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

With Creating Tax Digital for VAT in entire swing, for accountants, awareness is turning to the up coming stage of MTD: Producing Tax Digital (MTD) for Income Tax Self Evaluation.

This is in some cases referred to as MTD for ITSA.

The regulations are uncomplicated, but it’s the moment all over again going to be the accountancy profession acquiring their noses filthy at the proverbial coalface in aiding shoppers adapt—especially thousands and thousands of sole traders who are earlier mentioned the £10,000 threshold.

In this report, we spotlight some issues that could possibly aid kickstart your processes when it will come to supporting all those individuals.

Here’s what we include:

Why accountants should commence getting ready their sole trader clients now

As far as most shoppers are anxious, MTD for ITSA has quite a few fronts for which sole traders must put together:

  1. Transitioning to accounting software, if they have not now. Alternatively, sole traders may well use some sort of bridging resolution if they insist on employing spreadsheets (though using steps to be lawfully compliant with the electronic linking principles, of course—remember that copy and pasting quantities into a spreadsheet from somewhere else will almost certainly be lawfully prohibited).
  2. Swap to digital record-keeping for their profits tax accounting relating to self-work, including compliance inside all processes related to this (e.g. info seize from files this sort of as invoices or expenses), again in just the specifications of electronic linking.
  3. Basis period of time reform for sole traders, for the minority that needs it. It could theoretically be essential for a business to employ this for the tax 12 months 2023/24.

Preparing will have to commence now since just about every element in the above record is heading to need time and methods. As stated, some of the deadlines necessitating motion could be in this article extremely shortly.

For most tactics, the pretty 1st career will be to segment their shopper lists in accordance to these criteria. That in by itself will be time-consuming.

The moment that is completed, procedures really should dedicate assets all-around educating and utilizing. And this will be a continual method up to and even over and above the begin day of MTD for ITSA in April 2024.

This problem is difficult by the subsequent, which should be taken into account all through any planning:

  • Some sole traders will also be landlords, so they may possibly have to also use MTD for ITSA for property cash flow even if their sole trader cash flow is under £10,000 (that is, their sole trader moreover rental cash flow is increased than £10,000).
  • Standard partnerships join MTD for ITSA in April 2025, so will demand their possess training and onboarding processes leading up to that time. It’s not still very clear when other profits tax-paying out persons and organizations will be essential to signal up to MTD for ITSA but, if MTD for VAT is a guidebook, this will in all probability be staggered throughout the many years following 2024. In other terms, MTD for ITSA is persistently likely to require setting up and sources, most likely all the way to the end of the ten years.
  • Basis time period reform influences all sole traders, not just people over the £10,000 threshold for MTD for ITSA, so the filtering for that specific endeavor ought to be drawn from your full sole trader customer foundation.
  • Those people down below the MTD for ITSA threshold may possibly however contact you and require aid when they discover of MTD for ITSA (e.g. from ads). Although the reply may be easy for these shoppers, it will nonetheless consume time and assets. In other phrases, the days next an HMRC mail-out might established your telephones on fire!

Make certain your clientele have an understanding of the worth of adopting the compliance adjust faster somewhat than afterwards. Shift now and the price stays the similar, but shift afterwards and they are probable to incur higher charges.

Really encourage your shoppers to just take edge of any pilot schemes, these as that out there for MTD for ITSA.

Try to remember that they will need to have suitable application, as will you if you desire to maximise your company offering for them.

Strategies to converse the alterations to sole traders

While speak of digitalisation in accountancy is practically nothing new, practices that are keen to embrace chopping-edge technologies are going to realize efficiencies when it comes to conversation.

Without having working with these systems, methods hazard staying confused.

So, let us get a search at a handful of suggestions—starting with the additional modern way of driving engagement.

Instagram/Fb Dwell

Almost all your customers will have social media accounts of some type, and your exercise will hopefully already have its own social media existence to join with this.

Facebook Reside (also on Instagram in a broadly comparable way) is just a way of broadcasting reside online video, just like a news reporter on Tv set.

Viewers are restricted to commenting (and you can approve responses ahead of they are noticed), but you also can share polls and display web backlinks (e.g. to HMRC sites that make clear additional).

You can live broadcast from a cellular phone or laptop or computer, or use the Live Producer computer software for a extra expert approach.


It could possibly no extended be chopping edge but utilizing Zoom or Microsoft Teams to host an online webinar fits in just a lot of people’s ease and comfort zones presently, following the enforced complex migration caused by the pandemic.

Simply because these are fundamentally on line meetings in all but identify, invitations can be scheduled within just Zoom or Microsoft accounts and despatched to purchasers, which can boost engagement.

They can be interactive, and the webinar can be recorded way too so that you can allow for obtain at a later on day, deriving even more value from your do the job.


Via electronic mail or printed and posted, newsletters continue being a critical way to converse with clients about all kinds of troubles. They’re much less simple than videoconferencing in today’s earth, however, mainly because, you are going to want to assure you keep on being GDPR compliant.

In other words and phrases, individuals typically need to opt-in to acquire email messages or newsletters. But e-mail newsletters in unique have had a resurgence lately, and people aren’t as resistant to them as they once had been.

And the rest…

The Pareto principle suggests 80% of success typically come up from 20% of the hard work.

In conditions of basic instruction for a apply, it is the small points that usually get the job done finest.

Tack a point out of MTD for ITSA on to every incoming or outgoing customer cellular phone connect with, for instance.

Include a brief paragraph box to the invoices you mail out.

Have everybody increase a mention of MTD for ITSA to their e-mail signatures.

Put a banner on your web-site mentioning it, and how you can aid.

Put this question out to your employees to see if you obtain any progressive responses based on the peculiarities of your observe: How would they unfold the word about MTD for ITSA?

MTD for ITSA rewards for your sole trader shoppers

With any luck, quite a few of your present clients essential to use MTD for ITSA will currently use a cloud accounting answer. If so, there’s a fantastic chance this will be MTD-all set in time for April 2024, while the client will need to have to sign-up for MTD (or you can on their behalf), furthermore swap on the MTD features within just the software program.

Don’t forget that MTD for VAT and MTD for ITSA are two totally different considerations—accounting computer software with MTD for VAT already activated will not mechanically be activated for MTD for ITSA.

Those people applying older desktop-primarily based application may well will need to find an upgrade.

In the same way, the up grade path for all those relying on spreadsheets may possibly be a minimal bumpy, with a have to have to implement suitable bridging plugins for the spreadsheet application.

For those people who are not making use of software program, you should really emphasise the advantages of accounting software package that you are going to presently know about—a 24/7 perspective of funds flow, for example, so they normally know where by they stand.

This way customers can spot difficulties coming, as well as see possibilities when they occur.

But it is vital to emphasise newer systems way too.

Automating lender reconciliation, for case in point, is transforming small business admin by massively decreasing the quantity of time taken to match payments against invoices.

Similarly, receipt seize suggests acquiring critical MTD-necessary info into the client’s accounting results in being a piece of cake—just snap the receipt or invoice with a cellular mobile phone straight following order or receipt of the items.

And really do not ignore perhaps the most significant boon for any accountant—linking shopper accounting to your own methods, so you can see their live economical details.

This enables for you to create new worth propositions about periodic check out-ins, for example. This demonstrates how MTD for ITSA is eventually a business enterprise chance for methods.

Last views

MTD for ITSA could possibly feel like some time absent.

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

Sources and budget needs to be allocated, and the sheer scale of the function will have to be quantified. This could possibly truly feel like the early levels but you know from experience with MTD for VAT that critical dates will be here prior to we know it.

Going forward, good procedures are by now creating performing functions that fulfill routinely and set aims so that milestones can be reached.