## Theme
The lecture provided a comprehensive overview of the upcoming Making Tax Digital for Income Tax (MTD IT) requirements, emphasising the importance of proactive client communication, timely compliance, and strategic service/pricing adjustments for accounting firms. Attendees left with increased confidence and actionable resources to support their transition and client management.
## Takeaways
1. Bridging software is a temporary solution for MTD IT and will eventually be phased out.
2. MTD IT requires quarterly digital tax returns and annual self-assessment for self-employed and landlords above income thresholds.
3. Mandatory MTD IT registration is phased by income: £50,000+ (2026), £30,000+ (2027), £20,000+ (2028), with possible future reduction.
4. Partnerships are not currently included in MTD IT; only self-employment and property income count toward thresholds.
5. Firms must proactively communicate with clients about MTD IT to maintain trust and avoid HMRC contacting clients first.
6. Bulk emails and tailored communications are recommended to inform clients of their compliance status and deadlines.
7. Quarterly filing services should be set up with clear deadlines and pricing structures.
8. Delegation of repricing and client management tasks can improve outcomes.
9. Resources, templates, and help center materials are available to support implementation.
10. Demonstrating expertise at events and providing clear answers builds client trust and aids acquisition.
## Highlights
- ` "You need to decide if you want to use bridging software as a temporary solution, but ultimately, bridging software will get turned off."-- Johann `
- ` "Once you're MTD registered, you're MTD registered, ultimately, is the goal."-- Johann `
- ` "Focus on informing all your clients so you look as proactive because HMRC are going to beat you to it otherwise."-- Johann `
- ` "Delegation works really well when it comes to pricing."-- Johann `
- ` "Please ask the questions you've got. You won't be seen as being dumb or anything like that. This is a safe space."-- Johann `
- ` "I have got a lead generator there where they are paying me to become a lead for myself."-- Johann `
- ` "Ultimately, remember, you're not the bad guy here. HMICR, the government are. They're the ones that are changing these rules."-- Johann `
- ` "What's important is you know where to go to get that answer if you get stuck."-- Johann `
## Chapters & Topics
1. **Webinar Introduction and Structure**
> The webinar, hosted by Engager and led by Johann, is an update on the January session, focusing on recent HMRC changes regarding MTD IT. The session includes a Q&A, technical updates, implementation strategies, and resource sharing. Attendees are encouraged to participate in polls at the start and end to measure confidence and value gained.
- Webinar is an update on January's session due to HMRC changes.
- Attendees can ask questions via Q&A; Andy will assist with responses.
- Polls are conducted at the beginning and end to gauge confidence.
- Recording and AI-generated summary will be available in the help center.
2. **Overview of MTD IT (Making Tax Digital for Income Tax)**
> MTD IT is HMRC's initiative to digitize tax records, previously known as MTD ITSA. It requires quarterly returns (P&L) and an annual self-assessment, with all quarters aligned for all taxpayers. Digital record-keeping is mandatory, with temporary allowance for bridging software, which will eventually be phased out.
- MTD IT replaces MTD ITSA; terminology changed in the last year.
- Quarterly returns are required, with one month and seven days to file each.
- All taxpayers have the same quarterly periods (e.g., April-June, file by 7th August).
- Annual return remains, but terminology may change.
- Digital record-keeping via software (QuickBooks, Xero, FreeAgent, Sage, etc.) is required.
- Bridging software (e.g., TaxCalc) is a temporary solution for spreadsheet users.
- Bridging software will eventually be banned; permanent transition to full software is necessary.
3. **Technical Q&A on MTD IT Implementation**
> Key technical clarifications were provided: HMRC's system processes quarterly and annual returns instantly; separate submissions are required for different income types; penalties for late filing are not yet defined but expected to follow a points system; bridging software is temporary; thresholds for MTD IT registration are based on combined self-employed and property income.
- Quarterly returns are 'draft' figures and do not create a tax bill yet.
- Annual return can be filed instantly after the final quarterly update.
- Separate quarterly submissions are required for each income type (e.g., landlord and self-employed).
- No penalties for late quarterly returns yet, but a points-based system is expected after a year of grace.
- Bridging software (e.g., VT Accounts, TaxCalc) is MTD-compliant but temporary.
- Thresholds are cumulative for self-employed and landlord income.
- Once registered for MTD, deregistration is possible only after dropping below the threshold for a year or two.
4. **MTD IT Thresholds and Dates**
> Mandatory MTD IT registration is phased: from 6th April 2026 for those with £50,000+ income, from 6th April 2027 for £30,000+, and from April 2028 for £20,000+. It is anticipated that by 2029, the threshold may drop to £10,000.
- 6th April 2026: £50,000+ self-employment and/or property income must register.
- 6th April 2027: £30,000+ must register.
- April 2028: £20,000+ must register.
- By 2029, likely threshold will be £10,000+.
5. **Partnerships and MTD IT**
> Partnerships are not yet included in MTD IT due to lack of technology for SA800 processing. Only self-employment and property income count towards thresholds. Partnership income with a UTR and SA800 does not count towards MTD IT thresholds.
- Partnerships will be included in MTD IT in the future, but not currently.
- Partnership income (with SA800) does not count towards MTD IT thresholds.
6. **Client Communication and Implementation Strategies**
> Proactive communication with clients is essential, as HMRC is already sending letters. Firms should identify which clients are affected and when, using custom fields in their systems to track MTD IT status and plan communications accordingly.
- HMRC is sending letters to clients about MTD IT.
- Firms should communicate proactively to be seen as the primary source of information.
- Use custom fields (e.g., 'MTD IT status') to track client readiness and timing.
- Filter client lists to focus on individuals and sole traders for MTD IT assessment.
7. **MTD-IT Compliance and Client Communication**
> Firms need to identify which clients are impacted by MTD-IT, determine their compliance status, and communicate accordingly. Bulk emails should be sent to all clients to inform them about MTD-IT, specifying whether they are compliant or not, and when they will be impacted. Focus should be on clients affected in 2026 first, with follow-ups closer to their impact date. Resources, templates, and guides are available to assist with this process.
- Determine each client's year of enrolment and MTD compliance status.
- Clients already using FreeAgent, Xero, Sage, or QuickBooks are considered MTD compliant.
- Bulk emails should inform clients about MTD-IT, their compliance status, and when they will be impacted.
- Clients impacted in 2028 should be informed but not focused on until closer to the date.
- Resources such as videos, FAQs, and templates are available in the Help Centre.
- Templates include emails for compliant and non-compliant clients, and for authorising period end returns.
- Blog post links can be customised for client communication.
8. **Setting Up MTD Filing Services and Deadlines**
> Firms should create a quarterly MTD filing service with deadlines set one month and seven days after the period end. The process involves setting up the service, activating it for clients, and ensuring deadlines and period ends are correctly calculated. Checklists are optional; some firms prefer simple phasers instead.
- Create an MTD filing service that recurs every quarter (every three months).
- Set the filing deadline as one month, seven days after the period end.
- For example, if the period ends 30th June, the deadline is 7th August.
- Service details must include the first quarterly return due date for each client.
- Checklists are optional; some firms use phasers instead.
9. **Pricing MTD-IT Services**
> Most firms plan to charge a fixed monthly or quarterly fee for MTD-IT filings, similar to VAT returns, in addition to the annual self-assessment fee and potential software costs. Quarterly filing fees range from £20 to £80 per filing, or £10 to £30 per month. Annual tax return fees range from £90 to £600 or more. Delegating repricing to team members has proven effective.
- Quarterly filing fees range from £20 to £80 per filing.
- Monthly charges for quarterly filing are typically between £10 and £30.
- Annual tax return fees range from £90 to £500 or £600 or more.
- Software costs may be additional: Sage offers a free option, FreeAgent is free with NatWest, RBS, or Metal accounts, Xero and QuickBooks offer £7/month options.
- A minority of firms consider offering quarterly filings for free, but this is discouraged.
- Delegating repricing to team members leads to more successful repricing outcomes.
10. **Book Recommendation and Session Structure**
> Johann introduced a five-star rated book on Amazon, which was the top-rated book on the platform. He structured the session to leave 20 minutes at the end for questions, emphasizing a safe space for attendees to ask anything, including technical, pricing, or software-related queries.
- The book mentioned is highly rated and was the top-rated book on Amazon.
- 20 minutes were deliberately left at the end of the session for questions.
- Attendees are encouraged to ask any questions without fear of judgment.
- Johann will seek answers from HMRC if he cannot answer a question.
11. **MTD IT MOT Service and Client Conversion**
> Johann discussed the challenge of converting clients to software for MTD IT. He introduced the idea of an MTD IT MOT service, where clients filing their own tax returns can pay £50 per quarter for a data check and report. This service acts as a lead generator, as clients may request further help if issues are found.
- Some clients want to do quarterly filings themselves, leading to higher year-end checking charges.
- Johann's firm offers an MTD IT MOT service for £50 per quarter to check data and provide a report.
- The service uses data analytic tools like Xenon or Dex Precision.
- Clients can fix issues themselves or pay for further help, generating leads.
12. **Technical Questions on MTD IT**
> Johann answered several technical questions about MTD IT, including filing basis, registration requirements, and eligibility. Only those needing to file quarterly (self-employed and landlords over the threshold) must register. Clients can submit their own filings using compatible software. Directors with only PAYE and dividends are not required to register unless they have qualifying sole trader or landlord income.
- Quarterly returns are filed on the same basis (cash or accruals) as the annual tax return.
- Only self-employed individuals and landlords over the threshold who need to file quarterly must register for MTD IT.
- Clients can submit their own quarterly filings using software like Xero, SAGE, FreeAgent, or QuickBooks.
- Directors with only PAYE and dividends do not need to register; only sole trader or landlord income qualifies.
13. **Pricing and Handling Edge Cases**
> Johann discussed pricing strategies for clients with multiple income streams and edge cases. He emphasized assessing the quality of records and the amount of work required. If records are good, lower charges may be justified; if not, higher charges are necessary. Ultimately, the rule changes are driven by HMRC, not accountants.
- Pricing should reflect the quality of client records and the amount of work involved.
- Clients with multiple income streams may require more submissions (e.g., 12 quarterlies and an annual).
- If clients find prices too high, they have options to accept, decline, or seek alternatives.
- Accountants are not responsible for the rule changes; HMRC is.
14. **Eligibility Clarifications for MTD IT**
> Eligibility for MTD IT is determined by the type of income, not employment status. Directors with landlord income over £50,000 qualify due to the landlord income, not their directorship. The final quarter must be filed by 7th May, and the annual self-assessment deadline remains 31st January, with tax due on the same date.
- Director status is irrelevant; only sole trader and landlord income matter for MTD IT.
- Landlord income over £50,000 qualifies for MTD IT.
- Final quarter filing deadline: 7th May.
- Annual self-assessment and tax payment deadline: 31st January.
15. **Session Feedback and Confidence Levels**
> Johann conducted an exit poll to gauge attendee confidence. 60% felt confident and 40% felt very confident after the session, indicating the session was valuable and met its goal of increasing confidence.
- Exit poll showed 60% confident, 40% very confident.
- Session aimed to increase attendee confidence.
- No further questions were raised at the end.
16. **Session Resources and Follow-up**
> The session recording will be available in the Help Centre later the same day. Previous session recordings and email templates are also available for attendees to review.
- Session recording will be uploaded to the Help Centre.
- Previous sessions and resources like email templates are already available.
17. **Client Acquisition through Expertise Demonstration**
> Johann advised Justina on preparing for common client questions at business events, emphasizing the value of demonstrating expertise by answering questions. He shared his experience of growing from one client to 700 and a team of 20 by speaking at local events and building trust. He encouraged admitting when answers are not known and following up later.
- Common client questions revolve around personal scenarios and MTD registration.
- Demonstrating expertise at events builds trust and attracts clients.
- Johann grew from one client to 700 and a team of 20 through this approach.
- It's acceptable to admit when you don't know an answer and follow up later.
## Suggestions
- Engage actively in Q&A and use provided resources for implementation.
- Plan client transitions: either use bridging software for up to two years or move directly to full software.
- Communicate clearly with clients about the temporary nature of bridging software.
- Encourage clients to maintain up-to-date records to avoid missing thresholds.
- Prepare for eventual removal of bridging software by planning client transitions.
- Monitor client incomes closely to anticipate registration requirements.
- Send an initial email to clients alerting them to HMRC letters and upcoming changes.
- Assess each client’s income and likelihood of crossing MTD thresholds to plan communications.
- Focus on informing all clients early to appear proactive and avoid HMRC contacting them first.
- Reassure clients and provide follow-up closer to their impact date.

> **AI Suggestion**
> - The core of this lesson is understanding MTD IT Compliance. It's recommended to start with identifying which clients are impacted by MTD IT and determining their compliance status using a client list or database. Practice by segmenting clients and drafting tailored communications to inform them about their compliance requirements.
> - Core content of MTD IT Compliance: Firms must identify which clients are impacted by MTD-IT, determine their compliance status, and communicate with them using tailored bulk emails.
> - Additionally, here are some extracurricular resources:
> - Practical application of MTD IT Compliance: https://www.gov.uk/guidance/using-making-tax-digital-for-income-tax
> - Alternative perspective on MTD IT Compliance: https://www.accountingweb.co.uk/tags/mtd-for-income-tax
> - Book recommendation for deeper understanding: https://www.amazon.co.uk/dp/B07N4M94ZP (example: "Making Tax Digital For Dummies")