Making Tax Digital for Income Tax Self-Assessment (MTD for ITSA) is coming and with it more frequent reporting and stricter rules. For many, it also means higher bookkeeping and accountancy costs.
You’ll need to use Making Tax Digital for Income Tax if all of the following apply:
- you’re a sole trader or a landlord registered for Self Assessment
- you get income from self-employment or property, or both
- your qualifying income is more than £20,000
Some clients are already worried about paying more so we’ve pulled together some of those concerns. Here’s what those concerns usually sound like, and how they can be approached.
“I’ve always done it this way—why can’t I carry on?”
Because the rules have changed. The same happened when VAT and payroll reporting went digital. MTD for ITSA is the next step.
“I don’t want to pay the extra fees for MTD.”
MTD for ITSA is mandatory. HMRC will issue penalties for late or inaccurate submissions. Paying your bookkeeper/accountant to manage this reduces stress and keeps you compliant; it also saves you the hours you would otherwise spend figuring it out yourself.
“I don’t have the budget—what are my options?”
There are choices. You could handle your own recordkeeping and only pay for submissions. We can guide you towards tools like Apron, Hubdoc, or Dext which scans receipts and pushes them straight into your accounts. It still takes a little effort, but it reduces costs.
“’Making Tax Digital’ feels like change for the sake of it.”
MTD is part of HMRC’s wider plan to digitise tax. The goal is to cut down on mistakes and move away from paper-based systems. Once the adjustment is made, the process becomes smoother.
“I don’t see the value—why should I pay more for the same thing?”
It is more work. Instead of one return a year, there will be four. That means four sets of checks and submissions, with all the responsibility that comes with them.
“I don’t want to use MTD software.”
The software is required by HMRC. Once you get over the initial learning curve, you’ll notice other benefits. You can see your cash flow in real time, check who owes you money, and avoid the pile-up of paperwork. A tradesperson using Xero recently told us they cut two evenings of admin a month by switching.
“Can’t I just do the MTD reporting, myself, and avoid fees altogether?”
Of course you can. But it carries risk. Miss one deadline or submit the wrong data and the fines quickly outweigh the savings.
In Summary
The real value is in knowing your obligations are met properly and on time. The software also gives better financial insight, which helps with decisions about spending, hiring, or investment.
MTD is a change none of us chose, but it is here. The best option is to adapt quickly, use the tools available, and make sure compliance doesn’t become a problem for your business.
If you’re unsure how these changes affect you, talk to us now. We’ll help you choose the right level of support, set up the software, train you or your staff if required and take the stress out of MTD before deadlines arrive.
