broadcast from a mobile phone or personal computer, or use the Stay Producer software package for a far more qualified technique.


It could no more time be reducing edge but utilizing Zoom or Microsoft Teams to host an on line webinar suits within just many people’s consolation zones nowadays, following the enforced complex migration caused by the pandemic.

Because these are in essence on-line meetings in all but name, invites can be scheduled within just Zoom or Microsoft accounts and sent to clientele, which can raise engagement.

They can be interactive, and the webinar can be recorded also so that you can make it possible for obtain at a afterwards date, deriving further more worth from your work.


By using e mail or printed and posted, newsletters stay a vital way to connect with clientele about all types of concerns. They’re fewer clear-cut than videoconferencing in today’s environment, even though, because, you are going to require to make certain you continue being GDPR compliant.

In other terms, folks normally will have to choose-in to acquire emails or newsletters. But electronic mail newsletters in distinct have experienced a resurgence not long ago, and people are not as resistant to them as they after ended up.

And the rest…

The Pareto basic principle states 80% of benefits generally crop up from 20% of the hard work.

In terms of basic instruction for a practice, it is the compact items that often do the job most effective.

Tack a point out of MTD for ITSA onto each individual incoming or outgoing consumer cell phone connect with, for example.

Incorporate a brief paragraph box to the invoices you send out out.

Have everyone include a point out of MTD for ITSA to their email signatures.

Put a banner on your website mentioning it, and how you can enable.

Put this question out to your staff to see if you get any revolutionary responses centered on the peculiarities of your exercise: How would they distribute the term about MTD for ITSA?

MTD for ITSA benefits for your sole trader consumers

With any luck, several of your present purchasers necessary to use MTD for ITSA will currently use a cloud accounting answer. If so, there is a good prospect this will be MTD-ready in time for April 2024, while the consumer will want to register for MTD (or you can on their behalf), as well as change on the MTD performance inside the software program.

Remember that MTD for VAT and MTD for ITSA are two entirely independent considerations—accounting software with MTD for VAT presently activated won’t mechanically be activated for MTD for ITSA.

These making use of older desktop-dependent program could have to have to seek an improve.

Likewise, the upgrade path for those people relying on spreadsheets could be a minimal bumpy, with a want to apply suitable bridging plugins for the spreadsheet app.

For those who aren’t employing software program, you should really emphasise the advantages of accounting software program that you will presently know about—a 24/7 look at of cash stream, for example, so they constantly know where by they stand.

This way clients can location complications coming, as very well as see possibilities when they come up.

But it’s significant to emphasise more recent systems as well.

Automating bank reconciliation, for example, is reworking business admin by massively minimizing the quantity of time taken to match payments from invoices.

Likewise, receipt seize implies getting crucial MTD-demanded data into the client’s accounting will become a piece of cake—just snap the receipt or bill with a cellular cellular phone straight following order or receipt of the merchandise.

And don’t forget about maybe the largest boon for any accountant—linking customer accounting to your very own devices, so you can see their stay financial knowledge.

This will allow for you to create new price propositions about periodic test-ins, for case in point. This demonstrates how MTD for ITSA is finally a business enterprise opportunity for practices.

Closing views

MTD for ITSA could possibly truly feel like some time absent.

But as an accountant, you have to begin arranging straight away.

Assets and spending budget needs to be allocated, and the sheer scale of the do the job should be quantified. This might come to feel like the early stages but you know from knowledge with MTD for VAT that key dates will be below prior to we know it.

Shifting ahead, wise procedures are previously developing functioning parties that satisfy often and established objectives so that milestones can be obtained.