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Xero launches MTD for ITSA beta

29th Mar 2022
Brought to you by
xero

Xero is an easy-to-use platform for businesses and advisors.

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By joining HMRC’s MTD for ITSA pilot with Xero, you can drive digitisation and ensure clients are compliant with government legislation.

xero-mtd-for-itsa-beta
Xero

These are difficult times for accountants, as well as their small business and sole trader clients. Facing a huge number of challenges, from supply chain issues to geopolitical events driving economic uncertainty, the pressure is also on to grapple with evolving legislation and digitisation, namely Making Tax Digital for Income Tax Self Assessment (MTD for ITSA). 

Now, Xero has launched its MTD for ITSA beta to enable accountants to participate in HMRC’s pilot, becoming one of the first HMRC-recognised software solutions available. Launched in advance of the pilot, this beta is helping accountants prepare for one of the largest ever changes to the tax system, impacting 4.2 million taxpayers in the UK. 

With the Xero beta, you can comply with the government’s new reporting regulations while also driving broader digitalisation. Sole traders and landlords with gross income over £10,000 can now sign up to the pilot long before the April 2024 deadline, putting them in the best possible position to prepare, and paving the way for them to do their record-keeping online in the future.

By encouraging clients to take part in the pilot using Xero’s HMRC-compatible software, moving away from the traditional, onerous use of paper or spreadsheets, accountants and bookkeepers can both ensure compliance while making quarterly reporting more efficient. 

So, how can you take part in the HMRC pilot? First, advisors will need to identify the clients that are UK residents and meet the eligibility criteria to join. Eligible clients can only sign up for the MTD for ITSA pilot through an approved software provider, like Xero. As for the eligibility criteria, here’s what to look out for:

  • Clients need to be sole traders with qualifying income from one business or a landlord that rents out UK property.
  • They have to be registered for Self Assessment with returns and payments that are up to date.
  • They must not have income from any other source or other payments that are taxable or that the taxpayer claims tax relief on. 
  • The business must have an accounting period of 6 April to 5 April and must have existed prior to 9 February 2021.

Meanwhile, to take part in the Xero MTD for ITSA beta, users must:

  • Only have income from a single sole trade business (landlords are not yet supported but will be soon);
  • Use Xero to record business income and expenses for the whole tax year i.e. 6 April 2022 to 5 April 2023;
  • Sign up for MTD for ITSA for the tax year 2022/23.

If you’re interested in joining the Xero MTD for ITSA beta, contact your Xero Account Manager to find out more.