| Overview |
Many clients will not be aware of MTD for Income Tax or what it requires of them. Clear, timely communication from your firm helps clients understand what is changing, what they need to do, and how you will support them. This article provides guidance on what to cover in client communications and a template you can adapt.
| When to Communicate |
| Timing | What to Cover |
|---|---|
| 6–12 months before mandation date | Initial notice — what MTD is, whether they are affected, and what they need to do |
| 3–6 months before mandation date | Practical steps — software review, digital record keeping, sign-up process |
| 1–3 months before mandation date | Final preparation — confirm software is in place, sign-up completed, quarterly workflow agreed |
| At mandation date | Confirmation — first quarterly update due date, how to provide information to you |
| ✔ Tip: Clients who receive advance notice and clear guidance are far less likely to miss their mandation date or face penalties. Earlier communication also gives your firm more time to manage the transition workload across your client base. |
| Key Points to Cover in Every Communication |
- Whether the client is affected — confirm their qualifying income and mandation date
- What MTD for ITSA means — quarterly updates, End of Period Statement, and Final Declaration
- What changes for them practically — digital record keeping, quarterly deadlines
- What stays the same — payment dates, tax calculation at year end
- What you need from them — how they should provide quarterly income and expense information
- The consequences of non-compliance — penalty points for late submissions
- Your fees — if there are additional fees for MTD services, communicate this clearly
| Client Communication Template — Initial Notice |
The following template can be adapted for your firm's letterhead and tone. Replace all text in [brackets] with the relevant details.
Subject: Making Tax Digital for Income Tax — What This Means for You
Dear [Client Name],
I am writing to let you know about an important change to the way self-employed individuals and landlords report their income to HMRC — Making Tax Digital for Income Tax (MTD for ITSA).
What is changing? From [mandation date], you will be required to keep digital records of your [self-employment / rental / both] income and submit quarterly updates to HMRC. At the end of the tax year, you will also need to submit a Final Declaration confirming your total income for the year.
What does this mean for you? You will need to record your income and expenses using digital software throughout the year. We will submit your quarterly updates to HMRC on your behalf, and continue to prepare your year-end tax position as we do now.
Your tax payment dates remain unchanged — you will still pay tax on 31 January and 31 July as before.
What do you need to do? [If the client needs to change their record keeping:] You will need to start keeping your records digitally using MTD-compatible software. We recommend [software name] — please contact us to discuss the options. [If the client already uses compatible software:] Your current software is MTD-compatible, so no changes to your record keeping are needed.
We will be in touch again closer to your mandation date to confirm the next steps. In the meantime, if you have any questions, please do not hesitate to contact us.
Yours sincerely, [Your name / Firm name] |
| ✔ Tip: Personalise each communication with the client's specific mandation date and income sources. A generic letter that does not reference the client's specific circumstances is less likely to prompt action. |
| Frequently Asked Questions |
Q: Should I communicate with all clients or only those who are mandated?
A: Focus initially on mandated clients — those above £50,000 qualifying income now and those approaching the £30,000 threshold. You may also want to notify clients approaching the £20,000 proposed threshold so they can plan ahead.
Q: What if a client is upset about the additional requirements?
A: Acknowledge the change is significant and focus on what your firm is doing to support them. Emphasise that payment dates are unchanged and that the quarterly updates are summaries rather than full tax returns. Many clients' concerns reduce significantly once the practical implications are clearly explained.
Q: Do we need to charge extra fees for MTD services?
A: This is a commercial decision for your firm. Quarterly submissions and additional communication represent real additional work. Many firms have introduced MTD service fees — communicate any fee changes clearly and well in advance.
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