Checklists
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.
Preview Checklist
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
- Check if you meet the MTD threshold.
- Calculate gross self-employment income.
- Arrange compatible software.
- Sign up for MTD.
- Keep ongoing digital records.
- Send quarterly updates.
- Adjust at year-end.
- Submit final tax return.
- Keep records and pay on time.
- Update HMRC if circumstances change.
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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?
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