Outsourcing Making Tax Digital for Income Tax Work – Frequently Asked Questions

Which clients are affected by the new MTD for IT requirements?

From April 2026, any individual who is a UK taxpayer with total income from self-employment or property (including foreign property) which is more than £50,000 are affected. Both sources of income contribute to the total amount HMRC will use to assess eligibility.

The threshold reduces to £30,000 from April 2027 and is expected to reduce further by 2030. Income from employment or from a limited company is not part of the MTD for IT regime and isn’t part of the assessed total income.

Which records will my client need to keep?

For each qualifying business or income source, individuals will need to maintain complete, digital records of income and expenses and submit a summary online each quarter to HMRC using compatible software. A final submission is needed by 31 January after the end of the tax year.

What if my client isn’t comfortable maintaining digital records?

Accountants or agents can maintain digital records and submit information to HMRC on a client’s behalf. They will usually seek to charge for this service. Clients who are not familiar with accounting or bookkeeping software will need a lot of support to make a successful transition to the MTD for IT regime.

Can I outsource the regular maintenance of records?

Yes. Accountants can engage an outsource partner to maintain client records in real time using cloud-based bookkeeping or accounting software. If clients have only manual records (such as paper or bank statements) the outsource partner can convert these to digital and update software as necessary.

Can I outsource the submission of records to HMRC?

Yes. When a quarterly deadline is due, the outsourced accountant can use the onshore accountants Practice software to submit information if the software is HMRC compatible.

What if a client has multiple sources of income?

MTD for IT covers total income from self-employment and property businesses. Individuals will need to submit information for each type of income. If they have multiple trades and property income, separate records need to be maintained, and totals submitted each quarter to HMRC.

How do clients sign up for MTD for IT?

HMRC will write to Agents and affected businesses between March and May 2025. If already in place, Agents and accountants can use their Agents Services Account to sign a client up. Clients can sign up directly using their Government Gateway account. A small number of individuals signed up to test HMRC’s private beta for the 2024/25 tax year. HMRC’s public beta opens for anyone to take part in testing from April 2025.

What information is needed to sign up?

The following information is needed for each client and needs to be submitted on a client-by-client basis:

• Business name
• Email address
• National Insurance number
• Business start dates and registered address
• Accounting period
• Accounting type such as cash or standard accounting
• The tax year to start using MTD for IT.

Can I outsource any part of the sign-up process?

Yes. Obtaining information from clients can be problematic and resource intensive. An outsource partner can use an accountants’ Customer Relationship Management system to contact clients for missing information and ensure this is available to enable an efficient sign-up.

When will my clients need to use the MTD for IT service?

Individuals will need to use MTD for IT from 6 April 2026 if all of the following apply:

• They are registered for Self-Assessment
• Have income from self-employment or property, or both, before 6 April 2025
• Have a qualifying income of more than £50,000 in the 2024/25 tax year.

Can I outsource other personal tax work?

Yes. HMRC expects around 2 million taxpayers will use the MTD for IT service. This means another 10 million taxpayers will still need to submit self-assessment tax returns in the usual way by 31 January after tax year-end. An outsource partner can help prepare returns and supporting records and calculate tax due.

Can outsourcing help with peaks of work when quarterly submissons are due?

Accountants currently manage severe peaks of work each month when clients require bookkeeping, each quarter when VAT returns need to be filed and when year-end accounts need to be prepared at popular accounting period ends such as 31 March and 31 December. They also need to manage high levels of self-assessment tax return work between October and January each year.

With the additional workload expected from MTD for IT, accountants should look to outsource recurring work such as bookkeeping, VAT return preparation, year-end accounts preparation and self-assessment tax return preparation. This will free up capacity to help clients who may need additional support or complex tax advice as the MTD for IT arrangements bed in.

What if I only need to outsource MTD for IT work periodically?

Initor Global provides offshore accountancy services paid for by the hour, half-time equivalent or full-time equivalent basis. Services are completely flexible and can be used to clear backlogs of work or meet an unexpected peak in demand for services.

How much does it cost to outsource MTD for IT work?

Initor Global rates for bookkeepers and qualified accountants are typically 50% less than the cost of employing a professional based in the UK. Our prices are fixed each year and support incremental and flexible pricing models now used by most UK accountants.