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

ByFrancoise Ardion

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With Generating Tax Digital for VAT in full swing, for accountants, focus is turning to the next phase of MTD: Creating Tax Digital (MTD) for Income Tax Self Evaluation.

This is sometimes referred to as MTD for ITSA.

The policies are straightforward, but it is after once again heading to be the accountancy job getting their noses soiled at the proverbial coalface in supporting clientele adapt—especially millions of sole traders who are higher than the £10,000 threshold.

In this post, we highlight some things to consider that may help kickstart your processes when it arrives to supporting those people persons.

Here’s what we deal with:

Why accountants must start out making ready their sole trader shoppers now

As far as most clients are worried, MTD for ITSA has many fronts for which sole traders should get ready:

  1. Transitioning to accounting computer software, if they have not already. Alternatively, sole traders may use some type of bridging solution if they insist on applying spreadsheets (while using measures to be lawfully compliant with the digital linking regulations, of course—remember that copy and pasting quantities into a spreadsheet from elsewhere will possibly be lawfully prohibited).
  2. Change to electronic file-preserving for their income tax accounting relating to self-work, including compliance within just all procedures linked to this (e.g. details seize from files this sort of as invoices or expenses), yet again within just the demands of digital linking.
  3. Foundation time period reform for sole traders, for the minority that requires it. It could theoretically be essential for a company to carry out this for the tax year 2023/24.

Scheduling need to start off now for the reason that each component in the above checklist is going to demand from customers time and resources. As described, some of the deadlines necessitating action could be right here quite soon.

For most practices, the extremely first occupation will be to segment their customer lists according to these standards. That in itself will be time-consuming.

At the time that’s accomplished, techniques should really dedicate resources about educating and applying. And this will be a continuous process up to and even further than the start off date of MTD for ITSA in April 2024.

This situation is challenging by the pursuing, which have to be taken into account for the duration of any planning:

  • Some sole traders will also be landlords, so they might have to also use MTD for ITSA for assets money even if their sole trader cash flow is under £10,000 (that is, their sole trader moreover rental revenue is better than £10,000).
  • Typical partnerships be a part of MTD for ITSA in April 2025, so will have to have their very own education and onboarding processes primary up to that time. It’s not nevertheless crystal clear when other earnings tax-paying out people and firms will be essential to indication up to MTD for ITSA but, if MTD for VAT is a information, this will likely be staggered across the years adhering to 2024. In other phrases, MTD for ITSA is persistently heading to need scheduling and assets, most likely all the way to the finish of the ten years.
  • Basis interval reform affects all sole traders, not just those earlier mentioned the £10,000 threshold for MTD for ITSA, so the filtering for that particular activity should be drawn from your whole sole trader consumer base.
  • Those people underneath the MTD for ITSA threshold may possibly still contact you and demand enable when they find out of MTD for ITSA (e.g. from adverts). Whilst the respond to may be uncomplicated for these customers, it will even now eat time and means. In other words and phrases, the times following an HMRC mail-out might established your telephones on fire!

Guarantee your clients comprehend the relevance of adopting the compliance transform faster rather than afterwards. Transfer now and the cost stays the very same, but move later and they’re probably to incur greater charges.

Inspire your purchasers to get benefit of any pilot schemes, this sort of as that obtainable for MTD for ITSA.

Keep in mind that they will will need appropriate program, as will you if you want to maximise your services featuring for them.

Ideas to communicate the modifications to sole traders

When discuss of digitalisation in accountancy is almost nothing new, methods that are inclined to embrace chopping-edge systems are likely to achieve efficiencies when it comes to conversation.

Without having making use of these systems, tactics risk staying overwhelmed.

So, let us choose a appear at a couple of suggestions—starting with the extra revolutionary way of driving engagement.

Instagram/Fb Dwell

Virtually all your consumers will have social media accounts of some variety, and your follow will ideally already have its very own social media existence to connect with this.

Fb Dwell (also on Instagram in a broadly very similar way) is merely a way of broadcasting dwell video clip, just like a information reporter on Tv.

Viewers are confined to commenting (and you can approve comments prior to they are viewed), but you also can share polls and exhibit net links (e.g. to HMRC websites that make clear extra).

You can stay broadcast from a cell phone or computer system, or use the Are living Producer software for a more professional method.


It may possibly no extended be chopping edge but making use of Zoom or Microsoft Groups to host an on the internet webinar suits within just numerous people’s consolation zones at present, pursuing the enforced complex migration brought about by the pandemic.

For the reason that these are basically online meetings in all but name, invites can be scheduled in Zoom or Microsoft accounts and sent to clientele, which can enhance engagement.

They can be interactive, and the webinar can be recorded far too so that you can enable obtain at a later on date, deriving further value from your get the job done.


By using electronic mail or printed and posted, newsletters remain a essential way to converse with clients about all forms of troubles. They are considerably less straightforward than videoconferencing in today’s planet, though, for the reason that, you’ll need to have to guarantee you continue being GDPR compliant.

In other words and phrases, folks ordinarily will have to choose-in to receive e-mails or newsletters. But email newsletters in specific have experienced a resurgence just lately, and men and women are not as resistant to them as they the moment have been.

And the rest…

The Pareto theory says 80% of effects usually crop up from 20% of the hard work.

In conditions of general schooling for a observe, it’s the tiny points that normally work very best.

Tack a mention of MTD for ITSA onto just about every incoming or outgoing customer cell phone contact, for instance.

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

Have everybody insert a point out of MTD for ITSA to their email signatures.

Put a banner on your site mentioning it, and how you can assistance.

Set this question out to your employees to see if you receive any modern solutions primarily based on the peculiarities of your exercise: How would they unfold the phrase about MTD for ITSA?

MTD for ITSA rewards for your sole trader customers

With any luck, lots of of your current consumers needed to use MTD for ITSA will presently use a cloud accounting solution. If so, there is a superior possibility this will be MTD-ready in time for April 2024, while the shopper will want to register for MTD (or you can on their behalf), as well as swap on the MTD functionality in the software package.

Remember that MTD for VAT and MTD for ITSA are two completely different considerations—accounting computer software with MTD for VAT already activated will not quickly be activated for MTD for ITSA.

Individuals making use of older desktop-based mostly software program may well need to have to request an update.

Likewise, the upgrade route for individuals relying on spreadsheets may perhaps be a minor bumpy, with a need to apply appropriate bridging plugins for the spreadsheet app.

For these who aren’t employing program, you should emphasise the rewards of accounting program that you’ll currently know about—a 24/7 see of money flow, for instance, so they often know where by they stand.

This way clients can spot difficulties coming, as properly as see options when they occur.

But it’s crucial to emphasise newer technologies too.

Automating financial institution reconciliation, for instance, is reworking organization admin by massively lessening the sum of time taken to match payments versus invoices.

Equally, receipt capture indicates receiving very important MTD-demanded info into the client’s accounting will become a piece of cake—just snap the receipt or invoice with a cellular mobile phone straight following buy or receipt of the goods.

And do not forget about potentially the largest boon for any accountant—linking client accounting to your personal devices, so you can see their dwell economic knowledge.

This lets for you to generate new worth propositions all around periodic test-ins, for example. This displays how MTD for ITSA is in the long run a business option for tactics.

Ultimate views

MTD for ITSA might feel like some time away.

But as an accountant, you have to commence setting up promptly.

Means and funds wants to be allotted, and the sheer scale of the work will have to be quantified. This may well experience like the early phases but you know from working experience with MTD for VAT that critical dates will be listed here right before we know it.

Transferring forward, good tactics are previously producing functioning events that meet up with on a regular basis and established targets so that milestones can be achieved.