| Overview |
With MTD for Income Tax now mandatory for clients with qualifying income of £50,000 or more, and the April 2027 threshold approaching for clients above £30,000, firms need a structured approach to identifying affected clients, reviewing workflows, and communicating changes. This article sets out a practical action plan.
| Step 1 — Identify Affected Clients |
The first step is knowing which clients are affected and when. Use the MTD Qualifying Income Report in BrightTax to generate a complete picture across your client base.
- Go to Reports > MTD Qualifying Income in BrightTax.
- Run the report for the relevant tax year.
- Export or print the results.
- Identify clients who are already mandated (£50,000+) and those approaching the April 2027 threshold (£30,000+).
- Note any clients with exemptions — these do not need to be enrolled.
| ✔ Tip: Run the report now if you have not already done so. The April 2026 mandation date has passed — any clients above £50,000 should already be enrolled. Focus immediately on those approaching the April 2027 threshold. |
| Step 2 — Review Digital Record Keeping |
MTD for ITSA requires clients to keep digital records. Review how each affected client currently records their income and expenses:
| Current Method | MTD Compatible? | Action Required |
|---|---|---|
| MTD-compatible software (e.g. Xero, QuickBooks, FreeAgent) | Yes | Connect to BrightTax via integration |
| Spreadsheets with bridging software | Yes (with bridging) | Confirm bridging software is MTD-compliant |
| Spreadsheets without bridging software | No | Move to MTD-compatible software or add bridging solution |
| Paper records / cash book | No | Must transition to digital record keeping before mandation date |
| Step 3 — Sign Up Clients for MTD for ITSA |
Clients must be signed up for MTD for ITSA with HMRC before their mandation date. The sign-up process is completed by the client (or by the agent on their behalf where applicable).
- Clients sign up at gov.uk/sign-up-for-making-tax-digital-for-income-tax
- As the agent, you will need to have an Agent Services Account and be authorised to act for the client under MTD
- Once signed up, HMRC will confirm the client's MTD start date
| ⚠ Important: Clients cannot file a standard Self Assessment return for income sources covered by MTD once they are signed up. Ensure the client's software and workflow are MTD-ready before signing them up. |
| Step 4 — Set Up Quarterly Reporting Workflow |
Once a client is enrolled, you need a workflow to handle the four quarterly updates per year. Each quarterly update is a summary of income and expenses for that quarter — it does not require a full tax calculation.
| Quarter | Period | Update Due By |
|---|---|---|
| Q1 | 6 April – 5 July | 5 August |
| Q2 | 6 July – 5 October | 5 November |
| Q3 | 6 October – 5 January | 5 February |
| Q4 | 6 January – 5 April | 5 May |
| ✔ Tip: Late quarterly updates attract penalties under HMRC's points-based penalty system. Set up reminders or a workflow tracker for each mandated client to ensure quarterly submissions are made on time. |
| Step 5 — Plan the End of Period Statement and Final Declaration |
At the end of each tax year, mandated clients must submit:
- End of Period Statement (EOPS) — confirms and adjusts the quarterly figures for each income source.
- Final Declaration — the annual summary of all income (including non-qualifying sources such as employment and dividends), replacing the traditional Self Assessment return.
Plan capacity for EOPS and Final Declaration submissions alongside your existing year-end workload — they add new filing obligations on top of existing tasks for mandated clients.
| Step 6 — Communicate With Clients |
Many clients will not be aware of MTD for ITSA or what it requires of them. Early communication reduces last-minute pressure and helps clients prepare. See MTD Client Communication: What to Tell Your Clients for a ready-to-use communication guide and template language.
| Frequently Asked Questions |
Q: What if a client refuses to comply with MTD?
A: MTD for ITSA is a legal requirement for mandated clients. Clients who do not comply face penalties from HMRC. It is important to explain this clearly and support clients in making the transition.
Q: Can we phase the work across our team?
A: Yes. Prioritise clients approaching their mandation date first. Use the MTD Qualifying Income Report to segment your client base by mandation year and allocate preparation work accordingly.
Q: Do we need new software to handle MTD for ITSA?
A: BrightTax supports MTD for ITSA. For clients currently not using MTD-compatible bookkeeping software, they will need to transition to digital record keeping before their mandation date.
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