Making Tax Digital for Income Tax (MTD ITSA) is bringing more structure to how Sole Traders and landlords report income to HMRC. 

You’ve probably seen the adverts, or at least had the odd email or letter from HMRC about it. In case you’ve been living under a rock though, let’s break it down quickly.

What is MTD for Income Tax?

It’s often called a variety of things: MTD ITSA, MTD IT, or even the very long MTD for Income Tax Self Assessment. Really though, it’s a term used to describe the new digital reporting that HMRC have brought in for Sole Traders and Landlords with qualifying income above the £50,000 threshold. 

If you meet the criteria, you’ll need to keep digital records using MTD-compatible software, send quarterly reports, and then submit a Final Declaration. The Final Declaration will eventually replace the traditional Self Assessment for those who meet the criteria.

So tax is becoming more “throughout the year” and less “panic in January with snacks and regret”. Which brings us to the actual question people are trying to answer:

Do you need an MTD ITSA accountant or is Making Tax Digital software enough?

So what does the software actually do?

Software is basically the engine of ITSA. It’s what allows you to:

• Record income and expenses.
• Pull in bank transactions.
• Categorise spending.
• Generate quarterly submissions and a final declaration for HMRC. 

In most cases, you won’t be doing MTD for Income Tax on paper or spreadsheets anymore, though there are a few bridging software solutions out there. That era is over. 

Here’s the important bit people miss though. Software is very good at recording what you tell it, but it is not so good at telling you if what you told it is correct. That’s still on you, unless you’ve got support in place.

Software only vs full service accounting (the actual difference)

Here’s how that looks in practice with an example of how both offerings differ with Crunch:

Forget the features for a second. This isn’t really a software decision, and it’s definitely not an HMRC jargon test.

It’s more about how much of it you want to handle yourself, and how much you’d rather hand to an accountant. For most people, especially when the price difference is relatively small, having unlimited access to an accountant and tax experts makes that decision an easy one.

When software tends to be enough

Software-led setups work well when things are fairly straightforward. For example, if:

• your income is simple,
• your expenses are easy to track,
• you’re comfortable staying on top of admin,
• you don’t mind checking things yourself,
• you’ve got the confidence to manage things solo. 

This is where tools like Crunch Plus tend to fit really well. The great thing about using our accounting software is that if you do ever need to speak to an accountant, you can add on one-off support for just £25+VAT. 

When software starts to feel a bit thin

There’s usually a moment where people realise: “I can do this… but I don’t really want to anymore.” That tends to happen when things get more complicated, like:

• Multiple income streams.
• VAT registration.
• Hiring people or subcontractors.
• Rental income mixed in.
• Increasing transaction volume.
• Or just have less time than they used to have.

At that point, software still works fine, but it starts to feel like you’re doing a second job just to keep up with the first one.

Full service accounting (even less admin and more support)

This is where an accountant comes in alongside the software. Instead of you doing everything and hoping it’s right, you’ve got someone involved who helps keep things under control throughout the year.

It’s not just about submissions. It’s ongoing support, advice, and keeping things on track as your business grows.

Examples of things an accountant can help with:

• Making sure your submissions and compliance are handled correctly.
• Helping you stay on top of HMRC requirements throughout the year.
• Answering tax questions as they come up.
• Dealing with HMRC queries if they arise.
• Keeping you aligned with reporting deadlines and obligations.
• Reviewing your position and flagging anything that needs attention.
• Offering guidance on ways to improve your tax efficiency.
• Helping you think through the best setup for your business.

Beyond that, there’s the general day-to-day reassurance of having an accredited accountant who knows your business and is there whenever you need them.

It comes down to that glorious peace of mind that comes from knowing you’ve got an expert team behind you.

People usually go this route when:

• they don’t want to second-guess whether things are right or,
• their finances are getting more complex or,
• they’ve got better things to do than keep on top of tax admin and HMRC jargon.

Often people come to an MTD accountant not because they can’t do it, but because they’ve got better things to be doing. Like actually running their business. 

The real decision isn’t technical

It’s not really about ITSA, software features, or HMRC terminology. It comes down to something much simpler:

Do you want me to be the one in the driving seat? Using MTD compatible software to keep yourself compliant. Or would you prefer if the car was full of experts that you could call on whenever you needed?

Some people like being close to their numbers. They want visibility, control, and the ability to check things whenever they want. Software like Crunch Plus fits that style well.

Others would rather not spend their time thinking about quarterly updates or categorising transactions. They just want the peace of mind that they’re doing things correctly, with an accountant available to support them when needed. That’s where full service accounting makes more sense.

How Crunch can help

Crunch is built to support both approaches, without overcomplicating either.

If you want to stay firmly in the driver’s seat, Crunch Plus gives you MTD-compatible software with smart tools to help you stay on top of things. You can track income and expenses, submit quarterly updates to HMRC, and see your tax position in real time, so you always know where you stand without having to second-guess it.

If you want more support, Crunch’s accounting packages bring an accredited accountant and tax experts into the picture. You still use the same award-winning software, but you also have someone who understands your business and how HMRC applies to it. From helping you stay on top of compliance to answering questions as they come up, you’ve got expert support when you need it. You can get a free instant quote here, tailored to your specific needs.

So whether you prefer to manage things yourself with the right tools, or have an accountant-led service take more of the pressure off, Crunch is designed to flex around that. No switching systems or having to start over, just the level of support that fits the way you want to run your business.

‍