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

Gwen Catherine


With Making Tax Digital for VAT in comprehensive swing, for accountants, focus is turning to the next section of MTD: Generating Tax Electronic (MTD) for Revenue Tax Self Assessment.

This is sometimes referred to as MTD for ITSA.

The procedures are simple, but it is after again likely to be the accountancy profession obtaining their noses dirty at the proverbial coalface in supporting shoppers adapt—especially millions of sole traders who are above the £10,000 threshold.

In this short article, we spotlight some considerations that could support kickstart your processes when it arrives to supporting those people.

Here’s what we protect:

Why accountants should start off getting ready their sole trader clients now

As considerably as most shoppers are worried, MTD for ITSA has quite a few fronts for which sole traders need to put together:

  1. Transitioning to accounting software program, if they have not previously. Alternatively, sole traders could possibly use some sort of bridging answer if they insist on using spreadsheets (even though using steps to be lawfully compliant with the digital linking regulations, of course—remember that copy and pasting quantities into a spreadsheet from in other places will most likely be legally prohibited).
  2. Switch to digital report-maintaining for their profits tax accounting relating to self-employment, which include compliance within just all processes related to this (e.g. facts seize from documents this kind of as invoices or charges), all over again within just the necessities of electronic linking.
  3. Foundation period of time reform for sole traders, for the minority that needs it. It could theoretically be necessary for a business enterprise to implement this for the tax 12 months 2023/24.

Arranging should start off now because each individual element in the higher than checklist is going to demand time and sources. As talked about, some of the deadlines requiring action could be listed here extremely before long.

For most tactics, the quite initially career will be to phase their consumer lists according to these requirements. That in by itself will be time-consuming.

At the time which is accomplished, procedures must devote sources around educating and utilizing. And this will be a continuous procedure up to and even beyond the begin date of MTD for ITSA in April 2024.

This predicament is difficult by the following, which should be taken into account during any planning:

  • Some sole traders will also be landlords, so they may have to also use MTD for ITSA for assets money even if their sole trader profits is beneath £10,000 (that is, their sole trader additionally rental cash flow is bigger than £10,000).
  • Normal partnerships be part of MTD for ITSA in April 2025, so will need their own instruction and onboarding procedures major up to that time. It is not still crystal clear when other revenue tax-paying out people and firms will be essential to indicator up to MTD for ITSA but, if MTD for VAT is a guidebook, this will probably be staggered throughout the a long time following 2024. In other terms, MTD for ITSA is persistently heading to call for setting up and sources, potentially all the way to the close of the decade.
  • Basis time period reform has an effect on all sole traders, not just people higher than the £10,000 threshold for MTD for ITSA, so the filtering for that particular process ought to be drawn from your complete sole trader shopper foundation.
  • Those down below the MTD for ITSA threshold may well nonetheless contact you and demand enable when they understand of MTD for ITSA (e.g. from advertisements). Though the response may possibly be uncomplicated for these shoppers, it will continue to eat time and methods. In other words and phrases, the times subsequent an HMRC mail-out may well set your phones on hearth!

Make sure your consumers realize the worth of adopting the compliance adjust quicker somewhat than later. Go now and the price tag stays the similar, but shift afterwards and they’re likely to incur larger expenses.

Persuade your purchasers to get gain of any pilot techniques, this sort of as that out there for MTD for ITSA.

Bear in mind that they will need suitable software program, as will you if you desire to maximise your provider featuring for them.

Guidelines to connect the alterations to sole traders

Even though converse of digitalisation in accountancy is practically nothing new, methods that are ready to embrace slicing-edge systems are heading to obtain efficiencies when it comes to communication.

Without the need of utilizing these technologies, methods chance staying confused.

So, let’s choose a search at a handful of suggestions—starting with the much more impressive way of driving engagement.

Instagram/Fb Are living

Pretty much all your consumers will have social media accounts of some sort, and your apply will hopefully currently have its have social media presence to link with this.

Fb Stay (also on Instagram in a broadly equivalent way) is simply a way of broadcasting live movie, just like a information reporter on Television set.

Viewers are limited to commenting (and you can approve reviews before they’re seen), but you also can share polls and exhibit world-wide-web backlinks (e.g. to HMRC web pages that make clear far more).

You can live broadcast from a cellular phone or computer system, or use the Dwell Producer application for a much more experienced method.


It could possibly no more time be reducing edge but using Zoom or Microsoft Teams to host an on the net webinar fits in just a lot of people’s consolation zones these days, subsequent the enforced complex migration brought on by the pandemic.

Due to the fact these are basically on the web meetings in all but name, invites can be scheduled in just Zoom or Microsoft accounts and sent to clients, which can boost engagement.

They can be interactive, and the webinar can be recorded much too so that you can let accessibility at a afterwards day, deriving even more price from your work.


By means of electronic mail or printed and posted, newsletters continue being a important way to converse with customers about all forms of issues. They’re significantly less simple than videoconferencing in today’s entire world, though, for the reason that, you are going to need to be certain you continue to be GDPR compliant.

In other phrases, people ordinarily ought to choose-in to acquire emails or newsletters. But e mail newsletters in specific have experienced a resurgence recently, and individuals aren’t as resistant to them as they as soon as had been.

And the rest…

The Pareto basic principle says 80% of outcomes generally occur from 20% of the energy.

In conditions of normal instruction for a apply, it’s the smaller factors that normally operate ideal.

Tack a mention of MTD for ITSA on to each and every incoming or outgoing shopper phone get in touch with, for case in point.

Include a quick paragraph box to the invoices you send out.

Have most people include a mention of MTD for ITSA to their e mail signatures.

Set a banner on your web-site mentioning it, and how you can help.

Set this query out to your staff members to see if you receive any progressive responses primarily based on the peculiarities of your exercise: How would they distribute the term about MTD for ITSA?

MTD for ITSA advantages for your sole trader clientele

With any luck, many of your present shoppers demanded to use MTD for ITSA will already use a cloud accounting resolution. If so, there is a very good likelihood this will be MTD-completely ready in time for April 2024, while the client will will need to sign up for MTD (or you can on their behalf), in addition switch on the MTD performance within the application.

Keep in mind that MTD for VAT and MTD for ITSA are two completely separate considerations—accounting computer software with MTD for VAT presently activated will not routinely be activated for MTD for ITSA.

Those people applying more mature desktop-based mostly software program might need to have to seek out an enhance.

Equally, the up grade path for those relying on spreadsheets could be a tiny bumpy, with a need to implement appropriate bridging plugins for the spreadsheet application.

For those people who aren’t employing software program, you need to emphasise the gains of accounting computer software that you will by now know about—a 24/7 see of funds flow, for case in point, so they normally know where by they stand.

This way customers can place challenges coming, as perfectly as see alternatives when they crop up.

But it’s critical to emphasise newer systems as well.

Automating financial institution reconciliation, for instance, is reworking business admin by massively lowering the quantity of time taken to match payments in opposition to invoices.

Likewise, receipt capture signifies finding essential MTD-required info into the client’s accounting gets to be a piece of cake—just snap the receipt or bill with a cell cell phone straight immediately after buy or receipt of the products.

And never overlook possibly the major boon for any accountant—linking customer accounting to your own techniques, so you can see their dwell economical information.

This will allow for you to develop new price propositions all over periodic check-ins, for illustration. This demonstrates how MTD for ITSA is eventually a business enterprise possibility for practices.

Remaining thoughts

MTD for ITSA could come to feel like some time away.

But as an accountant, you have to start preparing promptly.

Methods and spending budget requires to be allocated, and the sheer scale of the do the job ought to be quantified. This could feel like the early phases but you know from knowledge with MTD for VAT that vital dates will be in this article before we know it.

Relocating ahead, sensible practices are by now making working functions that meet regularly and established ambitions so that milestones can be reached.


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