The last-minute rush – it’s a strange trait so many of us live by. There’s no straightforward explanation, other than the theory that some work better when the odds are stacked against them. Or maybe, just maybe, we like to put things off for as long as possible.
The point is, in most cases, leaving it last minute is okay. In this instance, however, when we talk about how firms can prepare for MTD ITSA, there’s a strong case to start now. There’s a lot on the line. But, with the MTD ITSA delay, HMRC has handed accountants and bookkeepers a chance to get a head start on imminent change.
In this blog, we’ll be explaining the benefits of starting now and what you can do to give you and your clients the best possible chance come April 2026. Before we start, though, it’s worth reminding ourselves why MTD ITSA was delayed in the first place.
What is the MTD ITSA delay?
For those that don’t know, MTD for ITSA has been delayed until April 2026. This was for a number of reasons, but, most notably, concerns around the readiness of HMRC’s computer systems. In case you didn’t know, here are the details:
- A two year delay until April 2026 for mandatory MTD ITSA filing
- Minimum income reporting level increased to £50,000, with those earning more than £30,000 mandated to join the scheme in 2027
- The situation for landlords and sole traders earning less than £30,000 will be reviewed to see if MTD ITSA can be shaped to meet the needs of smaller businesses
- Partnerships will not be brought into MTD for ITSA as previously planned in 2025
- Points-based penalty system to be extended to MTD ITSA filers when they join
Why you should start your MTD ITSA rollout now
As mentioned, it’s easy to put things off that are yet to come into view. For some, the MTD ITSA delay may fall into that category. If you do choose to wait, it’s unlikely you’ll face a crisis when the legislation does come into action.
But there is a risk that you miss out while others take aim. With MTD ITSA delayed until 2026, firms can now get to grips with the best practices, familiarise themselves with new processes and adjust services accordingly.
At the same time, it’s an opportunity to get clients up to speed. There is a clear competitive advantage to those that embrace change and start early. With that being said, let’s take a look at the reasons behind why you should start now.
5. Get ahead of the competition
1. Change is inevitable
Without stating the obvious, MTD for ISTA will happen. Of course, there will be some that have their doubts following the announcement of the delay. But it’s important to understand that MTD ITSA is just one part of a much larger shift towards digitalisation. And there’s no turning back now.
MTD ITSA is more than just meeting compliance deadlines. It’s also there to benefit sole trader and landlord clients, and the accountants and bookkeepers who serve them, with a more agile way to capture, monitor and analyse transactions. There may well be teething issues; that’s expected with this scale of change. But its advent is grounded in helping businesses make better decisions through digital means.
It therefore makes sense to start thinking about your MTD ITSA strategy now. Some firms may have already embarked on their procurement process, while others may have already found their MTD ITSA solution. The important thing is to kick start your firm’s approach, so both your team and clients are all set when the legislation does come into play.
2. Familiarise your firm
The biggest challenge for firms is adjusting your current operating model to accommodate the MTD for income tax changes. How will you support your clients as they move to quarterly submissions? How does that affect your team’s workload? And how much time do they need to spend on onboarding themselves to any potential new products?
Of course, the longer you wait, the more work you leave yourself to do. The smart move is to start those conversations now. If your internal processes are in order, your firm is far more likely to adapt to MTD ITSA in a more seamless manner. That’s before you even have to start worrying about your clients.
3. Get clients up to speed
Part two of your MTD ITSA preparation is your clients. As you well know, communication can sometimes be difficult for a number of reasons. Fortunately, you now have even more time to ensure that you and your clients are fully aligned on MTD ITSA.
And there are plenty of things to consider: how do you want your clients to carry out record keeping? How often do you want to communicate with them? And how hands-on do they need to be with your solution? These are just a few of the generic questions that might want to ask; each firm will have their own set based on the number of clients that fall under the new obligations.
We’re sure you know all too well the difficulties of receiving client paperwork on time. Now, with even more deadlines to contend with, that process will come under pressure. The beauty of MTD ITSA is that there are a number of solutions to help you mitigate the stress of chasing clients. The challenge you have is finding the right one for your firm and the right one for each client.
4. Test and explore
As we said above, treat this extended period as one of exploration. You now have time on your hands to test new processes and try out a range of solutions. Most of those products will offer a free trial period, during which you’ll have the option to use fake data. It’s a no-brainer in terms of finding that perfect fit.
If your firm has a team who specialise in sourcing technology, they will be checking that the solution in question matches the needs of the firm and your clients. If you don’t, you now have the scope and time to apply that same level of market analysis and product implementation. It would be a shame to let that luxury go to waste.
5. Get ahead of the competition
As we’ve seen, the implications of MTD for ITSA will require many firms to adjust how they manage landlord and sole trader clients. But it’s also worth remembering that it now presents a big opportunity to bring on new clients.
Originally, HMRC announced that the new legislation would affect 4.2 million taxpayers with business and/or property income over £10,000. Although that income level has now risen to £50,000, there’s still an estimated 740,000 individual taxpayers that need to file an ITSA return. They’re far more likely to opt for firms with a ready-made plan.
If anything, we hope this blog has given you a useful indication of how much preparation is needed in relation to MTD ITSA. What’s more, we hope that it’s demonstrated the benefits of starting your firm’s strategy now. It would be easy to see the delay as a reason to postpone your planning and implementation. But, in actual fact, it is an opportunity that firms should grab with both hands.
If you’re an existing Dext Prepare customer, and you’d like to find out more, click here to Book a Free ITSA Consultation with one of our team. If you’re new to Dext Prepare, click below to find out more about our product offering.