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

Marty Batteen

With Building Tax Digital for VAT in complete swing, for accountants, interest is turning to the future phase of MTD: Making Tax Digital (MTD) for Revenue Tax Self Assessment.

This is at times referred to as MTD for ITSA.

The guidelines are simple, but it is once once again likely to be the accountancy profession getting their noses soiled at the proverbial coalface in supporting clients adapt—especially thousands and thousands of sole traders who are higher than the £10,000 threshold.

In this report, we spotlight some factors that may well assistance kickstart your procedures when it comes to supporting individuals persons.

Here’s what we protect:

Why accountants ought to start out planning their sole trader shoppers now

As much as most clientele are concerned, MTD for ITSA has numerous fronts for which sole traders have to put together:

  1. Transitioning to accounting software package, if they have not currently. Alternatively, sole traders may well use some type of bridging solution if they insist on utilizing spreadsheets (whilst getting measures to be legally compliant with the electronic linking policies, of course—remember that copy and pasting quantities into a spreadsheet from somewhere else will possibly be lawfully prohibited).
  2. Change to digital history-keeping for their profits tax accounting relating to self-employment, like compliance within all processes related to this (e.g. info capture from documents these types of as invoices or expenditures), all over again inside the prerequisites of electronic linking.
  3. Foundation period reform for sole traders, for the minority that demands it. It could theoretically be important for a business enterprise to implement this for the tax calendar year 2023/24.

Organizing have to begin now mainly because each and every part in the over checklist is likely to desire time and resources. As outlined, some of the deadlines necessitating motion could be below very before long.

For most tactics, the pretty first job will be to segment their customer lists in accordance to these requirements. That in by itself will be time-consuming.

After that’s done, procedures should really dedicate assets about educating and employing. And this will be a continuous course of action up to and even further than the get started date of MTD for ITSA in April 2024.

This circumstance is complex by the next, which have to be taken into account throughout any organizing:

  • Some sole traders will also be landlords, so they may possibly have to also use MTD for ITSA for residence profits even if their sole trader profits is under £10,000 (that is, their sole trader moreover rental revenue is higher than £10,000).
  • Normal partnerships join MTD for ITSA in April 2025, so will call for their possess education and onboarding processes foremost up to that time. It is not nonetheless crystal clear when other income tax-paying individuals and firms will be expected to indicator up to MTD for ITSA but, if MTD for VAT is a guideline, this will almost certainly be staggered throughout the many years following 2024. In other phrases, MTD for ITSA is persistently likely to have to have organizing and methods, probably all the way to the conclude of the 10 years.
  • Basis period of time reform influences all sole traders, not just those people previously mentioned the £10,000 threshold for MTD for ITSA, so the filtering for that particular undertaking need to be drawn from your full sole trader shopper foundation.
  • These underneath the MTD for ITSA threshold may still call you and need aid when they understand of MTD for ITSA (e.g. from advertisements). Though the solution may possibly be uncomplicated for these shoppers, it will even now take in time and sources. In other words and phrases, the days adhering to an HMRC mail-out may perhaps set your phones on fireplace!

Ensure your purchasers understand the worth of adopting the compliance alter quicker fairly than later on. Move now and the value stays the very same, but go afterwards and they’re possible to incur bigger costs.

Motivate your shoppers to choose advantage of any pilot schemes, these types of as that offered for MTD for ITSA.

Remember that they will will need appropriate software, as will you if you would like to maximise your services featuring for them.

Suggestions to talk the changes to sole traders

Though discuss of digitalisation in accountancy is almost nothing new, tactics that are willing to embrace reducing-edge technologies are likely to reach efficiencies when it will come to interaction.

Without having working with these technologies, methods threat getting overwhelmed.

So, let us just take a look at a handful of suggestions—starting with the extra innovative way of driving engagement.

Instagram/Fb Are living

Just about all your customers will have social media accounts of some sort, and your follow will with any luck , presently have its very own social media existence to link with this.

Fb Dwell (also on Instagram in a broadly comparable way) is simply a way of broadcasting stay movie, just like a news reporter on Television.

Viewers are limited to commenting (and you can approve responses just before they are viewed), but you also can share polls and display screen web hyperlinks (e.g. to HMRC web pages that demonstrate additional).

You can reside broadcast from a cellular phone or pc, or use the Reside Producer computer software for a far more specialist strategy.


It could possibly no longer be cutting edge but applying Zoom or Microsoft Groups to host an online webinar fits in just quite a few people’s comfort and ease zones at present, subsequent the enforced specialized migration brought on by the pandemic.

For the reason that these are effectively on the internet conferences in all but name, invitations can be scheduled within just Zoom or Microsoft accounts and sent to consumers, which can improve engagement.

They can be interactive, and the webinar can be recorded too so that you can let accessibility at a later date, deriving additional worth from your get the job done.


Via e-mail or printed and posted, newsletters continue being a crucial way to talk with clientele about all varieties of difficulties. They are a lot less uncomplicated than videoconferencing in today’s entire world, although, due to the fact, you are going to require to make certain you continue to be GDPR compliant.

In other words, folks usually must choose-in to acquire emails or newsletters. But email newsletters in particular have experienced a resurgence recently, and men and women are not as resistant to them as they as soon as were being.

And the rest…

The Pareto principle says 80% of results typically occur from 20% of the exertion.

In conditions of standard training for a follow, it’s the small matters that frequently get the job done most effective.

Tack a mention of MTD for ITSA onto each individual incoming or outgoing shopper phone get in touch with, for illustration.

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

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

Place a banner on your web page mentioning it, and how you can aid.

Set this issue out to your staff members to see if you acquire any impressive responses based mostly on the peculiarities of your apply: How would they distribute the word about MTD for ITSA?

MTD for ITSA positive aspects for your sole trader clients

With any luck, many of your existing consumers expected to use MTD for ITSA will previously use a cloud accounting answer. If so, there is a good opportunity this will be MTD-ready in time for April 2024, whilst the customer will have to have to sign-up for MTD (or you can on their behalf), as well as swap on the MTD functionality in the software.

Bear in mind that MTD for VAT and MTD for ITSA are two totally separate considerations—accounting software program with MTD for VAT previously activated will not automatically be activated for MTD for ITSA.

Those making use of older desktop-based software package may possibly require to seek out an upgrade.

Equally, the update route for these relying on spreadsheets may be a small bumpy, with a need to utilize compatible bridging plugins for the spreadsheet app.

For individuals who aren’t applying application, you should emphasise the advantages of accounting software program that you are going to by now know about—a 24/7 look at of dollars circulation, for instance, so they generally know wherever they stand.

This way clientele can location difficulties coming, as very well as see alternatives when they come up.

But it is critical to emphasise more recent technologies way too.

Automating bank reconciliation, for illustration, is transforming business admin by massively cutting down the volume of time taken to match payments in opposition to invoices.

Likewise, receipt seize usually means obtaining very important MTD-expected information into the client’s accounting results in being a piece of cake—just snap the receipt or invoice with a cell phone straight soon after purchase or receipt of the merchandise.

And do not ignore perhaps the greatest boon for any accountant—linking customer accounting to your personal systems, so you can see their reside monetary details.

This allows for you to produce new price propositions about periodic verify-ins, for example. This shows how MTD for ITSA is in the end a organization possibility for methods.

Ultimate thoughts

MTD for ITSA might truly feel like some time away.

But as an accountant, you have to start out scheduling instantly.

Methods and funds demands to be allocated, and the sheer scale of the get the job done need to be quantified. This may sense like the early levels but you know from experience with MTD for VAT that vital dates will be in this article prior to we know it.

Going forward, smart practices are presently creating working functions that meet up with routinely and set objectives so that milestones can be realized.

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