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Making Tax Digital for Income Tax (MTD ITSA) – Self-Employment Checklist

Designed for sole traders and freelancers, this checklist ensures you’re capturing, recording, and submitting your income tax data accurately under the MTD rules.
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Making Tax Digital for Income Tax (MTD ITSA) — Self-Employment Checklist

1. Check if you are required to sign up

☐Confirm you are registered for Self-Assessment. ☐Confirm you have self-employment income (sole trader). ☐Check your gross self-employment income (before expenses):
    • Over £50,000 → Start from 6 April 2026.
    • Over £30,000 → Start from 6 April 2027.
☐If your income is between £20,000–£30,000, MTD will apply later (timeline pending).

2. Calculate your qualifying income

☐Include:
    • Gross self-employment turnover (income before expenses).
☐Exclude:
    • Income from employment (PAYE).
    • Partnership income (unless disguised management fees).
    • Dividends, savings interest, or rental income (separate).
☐Apply UK residence rules if applicable (foreign income matters only if UK tax resident).

3. Check your start date

☐If £50,001+ gross self-employment income (based on 2024–2025 tax return) → Start from 6 April 2026. ☐If £30,001–£50,000 (based on 2025–2026 tax return) → Start from 6 April 2027. ☐Await HMRC notification letter after submitting your return.

4. Get compatible software

☐Choose software that can:
    • Create, store, and correct digital records.
    • Send quarterly updates to HMRC.
    • Submit your final tax return.
☐If you use spreadsheets, ensure you have bridging software. ☐If your accounting year is 1 April–31 March, make sure your software supports calendar update periods.

5. Sign up for Making Tax Digital for Income Tax

☐Confirm your:
    • Personal details with HMRC are up to date.
    • No outstanding tax liabilities.
☐Gather information:
    • Business name (name used on invoices).
    • Business start date.
    • Accounting method (cash basis or traditional).
    • Type of trade.
☐Sign up yourself or through an agent.

6. Create and maintain digital records

☐Record digital entries for:
    • Income (sales, fees, takings).
    • Expenses (stock, travel, office costs, professional fees, etc.).
☐Maintain supporting evidence (receipts, invoices). ☐Avoid manually copying or pasting between systems (use digital links if bridging).

7. Send quarterly updates

☐Quarterly reporting deadlines:
    • 6 April–5 July → Submit by 7 August.
    • 6 April–5 October → Submit by 7 November.
    • 6 April–5 January → Submit by 7 February.
    • 6 April–5 April → Submit by 7 May.
☐If using calendar periods (1 April–30 June, etc.), update settings in software before the first submission. ☐Send nil returns if no income/expenses for a quarter.

8. Adjust at year-end

☐After sending your 4th update:
    • Adjust for disallowable expenses (personal elements of costs).
    • Adjust for accounting entries (prepayments, accruals).
    • Make 1–5 April adjustment if using calendar periods.
    • Claim eligible tax reliefs (e.g., capital allowances, trading allowance).

9. Finalise and submit your tax return

☐Add other income sources (employment, savings, dividends, rental) into your software. ☐Submit your final Self-Assessment tax return via MTD-compatible software. ☐Submit by 31 January following the end of the tax year.

10. Ongoing compliance

  • ☐Keep all digital records for at least 5 years after the 31 January submission deadline.
  • ☐Pay Self-Assessment tax on time (including payments on account if applicable).
  • ☐Notify HMRC online if:
    • You start or cease a business.
    • Your business changes.
☐If your turnover crosses £90,000, apply full categorisation of expenses from that year.

⭐ Special Situations for Self-Employed:

Situation What to Do
Turnover under £90,000 Simpler categorisation allowed (income vs expenses only).
New business started mid-year
Cash basis Record income when received and expenses when paid.
Traditional accounting Apply accruals and prepayments.

📌 Summary Flow for Self-Employed

  1. Check if you meet the MTD threshold.
  2. Calculate gross self-employment income.
  3. Arrange compatible software.
  4. Sign up for MTD.
  5. Keep ongoing digital records.
  6. Send quarterly updates.
  7. Adjust at year-end.
  8. Submit final tax return.
  9. Keep records and pay on time.
  10. Update HMRC if circumstances change.

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Frequently Asked Questions

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Explore our FAQs to learn how FigsFlow simplifies your workflows and boosts efficiency.

What is this MTD ITSA checklist for the self-employed?

It’s a step-by-step guide to help self-employed individuals prepare for Making Tax Digital for Income Tax Self Assessment, covering records, software and submissions.

What records do self-employed individuals need to keep under MTD ITSA?

You must maintain digital records of income and expenses using MTD-compliant software and submit quarterly updates to HMRC.

What software is required for MTD ITSA compliance?

You’ll need HMRC-recognised MTD-compatible software to record income and expenses and send quarterly reports and end-of-period statements.

Does FigsFlow offer a checklist for self-employed MTD ITSA compliance?

Yes, FigsFlow provides a downloadable checklist tailored for self-employed individuals to help track tasks, stay compliant and prepare for MTD ITSA deadlines.

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