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

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

With Earning Tax Digital for VAT in entire swing, for accountants, attention is turning to the subsequent phase of MTD: Producing Tax Digital (MTD) for Money Tax Self Assessment.

This is occasionally referred to as MTD for ITSA.

The principles are straightforward, but it’s the moment once again going to be the accountancy occupation acquiring their noses soiled at the proverbial coalface in serving to customers adapt—especially tens of millions of sole traders who are previously mentioned the initial £50,000 threshold from 2026, and £30,00 from 2027.

In this posting, we spotlight some things to consider that could assist kickstart your procedures when it arrives to supporting those people today.

Here’s what we protect:

Why accountants need to begin making ready their sole trader clients now

As much as most shoppers are concerned, MTD for ITSA has numerous fronts for which sole traders must prepare:

  1. Transitioning to accounting software, if they haven’t now. Alternatively, sole traders may use some variety of bridging remedy if they insist on utilizing spreadsheets (although taking measures to be lawfully compliant with the electronic linking regulations, of course—remember that duplicate and pasting figures into a spreadsheet from in other places will probably be legally prohibited).
  2. Change to electronic history-holding for their profits tax accounting relating to self-work, which includes compliance within just all procedures related to this (e.g. information seize from paperwork this sort of as invoices or payments), once more inside the specifications of electronic linking.
  3. Foundation period reform for sole traders, for the minority that needs it. It could theoretically be required for a business to carry out this for the tax calendar year 2023/24.

Scheduling will have to begin now mainly because each individual component in the earlier mentioned checklist is likely to desire time and sources.

For most methods, the pretty very first occupation will be to section their shopper lists according to these conditions. That in alone will be time-consuming.

At the time that is performed, practices ought to devote sources all over educating and applying. And this will be a continual procedure up to and even outside of the start date of the very first phase of MTD for ITSA in April 2026.

This situation is sophisticated by the subsequent, which must be taken into account throughout any planning:

  • Some sole traders will also be landlords, so they may well have to also use MTD for ITSA for home earnings even if their sole trader income is underneath £50,000 (that is, their sole trader additionally rental earnings is greater than £50,000).
  • Basis period of time reform has an effect on all sole traders, not just these over the inital £50,000 threshold for MTD for ITSA, so the filtering for that certain undertaking will have to be drawn from your overall sole trader client base.
  • People below the MTD for ITSA threshold may well continue to speak to you and have to have help when they understand of MTD for ITSA (e.g. from adverts). Despite the fact that the solution may well be basic for these shoppers, it will still consume time and assets. In other phrases, the times next an HMRC mail-out may set your phones on fire!

Guarantee your clients comprehend the value of adopting the compliance improve sooner somewhat than later. Move now and the price stays the very same, but go later on and they are probable to incur bigger service fees.

Inspire your customers to take gain of any pilot techniques, these kinds of as that accessible for MTD for ITSA.

Try to remember that they will need to have compatible software program, as will you if you desire to maximise your services supplying for them.

Strategies to communicate the modifications to sole traders

When chat of digitalisation in accountancy is practically nothing new, procedures that are keen to embrace slicing-edge technologies are going to obtain efficiencies when it comes to communication.

Devoid of working with these technologies, tactics possibility remaining confused.

So, let’s acquire a appear at a several suggestions—starting with the far more modern way of driving engagement.

Instagram/Fb Stay

Practically all your clients will have social media accounts of some kind, and your observe will hopefully by now have its own social media presence to connect with this.

Facebook Stay (also on Instagram in a broadly identical way) is merely a way of broadcasting live movie, just like a news reporter on Tv.

Viewers are confined to commenting (and you can approve feedback right before they are viewed), but you also can share polls and screen net one-way links (e.g. to HMRC internet sites that clarify far more).

You can reside broadcast from a mobile phone or personal computer, or use the Are living Producer application for a extra skilled approach.


It could no for a longer time be reducing edge but making use of Zoom or Microsoft Teams to host an on the net webinar suits within many people’s comfort zones nowadays, adhering to the enforced specialized migration brought about by the pandemic.

Simply because these are fundamentally on the net meetings in all but identify, invites can be scheduled inside Zoom or Microsoft accounts and sent to consumers, which can increase engagement.

They can be interactive, and the webinar can be recorded way too so that you can let entry at a later day, deriving even more worth from your perform.


By way of electronic mail or printed and posted, newsletters continue being a vital way to talk with clients about all varieties of difficulties. They’re a lot less clear-cut than videoconferencing in today’s world, even though, mainly because, you are going to require to make certain you continue to be GDPR compliant.

In other words and phrases, persons normally should opt-in to get e-mails or newsletters. But email newsletters in specific have had a resurgence not long ago, and individuals are not as resistant to them as they at the time were being.

And the rest…

The Pareto theory suggests 80% of benefits ordinarily arise from 20% of the energy.

In phrases of basic training for a observe, it is the small things that often do the job finest.

Tack a mention of MTD for ITSA on to just about every incoming or outgoing shopper mobile phone simply call, for illustration.

Insert a transient paragraph box to the invoices you send out out.

Have most people insert a mention of MTD for ITSA to their email signatures.

Set a banner on your web page mentioning it, and how you can support.

Set this problem out to your staff members to see if you get any revolutionary solutions based mostly on the peculiarities of your observe: How would they spread the word about MTD for ITSA?

MTD for ITSA positive aspects for your sole trader purchasers

With any luck, lots of of your existing shoppers expected to use MTD for ITSA will previously use a cloud accounting solution. If so, there’s a very good likelihood this will be MTD-all set in time for April 2026, while the shopper will will need to sign-up for MTD (or you can on their behalf), additionally switch on the MTD performance in the program.

Recall that MTD for VAT and MTD for ITSA are two solely separate considerations—accounting program with MTD for VAT previously activated won’t immediately be activated for MTD for ITSA.

People working with more mature desktop-based mostly program may well have to have to search for an upgrade.

Likewise, the upgrade route for those relying on spreadsheets may well be a minimal bumpy, with a need to utilize appropriate bridging plugins for the spreadsheet application.

For individuals who are not using software package, you ought to emphasise the added benefits of accounting computer software that you are going to by now know about—a 24/7 view of dollars flow, for example, so they generally know in which they stand.

This way clientele can location problems coming, as properly as see possibilities when they arise.

But it’s essential to emphasise newer systems too.

Automating bank reconciliation, for case in point, is reworking business admin by massively cutting down the volume of time taken to match payments versus invoices.

In the same way, receipt seize suggests having crucial MTD-necessary information into the client’s accounting becomes a piece of cake—just snap the receipt or invoice with a cell phone straight immediately after buy or receipt of the goods.

And really don’t overlook probably the most significant boon for any accountant—linking shopper accounting to your personal systems, so you can see their stay financial data.

This permits for you to generate new benefit propositions all over periodic verify-ins, for instance. This exhibits how MTD for ITSA is finally a organization prospect for practices.

Last ideas

MTD for ITSA may truly feel like some time away.

But as an accountant, you have to commence planning instantly.

Resources and spending budget needs to be allotted, and the sheer scale of the work have to be quantified. This might truly feel like the early levels but you know from experience with MTD for VAT that critical dates will be right here prior to we know it.

Relocating ahead, sensible practices are now making doing work get-togethers that satisfy regularly and established objectives so that milestones can be reached.

Editor’s observe: This post was to start with printed in June 2022 and has been up-to-date for relevance.