Making Tax Digital Checklist: Get Ready in 7 Steps (Free PDF Download)

Step 1: Check If MTD Applies to You

Before you do anything else, confirm MTD ITSA actually applies to your situation.

Sub-Checklist for Step 1:

• ☐  Add up your gross self-employment income for the past 12 months
• ☐  Add up your gross UK rental income for the past 12 months
• ☐  Add overseas rental income (if UK tax resident)
• ☐  Combine the totals, this is your “qualifying income”
• ☐  Check against thresholds: £50k (April 2026), £30k (April 2027), £20k (April 2028)
• ☐  If over the threshold, note your earliest MTD start date
• ☐  Verify you don’t qualify for an exemption (digital exclusion, age, religious grounds)

Read our full MTD Thresholds guide and MTD Qualifying Income calculator examples for full details.

Step 2: Open a Separate Business Bank Account

If you’re mixing personal and business finances in one account, untangling 12 months of transactions before MTD launch is painful. Separate accounts make MTD compliance dramatically easier.

Sub-Checklist for Step 2:

• ☐  Choose a business bank account (Starling Business, Tide, Revolut Business, all free for basic plans)
• ☐  Or use your existing high-street bank (HSBC, Lloyds, Barclays, NatWest)
• ☐  Open the account and verify it
• ☐  Direct ALL business income to flow into this account
• ☐  Pay ALL business expenses from this account
• ☐  If a landlord, separate accounts ideally per property or one for all property
• ☐  Keep at least 12 months of records once set up

Pro tip: NatWest/RBS business account holders get FreeAgent accounting software FREE — saving £15-£25/month. Worth considering if you don’t already bank elsewhere.

Step 3: Choose MTD-Compatible Software

You MUST use HMRC-approved MTD-compatible software. Don’t skip the research stage — picking the wrong software costs you in migration fees later.

Sub-Checklist for Step 3:

• ☐  List your specific needs (number of properties, income streams, employees)
• ☐  Compare top options: Xero, QuickBooks, Sage, FreeAgent, Zoho Books
• ☐  Check HMRC’s official approved software list at gov.uk
• ☐  Sign up for free trials (most offer 30 days free)
• ☐  Test with 1 month of your current data
• ☐  Compare pricing tiers and what’s included
• ☐  Choose your software and commit to it

Software Recommendations by Business Type:

Read our complete comparison: Best MTD Software UK 2026 for detailed feature-by-feature analysis.

Step 4: Start Digital Record-Keeping NOW

Don’t wait until April 2026. Start digital record-keeping today, even with your current self-assessment data, so you’re fully ready when MTD goes live.

Sub-Checklist for Step 4:

• ☐  Connect your business bank account to your accounting software (open banking)
• ☐  Categorise all transactions for the past 3 months
• ☐  Set up income categories (sales, rental, services, etc.)
• ☐  Set up expense categories (materials, travel, utilities, etc.)
• ☐  Upload digital copies of all current invoices (issued and received)
• ☐  Photograph and upload paper receipts via mobile app
• ☐  Set up recurring transactions for monthly subscriptions
• ☐  Reconcile all transactions to date

Time-saving tip: Use your accounting software’s mobile app to photograph receipts at the point of purchase. Apps like Xero, QuickBooks, and FreeAgent all OCR receipts and create expense records automatically, saving 2-3 hours per quarter.

Step 5: Set Up Digital Links Between Systems

If you use multiple tools (CRM + accounting software + invoicing app), the data must transfer digitally between them, no copy-pasting. This is one of the most overlooked MTD rules.

Sub-Checklist for Step 5:

• ☐  List all software/tools you currently use for business finance
• ☐  Identify any “copy-paste” workflows between tools (red flag!)
• ☐  Set up API integrations between systems (e.g., Stripe → Xero)
• ☐  Use formula references in Excel (=A1+B1) instead of typing values
• ☐  Use CSV imports/exports between systems
• ☐  Document each digital link for HMRC verification
• ☐  Test data flow end-to-end (one transaction from source to submission)

HMRC can fine you up to £3,000 per failure to maintain digital links. Don’t skip this step.

Step 6: Register with HMRC for MTD ITSA

You must register with HMRC for MTD ITSA before the start of the tax year MTD applies to you.

Sub-Checklist for Step 6:

• ☐  Sign in to your HMRC Government Gateway account (or create one)
• ☐  Have your UTR (Unique Taxpayer Reference) ready
• ☐  Have your NI number ready
• ☐  Have your business start date ready
• ☐  Visit gov.uk and search “sign up for Making Tax Digital for Income Tax”
• ☐  Complete the online registration
• ☐  Connect your MTD software to HMRC via the software’s “connect to HMRC” feature
• ☐  Save confirmation emails and reference numbers

Read our step-by-step MTD registration guide for the full process.

Want this done for you? Your accountant can register for MTD ITSA on your behalf through their HMRC Agent Services Account. This is often the easiest route.

Step 7: Set Up a Quarterly Submission Routine

Building a reliable monthly + quarterly routine now means MTD becomes a 15-minute review later, not a 3-day panic.

Sub-Checklist for Step 7:

Monthly Tasks (1-2 hours):

• ☐  Reconcile bank transactions to invoices/receipts
• ☐  Photograph and upload paper receipts
• ☐  Categorise all expenses correctly
• ☐  Review outstanding invoices to chase late payers
• ☐  Update mileage log if claiming travel

Quarterly Tasks (2-4 hours):

• ☐  Final reconciliation review for the quarter
• ☐  Review quarterly figures in your software
• ☐  Generate quarterly update preview
• ☐  Submit to HMRC at least 7 days before the deadline
• ☐  Save submission confirmation

Quarterly Deadlines to Note:

Add ALL these deadlines to your calendar with 30-day advance reminders. The £200 penalty for missed deadlines isn’t worth the risk.