July 24, 2024


Business & Finance

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

7 min read

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

This is at times referred to as MTD for ITSA.

The principles are straightforward, but it’s once yet again heading to be the accountancy occupation having their noses dirty at the proverbial coalface in assisting customers adapt—especially hundreds of thousands of sole traders who are above the £10,000 threshold.

In this post, we spotlight some criteria that might aid kickstart your processes when it will come to supporting those people persons.

Here’s what we address:

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

As considerably as most customers are involved, MTD for ITSA has several fronts for which sole traders have to prepare:

  1. Transitioning to accounting program, if they have not presently. Alternatively, sole traders may well use some kind of bridging resolution if they insist on using spreadsheets (even though having steps to be legally compliant with the digital linking rules, of course—remember that copy and pasting figures into a spreadsheet from in other places will possibly be legally prohibited).
  2. Swap to digital file-keeping for their revenue tax accounting relating to self-employment, which includes compliance within just all processes linked to this (e.g. info capture from documents this kind of as invoices or expenses), yet again inside the specifications of electronic linking.
  3. Basis period of time reform for sole traders, for the minority that involves it. It could theoretically be important for a business enterprise to put into practice this for the tax year 2023/24.

Scheduling should start off now mainly because each and every ingredient in the over listing is likely to demand time and sources. As talked about, some of the deadlines demanding action could be in this article pretty shortly.

For most practices, the extremely 1st occupation will be to section their customer lists in accordance to these conditions. That in itself will be time-consuming.

Once that is carried out, practices ought to dedicate sources all-around educating and implementing. And this will be a continual process up to and even over and above the commence day of MTD for ITSA in April 2024.

This predicament is intricate by the next, which should be taken into account all through any arranging:

  • Some sole traders will also be landlords, so they could have to also use MTD for ITSA for home income even if their sole trader profits is below £10,000 (that is, their sole trader additionally rental money is better than £10,000).
  • Typical partnerships be part of MTD for ITSA in April 2025, so will involve their individual schooling and onboarding procedures foremost up to that time. It is not but crystal clear when other money tax-paying out folks and organizations will be essential to signal up to MTD for ITSA but, if MTD for VAT is a manual, this will possibly be staggered across the yrs adhering to 2024. In other words, MTD for ITSA is persistently likely to involve planning and assets, possibly all the way to the stop of the ten years.
  • Basis time period reform impacts all sole traders, not just people above the £10,000 threshold for MTD for ITSA, so the filtering for that certain process must be drawn from your complete sole trader consumer foundation.
  • Individuals down below the MTD for ITSA threshold may possibly however get in touch with you and require support when they master of MTD for ITSA (e.g. from advertisements). While the remedy may well be basic for these purchasers, it will nonetheless consume time and resources. In other words and phrases, the days adhering to an HMRC mail-out may well set your telephones on hearth!

Ensure your shoppers realize the value of adopting the compliance transform quicker alternatively than later on. Transfer now and the price tag stays the exact, but shift later and they are possible to incur larger service fees.

Inspire your consumers to choose edge of any pilot strategies, these kinds of as that offered for MTD for ITSA.

Keep in mind that they will require compatible software, as will you if you want to maximise your company presenting for them.

Suggestions to talk the alterations to sole traders

Though speak of digitalisation in accountancy is nothing new, methods that are ready to embrace reducing-edge technologies are heading to achieve efficiencies when it arrives to communication.

Without having using these technologies, tactics possibility getting overcome.

So, let us acquire a glance at a couple of suggestions—starting with the far more progressive way of driving engagement.

Instagram/Facebook Stay

Almost all your purchasers will have social media accounts of some variety, and your observe will with any luck , previously have its very own social media existence to link with this.

Fb Dwell (also on Instagram in a broadly very similar way) is basically a way of broadcasting are living online video, just like a news reporter on Tv set.

Viewers are restricted to commenting (and you can approve feedback right before they are observed), but you also can share polls and display internet back links (e.g. to HMRC internet sites that demonstrate a lot more).

You can dwell broadcast from a mobile phone or laptop, or use the Are living Producer software program for a additional expert strategy.


It may possibly no longer be chopping edge but working with Zoom or Microsoft Teams to host an on the internet webinar matches inside several people’s consolation zones currently, following the enforced technical migration triggered by the pandemic.

Since these are essentially on-line conferences in all but name, invitations can be scheduled in just Zoom or Microsoft accounts and sent to purchasers, which can strengthen engagement.

They can be interactive, and the webinar can be recorded also so that you can make it possible for obtain at a later day, deriving more value from your perform.


By means of email or printed and posted, newsletters continue to be a vital way to converse with clients about all kinds of troubles. They are significantly less straightforward than videoconferencing in today’s entire world, however, mainly because, you’ll need to have to be certain you stay GDPR compliant.

In other phrases, folks normally must decide-in to get e-mail or newsletters. But e-mail newsletters in particular have had a resurgence just lately, and folks are not as resistant to them as they when have been.

And the rest…

The Pareto basic principle says 80% of final results ordinarily crop up from 20% of the exertion.

In phrases of basic education for a follow, it’s the modest issues that usually function finest.

Tack a mention of MTD for ITSA onto just about every incoming or outgoing consumer cell phone simply call, for illustration.

Add a temporary paragraph box to the invoices you send out.

Have all people add a mention of MTD for ITSA to their email signatures.

Place a banner on your website mentioning it, and how you can support.

Place this concern out to your staff to see if you get any ground breaking answers dependent on the peculiarities of your follow: How would they distribute the phrase about MTD for ITSA?

MTD for ITSA rewards for your sole trader customers

With any luck, numerous of your present shoppers required to use MTD for ITSA will now use a cloud accounting solution. If so, there’s a excellent opportunity this will be MTD-prepared in time for April 2024, while the shopper will require to sign up for MTD (or you can on their behalf), furthermore swap on the MTD functionality in just the application.

Try to remember that MTD for VAT and MTD for ITSA are two fully separate considerations—accounting software program with MTD for VAT previously activated won’t automatically be activated for MTD for ITSA.

Those people working with more mature desktop-based software package could need to request an up grade.

Likewise, the update route for these relying on spreadsheets may well be a tiny bumpy, with a will need to utilize compatible bridging plugins for the spreadsheet app.

For all those who are not utilizing software package, you should really emphasise the added benefits of accounting software package that you’ll already know about—a 24/7 see of dollars movement, for example, so they generally know where they stand.

This way purchasers can place problems coming, as very well as see alternatives when they crop up.

But it’s vital to emphasise more recent systems much too.

Automating lender reconciliation, for example, is reworking company admin by massively cutting down the quantity of time taken to match payments versus invoices.

In the same way, receipt capture signifies finding very important MTD-demanded information into the client’s accounting turns into a piece of cake—just snap the receipt or invoice with a mobile cellular phone straight right after invest in or receipt of the products.

And really don’t overlook maybe the greatest boon for any accountant—linking customer accounting to your very own systems, so you can see their stay economic data.

This enables for you to generate new worth propositions all-around periodic check-ins, for case in point. This reveals how MTD for ITSA is in the end a organization chance for tactics.

Ultimate feelings

MTD for ITSA may possibly truly feel like some time absent.

But as an accountant, you have to get started preparing instantly.

Resources and funds demands to be allotted, and the sheer scale of the perform have to be quantified. This may well truly feel like the early stages but you know from expertise with MTD for VAT that key dates will be listed here ahead of we know it.

Moving ahead, sensible procedures are presently generating performing parties that meet consistently and established goals so that milestones can be accomplished.