Making Tax Digital for Income Tax Self Assessment (MTD for ITSA) is fast approaching, bringing with it significant changes to the way many unincorporated landlords need to store and file their financial information.
HMRC estimates that around a million UK landlords will be affected by the new rules, which will require those with annual property and/or self-employment income above £10,000 to keep digital records and make quarterly submissions to HMRC from April 2024. So it’s important to start thinking about how to prepare your landlord clients for these changes as soon as possible. Here are five things you can do to help get them up to speed.
1. Segment your clients
A great place to start is by dividing up your client base and creating a specific segment for your landlord clients. This will allow you to tailor your approach and communications to their particular needs.
In our recent MTD for landlords masterclass, we spoke with Nick Heawood-Ferriter, Digital Account Specialist at Wright Vigar, about his practice’s approach to segmenting clients.
He says: “We did a lot of data mining work to understand the make-up of our landlord client base. We found that we had a very diverse set, ranging from accidental or reluctant landlords who had inherited property to professional landlords who generated income from several properties. We knew we needed to tackle these segments differently as they not only had different needs when it came to MTD for ITSA, but different attitudes as well.”
You can even think about splitting your landlord segment further by creating groups based on digital expertise. Tech-savvy clients can be brought up to speed relatively quickly, leaving you more time to nurture those who are less experienced using a more comprehensive communications plan.
Not only will segmentation ensure that your landlord clients receive the right kind of support, it can also help you to streamline your workflow, plan your resources and build more effective communication strategies.
Nick says: “It’s critical for accounting firms to understand their client base to ensure they partner with the right software that meets their needs. If you’re approaching your clients with the incorrect setup for them, there is a knock-on effect on the service your offer but also on the time you spend managing these clients.”
Check out our handy guide to segmenting your clients for MTD.
2. Design a communication plan
Once you’ve segmented your landlord clients, you can start thinking about how to share the relevant information with them in an effective way. A well-organised communications plan will not only make it easier for you to identify the key messages you want to share but also how best to communicate those messages with your different client segments.
Some important things to consider are:
- Your communication methods - while some clients are happy to receive all their information via email, others might prefer a phone call or even a meeting in person.
- Your messaging - dividing the information you want to share into various topics will help avoid overloading your clients with long emails that cover lots of complex information. You can also tailor the information based on the level of digital expertise your different audiences have.
- Your timings - laying out what information needs to be delivered and when will help give structure to your communication plan
Nick says: “When it comes to communication, speak to your software providers to see how they can help. FreeAgent have helped us create a range of co-branded content such as videos and leaflets to help educate our clients.”
Discover more tips on how to communicate to your clients about MTD.
3. Set targets for migrating your clients
With new MTD for ITSA rules coming into effect in April 2024, it’s vital that you give your practice plenty of time to migrate all your landlord clients to suitable accounting software, such as FreeAgent for Landlords.
You can use our MTD for ITSA workload calculator to help you figure out how long it will take to get your landlord clients migrated onto MTD-compatible software. Just enter the number of clients who will be affected by the changes and the calculator will show you the total hours you’ll need to set aside each week, based on the number of working days until the MTD for ITSA deadline.
By establishing a clear plan with internal monthly goals, you are much more likely to avoid having to tackle a mountain of work just before the deadline.
4. Tailor your client training
Different clients will likely require different levels of support when it comes to preparing for MTD for ITSA. Consider running training sessions tailored to the level of client involvement - for example, one session for clients who won’t have any involvement in their bookkeeping and quarterly filings, another for those who will pick up some elements, and another for clients who will do all of it.
5. Communicate your pricing
If you decide to review the pricing of your services, make sure you take the time to explain to clients why you’re making the change. Give plenty of notice and be clear about what each of your services will cost so your clients can plan effectively. Find out more about how you can package MTD for ITSA into your pricing strategy.
Watch our latest MTD for landlords masterclass to see how FreeAgent for Landlords can support you and your clients through the next stages of MTD for ITSA.