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

With Generating Tax Electronic for VAT in total swing, for accountants, consideration is turning to the up coming period of MTD: Building Tax Electronic (MTD) for Profits Tax Self Evaluation.

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

The guidelines are uncomplicated, but it’s the moment again going to be the accountancy occupation acquiring their noses soiled at the proverbial coalface in serving to shoppers adapt—especially tens of millions of sole traders who are higher than the £10,000 threshold.

In this report, we emphasize some concerns that could assist kickstart your procedures when it comes to supporting individuals men and women.

Here’s what we cover:

Why accountants ought to get started making ready their sole trader shoppers now

As far as most clients are anxious, MTD for ITSA has numerous fronts for which sole traders will have to prepare:

  1. Transitioning to accounting software, if they haven’t currently. Alternatively, sole traders may possibly use some sort of bridging option if they insist on utilizing spreadsheets (though getting actions to be legally compliant with the digital linking policies, of course—remember that duplicate and pasting figures into a spreadsheet from elsewhere will likely be legally prohibited).
  2. Switch to electronic record-trying to keep for their income tax accounting relating to self-work, which include compliance in just all processes linked to this (e.g. knowledge seize from files this kind of as invoices or expenses), yet again inside the needs of digital linking.
  3. Foundation period of time reform for sole traders, for the minority that requires it. It could theoretically be important for a enterprise to implement this for the tax 12 months 2023/24.

Scheduling must start off now due to the fact every single part in the previously mentioned list is likely to need time and methods. As pointed out, some of the deadlines necessitating action could be right here incredibly shortly.

For most methods, the incredibly to start with career will be to phase their client lists in accordance to these conditions. That in itself will be time-consuming.

The moment which is performed, practices really should dedicate sources close to educating and employing. And this will be a continuous procedure up to and even past the commence day of MTD for ITSA in April 2024.

This circumstance is difficult by the next, which have to be taken into account through any scheduling:

  • Some sole traders will also be landlords, so they might have to also use MTD for ITSA for residence revenue even if their sole trader income is underneath £10,000 (that is, their sole trader additionally rental revenue is bigger than £10,000).
  • Common partnerships be part of MTD for ITSA in April 2025, so will call for their personal education and learning and onboarding procedures leading up to that time. It is not however clear when other revenue tax-having to pay persons and organizations will be expected to sign up to MTD for ITSA but, if MTD for VAT is a manual, this will in all probability be staggered throughout the decades next 2024. In other terms, MTD for ITSA is persistently going to call for setting up and assets, perhaps all the way to the end of the 10 years.
  • Foundation interval reform impacts all sole traders, not just these higher than the £10,000 threshold for MTD for ITSA, so the filtering for that specific activity ought to be drawn from your entire sole trader consumer foundation.
  • These beneath the MTD for ITSA threshold may nonetheless make contact with you and call for assistance when they master of MTD for ITSA (e.g. from adverts). While the respond to may well be very simple for these clients, it will nevertheless eat time and means. In other words, the times following an HMRC mail-out may well set your phones on fire!

Make sure your clients recognize the great importance of adopting the compliance alter quicker instead than later. Transfer now and the selling price stays the exact same, but go afterwards and they are possible to incur larger expenses.

Motivate your clients to acquire advantage of any pilot strategies, this kind of as that readily available for MTD for ITSA.

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

Strategies to converse the adjustments to sole traders

Though communicate of digitalisation in accountancy is very little new, procedures that are ready to embrace chopping-edge technologies are heading to attain efficiencies when it comes to interaction.

With no working with these technologies, techniques danger being confused.

So, let us just take a look at a few suggestions—starting with the more modern way of driving engagement.

Instagram/Facebook Dwell

Practically all your customers will have social media accounts of some form, and your practice will hopefully by now have its own social media presence to hook up with this.

Fb Dwell (also on Instagram in a broadly identical way) is simply just a way of broadcasting are living video, just like a news reporter on Television.

Viewers are limited to commenting (and you can approve remarks in advance of they are viewed), but you also can share polls and screen world wide web back links (e.g. to HMRC web sites that clarify much more).

You can stay broadcast from a cell phone or laptop, or use the Dwell Producer program for a much more expert strategy.


It could no lengthier be cutting edge but employing Zoom or Microsoft Groups to host an on the net webinar suits in just lots of people’s ease and comfort zones nowadays, subsequent the enforced specialized migration brought about by the pandemic.

Simply because these are effectively on line conferences in all but name, invites can be scheduled in Zoom or Microsoft accounts and sent to customers, which can raise engagement.

They can be interactive, and the webinar can be recorded far too so that you can make it possible for entry at a afterwards date, deriving more price from your operate.


By way of e-mail or printed and posted, newsletters stay a important way to converse with purchasers about all sorts of concerns. They’re a lot less simple than videoconferencing in today’s globe, although, since, you will need to guarantee you keep on being GDPR compliant.

In other phrases, people today generally have to opt-in to get emails or newsletters. But email newsletters in specific have had a resurgence a short while ago, and persons are not as resistant to them as they when had been.

And the rest…

The Pareto basic principle states 80% of outcomes typically crop up from 20% of the exertion.

In phrases of common instruction for a observe, it is the compact factors that often work very best.

Tack a mention of MTD for ITSA onto each and every incoming or outgoing consumer phone get in touch with, for instance.

Increase a transient paragraph box to the invoices you ship out.

Have all people incorporate a mention of MTD for ITSA to their electronic mail signatures.

Place a banner on your internet site mentioning it, and how you can help.

Put this dilemma out to your employees to see if you receive any progressive responses primarily based on the peculiarities of your exercise: How would they unfold the term about MTD for ITSA?

MTD for ITSA benefits for your sole trader shoppers

With any luck, numerous of your existing purchasers required to use MTD for ITSA will presently use a cloud accounting option. If so, there is a fantastic probability this will be MTD-all set in time for April 2024, even though the customer will have to have to register for MTD (or you can on their behalf), as well as change on the MTD operation inside the software package.

Remember that MTD for VAT and MTD for ITSA are two solely individual considerations—accounting software package with MTD for VAT now activated won’t routinely be activated for MTD for ITSA.

Those utilizing more mature desktop-centered software package might want to seek an enhance.

Likewise, the upgrade route for those people relying on spreadsheets might be a little bumpy, with a require to implement appropriate bridging plugins for the spreadsheet application.

For those who aren’t making use of application, you must emphasise the added benefits of accounting computer software that you’ll now know about—a 24/7 check out of money circulation, for case in point, so they generally know wherever they stand.

This way customers can spot difficulties coming, as properly as see prospects when they come up.

But it is significant to emphasise newer technologies way too.

Automating financial institution reconciliation, for case in point, is transforming business enterprise admin by massively minimizing the sum of time taken to match payments from invoices.

Likewise, receipt capture signifies finding vital MTD-demanded facts into the client’s accounting turns into a piece of cake—just snap the receipt or invoice with a mobile cell phone straight immediately after invest in or receipt of the goods.

And really don’t forget possibly the most important boon for any accountant—linking consumer accounting to your personal devices, so you can see their dwell economic info.

This makes it possible for for you to generate new worth propositions around periodic examine-ins, for example. This exhibits how MTD for ITSA is finally a business prospect for tactics.

Closing views

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

But as an accountant, you have to get started arranging right away.

Assets and finances requires to be allocated, and the sheer scale of the operate will have to be quantified. This could possibly come to feel like the early levels but you know from working experience with MTD for VAT that crucial dates will be in this article right before we know it.

Moving ahead, clever procedures are presently developing operating events that fulfill frequently and established goals so that milestones can be achieved.