This article takes you through setting up the Making Tax Digital for Income Tax module for the first time, from giving your team access to choosing a workflow for each client. It applies to practices that have just purchased the module and are bringing their first clients in.
Before you start
- The MTD IT module must be purchased. See MTD IT - How to purchase the module. Once purchased, the module appears in your Capium App Menu.
- You need access to your HMRC Agent Services Account (ASA) to authorise clients.
- Your clients must be signed up for MTD IT with HMRC, or you will need to sign them up as part of step 4.
How MTD IT works in Capium
Three points shape how you set up and use the module.
Concept | What it means in Capium |
Submissions are cumulative | Each quarterly update is year to date. A missed item is picked up in a later quarter rather than resubmitted. See MTD IT – Cumulative Summary. |
The source system is the primary record | Digital records come from Capium Bookkeeping or Capium 365. MTD IT reports on them but does not replace them. See MTD IT: Understanding Digital Records. |
Some changes do not sync back | A change made in MTD IT, such as marking an expense as disallowable, affects the submission but does not update Bookkeeping or Capium 365. Correct data at source. |
Step 1: Give your team access to MTD IT
Users are set up in My Admin. Accountants have access to MTD IT by default; staff members must be granted it.
- Create the user in My Admin. Choose the User Type, then complete the contact, login and address details and save.
Navigation > My Admin > Users - Assign the user's clients and module access. Click the three dots next to the user, click on edit and assign the clients they should see, then go to Modules and tick MTD IT.
Navigation > My Admin > Users > Three dots menu > Edit >Modules
| Please note : The user must first to log in and open the MTD IT module. This triggers the sync that adds them to the Users section within MTD IT. |
For the full steps, see Adding users in MTDIT (via My Admin). To give an existing user access, see How to add existing users in MTDIT.
Step 2: Add individual clients to MTD IT
Only individuals are added to MTD IT. There are two routes, depending on whether the client already exists in Capium. Set up one individual per person; do not create a separate individual for each business or property.
Option 1: Add a new client directly in MTD IT
Use this route for a client who does not yet exist anywhere in Capium.
Navigation > MTD IT > Add Client
- Click Add Client.
- Enter the client's details.
- Save the client.
Option 2: Enable MTD IT for an existing individual in Capium 365
Use this route for a client who already exists in My Admin.
Navigation > Capium 365 > Select a client
- Select the relevant individual.
- Check that UTR Number, National Insurance Number, Full Name and Email Address are completed. MTD IT cannot be enabled until all four are present.
- Go to the Module section and enable MTD IT for the individual.
For more detail, including which clients to create for each type of income, see MTD IT - Adding New Clients. To enable several individuals at once, see Capium 365 - Bulk Assign Individual Clients.
Step 3: Link sole traders to their individual
Every sole trader business must be linked to its individual before it can be brought into MTD IT. Once linked, the sole trader sits under the individual. An individual with no self-employment income does not need a sole trader.
- Link the sole trader to the individual. This can be done in Capium 365 or in My Admin.
- Enable MTD IT for the individual, if you have not already done so in step 2.
- Check the link icon shows next to the sole trader's licence indicator. A linked pair uses one MTD IT licence in total; until the link is made, two licences are used.
For the full steps, see MTD IT - Linking Individuals and Sole Traders. To link several at once, see MTD IT - Linking the Sole Traders and Individuals in Bulk. For how linking affects your licence count, see MTD IT - Licence Usage When Linking a Sole Trader to an Individual.
Step 4: Authorise the client with HMRC
Before you can submit on a client's behalf, check the client is signed up for MTD IT, authorise your agent access through your ASA, and allow Capium to connect to HMRC.
- Check the client is signed up with HMRC. See MTD IT - Checking and Registering your client with HMRC.
- Complete the authorisation. See MTD IT – Client Authorisation Workflow, or MTD IT - Bulk Authorisation for several clients.
- Allow Capium to connect with HMRC. See MTD IT - How to allow software to connect with HMRC.
- Confirm the client has reached an approved state. See MTD IT Client Approval.
Step 5: Create the first tax return and select the right sources
A client's income sources are held against their tax return. Until a tax return exists with the right sources selected, no quarterly obligations are generated for the client. The client must be in an approved state before sources can be synced.
Navigation > MTD IT > Manage > Search for the client > Client profile
- Click the Client Name to open the client.
- In the Tax Returns section, click Sync Sources from HMRC. This pulls through every income source HMRC holds for the client, such as self-employment, UK property or foreign property.
- Create a new tax return for the tax year you are reporting.
- Use the sources drop-down to select each income stream you intend to submit for.
- Review the details and click Save. If you leave without saving, you will need to add the tax return again.
Choosing the right sources
Situation | What to do |
The client has a source you will not submit for | Leave it deselected. |
A source you expect is missing from the list | HMRC has not recorded it. The client or agent should contact HMRC, then sync again. See MTD IT: Sync Sources from HMRC. |
The client has foreign property | Foreign property is not synced from HMRC. Add each property manually, as described below. See MTD IT: Foreign Property Workflow. |
Property is jointly owned | See MTD IT: Handling Multiple Properties and Ownership Splits. |
The client's sources change later in the year | Sources can be added or removed by editing the tax return. A source cannot be removed once a submission has been made against it. See MTD IT: Adding or Removing an Income Source. |
Check the obligations and quarter type
Once saved, the client's obligations appear on the submissions grid, one set per source selected.
Navigation > MTD IT > Submissions > Search for the client
Before the first submission, confirm the client's quarter type (Standard or Calendar) matches the election held by HMRC:
Navigation > MTD IT > Submissions > View & Submit > Business Details
Select and save the quarter type, then check the obligations have updated. If they do not match, contact HMRC. See Calendar and Quarter Types in MTDIT.
Step 6: Choose the right workflow
Capium supports four workflows. The right one depends on where the client's digital records are kept and which services you provide.
Workflow | Use when | Guide |
1: Bridging template | Records are kept outside Capium and imported using a template | |
2: Capium 365 | The client keeps records in Capium 365 | |
3: Capium 365 and Bookkeeping | The client uses Capium 365 and the practice does bookkeeping in Capium | |
4: Bookkeeping | The practice keeps the records in Capium Bookkeeping |
Next steps
Once setup is complete, follow these articles in order:
- Bring in the client's digital records using the workflow chosen in step 6. See MTD IT: Understanding Digital Records.
- Review the year-to-date figures. See MTD IT – Cumulative Summary.
- Submit the quarterly update. See MTD IT – How to make Quarterly Submissions.
- Add any missed transactions to a later quarter. See How to Add Additional Transactions in MTD IT.
Troubleshooting
If something does not look right during setup, see:
- MTD IT Authorisation Error: "The Client or Agent is Not Authorised"
- MTD IT: Sources Not Appearing After Syncing a Client
- MTD IT - No obligations/incorrect obligations or Error message
- Why do I see both an Individual and a Sole Trader business? (MTD IT)
- Unlink an individual in MY ADMIN
- Why Connecting to HMRC for Making Tax Digital for Income Tax Isn't as Straightforward as It Seems
Related articles
- MTD IT - How to purchase the module
- Adding users in MTDIT (via My Admin)
- MTD IT - Adding New Clients
- MTD IT - Linking Individuals and Sole Traders
- MTD IT – Client Authorisation Workflow
- MTD IT: Sync Sources from HMRC
- MTD IT: Adding or Removing an Income Source
- MTD IT - Choosing the right workflow
- MTD IT - Client Journeys