MTD for ITSA: five admin tasks clients can do themselves

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This article was updated on 29th September 2021.

Making Tax Digital for Income Tax Self Assessment (MTD for ITSA) will be one of the biggest changes to the UK tax system, affecting both practice and client processes.

By encouraging your clients to keep their own accounting records in order, you may be able to spend more time providing them with valuable business insights and preparing your practice for MTD. With this in mind, here are some simple tasks your clients can do themselves in FreeAgent.

Instead of uploading bank statements manually, your clients can pull their bank transactions into FreeAgent automatically by setting up a bank feed. FreeAgent supports Open Banking bank feeds, which connect directly to your client’s bank, and bank feed integrations are also available for certain ‘challenger banks’ such as Monzo, Revolut, Starling Bank and Capital on Tap.

With the shift from annual to quarterly filing under MTD for ITSA rules, clients who have set up a bank feed are sure to feel the benefit of having fewer manual steps involved in pulling their transactions into FreeAgent.

Once your clients have an Open Banking bank feed set up, they’ll need to re-consent to the connection every 90 days and can do so via the desktop version of FreeAgent and the mobile app.

Our data shows that practices can halve the time they spend on client admin tasks when their clients have a bank feed set up, so encouraging them to do so could help you reclaim precious time.

2. Explain bank transactions

Explaining all of your clients’ bank transactions can be hugely time-consuming. Whether your clients are looking to categorise an internet bill or record a travel expense, they can explain their own transactions using both the desktop version of FreeAgent and the mobile app. If your clients have ‘Guess’ switched on, our smart algorithm can automatically explain and categorise up to 95% of their transactions, saving them time too.

With your clients regularly keeping on top of their transactions, you’ll have one less task to worry about ahead of their tax filing deadlines. 

3. Capture out-of-pocket expenses

Dealing with mountains of receipts can have a negative impact on your workload and your to-do list is only going to get longer with the shift from annual to quarterly filing. Handily, your clients can use the FreeAgent mobile app’s ‘Capture for later’ feature to snap pictures of their receipts and store them in the ‘Files’ area of their FreeAgent account.

We’re also working to automate the receipt capture process using optical character recognition. This will mean that your clients’ receipt data will be extracted digitally, so they won’t have to type out their expense information manually.

4. Set up properties as projects

It is our intention for FreeAgent to support landlords for MTD for ITSA. If you’re keen to add your clients with property income onto FreeAgent ahead of the introduction of MTD for ITSA, they can use the Projects feature to manage single or multiple properties.

Once your client has created a new project, they can assign a tenant as a contact and add property-specific nominal codes for any property-related expenses, such as repairs or safety inspections.

If you take the time to teach your landlord clients how to make the most of FreeAgent, you can acclimatise them to it well in advance of their first MTD for ITSA submission. To discover how MTD for ITSA will affect your landlord clients, register for our upcoming webinar.

5. Manage estimates and invoices

Your clients might want to send estimates to their customers to give them an idea of how much a project is likely to cost. Handily, your clients can whip up professionally designed estimates and send them to their customers directly from the FreeAgent mobile app.

Once their customers have approved the work, your clients can easily convert their estimates into invoices. They can then stay on top of which invoices have been paid, which ones are overdue and even set up recurring invoice profiles to send recurring invoices to customers.

Looking for more information on MTD for ITSA? Check out our MTD hub for additional resources.