London – 29 March, 2022 – As accountants continue to grapple with evolving legislation and digitisation, Xero, the global small business platform, has launched its Making Tax Digital for Income Tax Self Assessment (MTD for ITSA) beta. Xero is leading the charge in enabling accountants and bookkeepers to participate in HMRC’s pilot and prepare for one of the largest ever changes to the tax system, impacting 4.2 million taxpayers in the UK. By empowering advisors to digitise tax, Xero can enable them to comply with the government’s new reporting regulations while also progressing their digital journey.
Launched in advance of HMRC’s pilot, this beta is one of the first HMRC-recognised software solutions available, developed by Xero alongside its personal tax and sole trader accounts production software within Xero Tax.
MTD is already driving digitalisation among hundreds of thousands of VAT-registered small businesses, who have to comply with the legislation from April 2022.
Despite the delay of MTD for ITSA until 2024, this new beta will pave the way for sole traders to do their record keeping online in the future. Sole traders and landlords with gross income over £10,000 can now sign up to the pilot long before the deadline, putting them in the best possible position to prepare.
By encouraging clients to take part in the pilot using Xero’s HMRC compatible software, rather than having to use paper or spreadsheets, accountants and bookkeepers can not only ensure compliance but help make the process of quarterly reporting more efficient.
Alex von Schirmeister, Xero’s UK & EMEA managing director said, “Almost half of the UK’s small businesses (45%) rely heavily on their trusted accountant. Against a challenging backdrop, this is only going to accelerate as the next phase of MTD gathers pace. It might seem like a long way off, but now is the time to start thinking about quarterly reporting for sole trader businesses.
“By launching this beta, and working with HMRC and our accounting partners, we hope to provide the right tools and support to ensure the preparation is as seamless as possible.”
Through Xero’s personal tax solution and MTD for ITSA beta, accountants and bookkeepers are able to transform the work they do for their clients, driving efficiencies by removing manual tasks, delivering more accurate data and offering seamless digital filing experiences. By offering both of these solutions, Xero helps sole traders tackle self-assessment today, while ensuring MTD compliance in the future.
In order to take part in the HMRC pilot, advisors will need to identify the UK resident clients that meet the eligibility criteria to join. It’s also vital to remember that eligible clients will only be able to sign up for the MTD for ITSA pilot through an approved software provider, like Xero.
These 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, and must not have income from any other source or other payments that are taxable or that the taxpayer claims tax relief on.
Finally, business must have an accounting period of 6 April to 5 April and the business must have existed prior to 9 February 2021.
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.
Accountants and bookkeepers interested in joining the Xero MTD for ITSA beta, should contact their Xero Account Manager.
Xero Tax is available to all accountants and bookkeepers on the Xero Partner Programme. Find out more here.
Xero is a cloud-based accounting software platform for small businesses with over 3 million subscribers globally. Through Xero, small business owners and their advisors have access to real-time financial data any time, anywhere and on any device. Xero offers an ecosystem of over 1,000 third-party apps and 300 plus connections to banks and other financial partners. For three consecutive years (2020-2022), Xero has been included in the Bloomberg Gender-Equality Index. In 2021, Xero was included in the Dow Jones Sustainability Index (DJSI), powered by the S&P Global Corporate Sustainability Assessment and in 2020, Xero was recognised by IDC MarketScape as a leader in its worldwide SaaS and cloud-enabled small business finance and accounting applications vendor assessment.
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