1

Work out which clients are affected

Only clients who make more than £50,000 in self-employment and property income need to adhere to the MTD for Income Tax rules in the first instance.

If they are in this bracket, however, they must declare and pay their taxes under the new regime.

It’s not possible to opt out of MTD for Income Tax, although there are some exemptions – for example, if your client is submitting a tax return as a trustee or on behalf of a non-resident company.

2

Create an agent services account

Your company will need to create an agent services account to use MTD for Income Tax (unless you already have one to use with MTD for VAT returns or trust registration service returns).

These accounts can only be created by company directors, partners or sole traders.

But once you have one, you can set up your staff with administrator or assistant logins to use the account.

To create one, the information you have to provide includes your Government Gateway user ID and password (create one via the sign-in page if you don’t have one), your company’s Unique Taxpayer Reference, postcode and registration number and, in some cases, your National Insurance number and date of birth.

3

Add your client authorisations

To transact for clients under the MTD for Income Tax regime, you will need to both be registered as a tax agent and have authorisation to act on their behalf.

Existing self-assessment client authorisations should work for MTD for Income Tax.

You can check this by signing into your agent services account and select ‘Add existing self-assessment authorisations to your agent services account’.

If existing authorisations have been added, you’ll see a list of the relevant self-assessment agent codes.

If your client’s self-assessment agent code is not in this list, you’ll need to add the relevant code to your account before adding client authorisation.

4

Get compatible software:

MTD for Income Tax data transfers must be digital and automated, so you and, in some instances, your clients need to use compatible software that can: ● Create and store digital records ● Send quarterly updates ● Submit the final declaration ● Receive information from HMRC. Most of the big-name cloud accounting software is already MTD for Income Tax-ready. But this may not be true of all desktop accounting packages, which could need to be updated or upgraded to handle the requirements of the new regime. If your client uses spreadsheets, they will probably need ‘bridging software’ to continue recording their income and expenses this way. For more information, check out HMRC guidance on the different types of software to consider, including a list of approved providers.

5

Sign up your clients

Once you have MTD-compatible software, you can sign up your clients for MTD for Income Tax.

The information you’ll need to do this includes:

● client’s full name

● date of birth

● National Insurance number

● business start date or the date your client started receiving income

● accounting method (cash or accrual basis)

● the tax year your client would like to start using MTD for ITSA.

Remember, you will need to be authorised to act on your client’s behalf to sign them up.