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

With Building Tax Electronic for VAT in comprehensive swing, for accountants, consideration is turning to the subsequent phase of MTD: Earning Tax Digital (MTD) for Revenue Tax Self Assessment.

This is at times referred to as MTD for ITSA.

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

In this article, we highlight some factors that could possibly aid kickstart your processes when it arrives to supporting individuals individuals.

Here’s what we cover:

Why accountants should really commence making ready their sole trader consumers now

As far as most purchasers are worried, MTD for ITSA has various fronts for which sole traders should prepare:

  1. Transitioning to accounting software package, if they haven’t presently. Alternatively, sole traders may well use some form of bridging resolution if they insist on utilizing spreadsheets (even though getting actions to be legally compliant with the digital linking principles, of course—remember that copy and pasting quantities into a spreadsheet from somewhere else will likely be legally prohibited).
  2. Change to electronic file-trying to keep for their money tax accounting relating to self-work, like compliance in all procedures related to this (e.g. info capture from files such as invoices or costs), once more in just the demands of electronic linking.
  3. Basis period of time reform for sole traders, for the minority that requires it. It could theoretically be needed for a business to employ this for the tax yr 2023/24.

Preparing ought to get started now mainly because each individual element in the higher than record is heading to demand time and means. As stated, some of the deadlines demanding action could be right here incredibly before long.

For most practices, the extremely to start with job will be to section their shopper lists according to these conditions. That in itself will be time-consuming.

At the time that’s accomplished, procedures should really devote means about educating and employing. And this will be a continual method up to and even over and above the start day of MTD for ITSA in April 2024.

This predicament is intricate by the pursuing, which ought to be taken into account all through any arranging:

  • Some sole traders will also be landlords, so they may perhaps have to also use MTD for ITSA for assets revenue even if their sole trader earnings is down below £10,000 (that is, their sole trader furthermore rental money is better than £10,000).
  • General partnerships be a part of MTD for ITSA in April 2025, so will call for their have education and learning and onboarding procedures major up to that time. It’s not still very clear when other income tax-having to pay persons and firms will be needed to indicator up to MTD for ITSA but, if MTD for VAT is a tutorial, this will probably be staggered across the decades subsequent 2024. In other phrases, MTD for ITSA is persistently going to have to have planning and methods, probably all the way to the conclusion of the decade.
  • Foundation time period reform has an effect on all sole traders, not just those higher than the £10,000 threshold for MTD for ITSA, so the filtering for that specific undertaking have to be drawn from your complete sole trader client base.
  • Those underneath the MTD for ITSA threshold may possibly still make contact with you and demand assistance when they discover of MTD for ITSA (e.g. from adverts). Despite the fact that the response might be straightforward for these clientele, it will nevertheless consume time and resources. In other terms, the times following an HMRC mail-out might established your phones on fireplace!

Make sure your clients realize the worth of adopting the compliance change quicker alternatively than later. Move now and the price stays the identical, but shift later on and they’re probably to incur better fees.

Really encourage your purchasers to just take advantage of any pilot schemes, this sort of as that offered for MTD for ITSA.

Don’t forget that they will require suitable software, as will you if you wish to maximise your company giving for them.

Ideas to converse the improvements to sole traders

When talk of digitalisation in accountancy is practically nothing new, methods that are prepared to embrace slicing-edge technologies are going to attain efficiencies when it comes to interaction.

Without having employing these systems, methods chance staying overwhelmed.

So, let us just take a glimpse at a couple suggestions—starting with the extra impressive way of driving engagement.

Instagram/Facebook Dwell

Pretty much all your purchasers will have social media accounts of some form, and your apply will hopefully previously have its possess social media presence to join with this.

Fb Reside (also on Instagram in a broadly similar way) is simply just a way of broadcasting stay movie, just like a information reporter on Tv.

Viewers are constrained to commenting (and you can approve feedback just before they are viewed), but you also can share polls and show website back links (e.g. to HMRC sites that explain extra).

You can live broadcast from a mobile phone or computer, or use the Live Producer software for a more professional strategy.


It could no lengthier be cutting edge but using Zoom or Microsoft Teams to host an on the net webinar suits in several people’s comfort and ease zones presently, subsequent the enforced technical migration prompted by the pandemic.

Mainly because these are effectively on the internet meetings in all but identify, invites can be scheduled within Zoom or Microsoft accounts and sent to clientele, which can strengthen engagement.

They can be interactive, and the webinar can be recorded much too so that you can allow for entry at a later on date, deriving even more worth from your perform.


By using e mail or printed and posted, newsletters keep on being a crucial way to connect with consumers about all sorts of issues. They’re considerably less simple than videoconferencing in today’s world, while, mainly because, you are going to want to guarantee you continue to be GDPR compliant.

In other words and phrases, men and women generally have to opt-in to receive email messages or newsletters. But e mail newsletters in particular have had a resurgence just lately, and individuals are not as resistant to them as they at the time have been.

And the rest…

The Pareto theory states 80% of benefits ordinarily crop up from 20% of the effort and hard work.

In phrases of normal schooling for a practice, it is the smaller issues that normally operate very best.

Tack a mention of MTD for ITSA on to each individual incoming or outgoing shopper cell phone get in touch with, for instance.

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

Have every person insert a mention of MTD for ITSA to their email signatures.

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

Place this query out to your staff members to see if you get any progressive answers based on the peculiarities of your apply: How would they distribute the word about MTD for ITSA?

MTD for ITSA rewards for your sole trader clients

With any luck, a lot of of your existing clientele essential to use MTD for ITSA will presently use a cloud accounting answer. If so, there’s a good prospect this will be MTD-ready in time for April 2024, though the customer will need to sign-up for MTD (or you can on their behalf), moreover swap on the MTD performance in the program.

Keep in mind that MTD for VAT and MTD for ITSA are two totally individual considerations—accounting application with MTD for VAT now activated will not mechanically be activated for MTD for ITSA.

All those utilizing more mature desktop-based mostly computer software may perhaps need to have to find an enhance.

Similarly, the enhance route for people relying on spreadsheets may perhaps be a small bumpy, with a want to implement appropriate bridging plugins for the spreadsheet application.

For those who aren’t using program, you really should emphasise the advantages of accounting software that you’ll already know about—a 24/7 see of hard cash flow, for instance, so they often know where they stand.

This way purchasers can place issues coming, as very well as see possibilities when they arise.

But it is essential to emphasise more recent systems too.

Automating bank reconciliation, for illustration, is reworking business admin by massively reducing the amount of time taken to match payments from invoices.

Similarly, receipt capture usually means finding crucial MTD-required data into the client’s accounting gets a piece of cake—just snap the receipt or invoice with a cellular phone straight immediately after purchase or receipt of the products.

And really don’t overlook maybe the major boon for any accountant—linking client accounting to your have techniques, so you can see their stay economical info.

This makes it possible for for you to create new worth propositions about periodic verify-ins, for example. This reveals how MTD for ITSA is finally a business prospect for techniques.

Last views

MTD for ITSA may experience like some time absent.

But as an accountant, you have to commence arranging promptly.

Means and spending plan desires to be allocated, and the sheer scale of the get the job done have to be quantified. This could sense like the early levels but you know from encounter with MTD for VAT that crucial dates will be listed here right before we know it.

Going forward, intelligent methods are currently building working get-togethers that meet up with routinely and established targets so that milestones can be achieved.