The Only Making Tax Digital Checklist You Need in 2026

Making Tax Digital (MTD) is transforming how UK freelancers, sole traders, and landlords manage their taxes. From April 2026, many taxpayers will stop submitting a single tax return per year. Instead, they will need to keep digital records and send quarterly updates to HMRC using compatible software.

For anyone affected, the shift can feel overwhelming. But once you break it down, preparing for MTD is mostly about setting up the right systems and habits.

This practical Making Tax Digital checklist walks you through everything you need to do in 2026 to stay compliant with MTD and keep your tax admin running smoothly.

Your Making Tax Digital checklist at a glance

Preparing for Making Tax Digital doesn’t have to be complicated. The checklist below outlines the key steps that freelancers, sole traders, and landlords should take to prepare for MTD in 2026.

The essential 2026 MTD checklist

Follow the steps below to ensure your business is ready for Making Tax Digital in 2026.

Step 1: Confirm whether MTD applies to you

The first step is determining whether you actually need to comply with MTD yet.

From 6 April 2026, MTD for Income Tax becomes mandatory for:

• Self-employed individuals (sole traders)
• Landlords
• Anyone earning over £50,000 in qualifying income (combined self-employment and property income).

The rules are being introduced gradually:

• April 2026: for those with income above £50,000
• April 2027: for those with income above £30,000
• April 2028: for those with income above £20,000

When your income crosses the threshold, you need to start using digital software to record income and expenses and submit updates to HMRC.

📋 Checklist:

• Confirm your annual income level: Review your total income from self-employment and property for the most recent tax year.
• Include both self-employment and rental income: Make sure you combine earnings from all relevant sources, including freelance work, sole trader activities, and rental property income.
• Confirm the tax year when you must start MTD compliance: Compare your income with the thresholds, and pinpoint the tax year in which you’ll need to comply with MTD.

Step 2: Set up digital record-keeping

To comply with MTD, you must submit tax information to HMRC digitally using compatible software. Manual submissions through HMRC’s website are no longer allowed.

This means your records need to be maintained in a way that allows them to be reported digitally. Many businesses do this via accounting software, although spreadsheets combined with bridging software can also be used.

Digital record-keeping helps reduce errors caused by manual bookkeeping and makes it easier to stay on top of quarterly submissions.

Typical records include:

• Business income
• Business expenses
• Invoice details
• Transaction dates
• VAT information (if applicable)

You must also keep these records for at least five years after the submission deadline, the same requirement as for Self Assessment.

Choosing MTD-compatible software

For many freelancers and small businesses, the easiest way to meet MTD requirements is to use accounting software that connects directly to HMRC. These tools can automatically record transactions, categorise expenses, and submit updates without manual filing.

While spreadsheets and bridging software are allowed, modern accounting platforms often simplify the process by automating much of the record-keeping and reporting.

📋 Checklist:

• Choose MTD-compatible software: Select software that can submit tax information directly to HMRC.
• Connect the software to HMRC: Link your software to your HMRC account so it can send updates securely.
• Record business income and expenses: Maintain accurate records of payments received and costs incurred.
• Categorise transactions regularly: Assign expenses to the correct categories to keep records organised and ready for submission.
• Store invoices and receipts digitally: Keep supporting documents accessible in case HMRC needs to review them.

Step 3: Connect your business bank account

One of the simplest ways to reduce bookkeeping workload is by linking your business bank account to your accounting software.

Many modern tools automatically import transactions and categorise them. This reduces manual data entry and keeps records up to date.

📋 Checklist:

• Open a dedicated business account if needed: Use a separate bank account for business transactions to keep your finances organised and easier to track.
• Connect your bank account to your accounting software: Link your business bank account so transactions can flow directly into your bookkeeping system.
• Enable automatic transaction imports: Turn on bank feeds or similar features so new transactions are imported automatically rather than entered manually.
• Review and categorise transactions regularly: Check incoming transactions and assign them to the correct categories (if your app doesn’t do it automatically).

When your bank feed is connected, most of the bookkeeping work happens automatically in the background.

Step 4: Understand the quarterly reporting schedule

Under MTD, instead of one annual tax return, you’ll need to submit four quarterly updates each year. Each update summarises your income and expenses for that period.

Typical reporting periods are:

Each quarterly submission should include totals for income and expenses during that period, not individual transactions.

If you have multiple income sources, such as freelance income and rental income, you must submit separate updates for each.

📋 Checklist:

• Confirm reporting periods in your software: Make sure your software is set up with the correct reporting periods so your quarterly updates match HMRC’s schedule.
• Set reminders for submissions: Use calendar alerts or built-in software reminders to ensure you never miss a reporting deadline.
• Submit updates even if there is no income (nil returns): As part of MTD compliance, you still have to submit a nil update to HMRC.

Step 5: Prepare for the End-of-Year Final Declaration

MTD doesn’t eliminate the annual tax return. Instead, it replaces it with a Final Declaration. Think of quarterly updates as progress reports, and the Final Declaration as the final reconciliation.

The Final Declaration must be submitted by 31 January following the end of the tax year, the same deadline as the current Self Assessment return.

This step allows you to:

• Correct earlier estimates
• Add missing income
• Claim additional reliefs or deductions

📋 Checklist:

• Review your annual income totals: Check that the income recorded across your quarterly updates reflects your full earnings for the tax year.
• Adjust for missing transactions: Add any income or expenses that were missed earlier so your final figures are accurate.
• Include reliefs or allowances: Make sure you claim any relevant tax reliefs, deductions, or allowances you are entitled to.
• Submit the Final Declaration by 31 January: Complete and send your end-of-year declaration to HMRC before the standard Self Assessment deadline.

Step 6: Understand the new penalty system

Missing deadlines under MTD can result in penalties.

HMRC is introducing a points-based penalty system for late submissions. Each missed deadline adds penalty points. Once you reach a certain number of points, a financial penalty is applied.

If you miss four quarterly update deadlines, you may receive a £200 penalty.

Late payment penalties are applied in stages: 3% of the outstanding tax is charged after 15 days, with an additional 3% added after 30 days. From day 31 onwards, interest begins accruing at 10% per year on the unpaid amount.

The first year of MTD is expected to be a learning period, giving taxpayers time to adapt before stricter enforcement begins.

📋 Checklist:

• Track submission deadlines carefully: Keep a clear record of all quarterly and annual deadlines so you know exactly when updates must be filed.
• Submit updates early when possible: Filing ahead of the deadline can reduce stress and provide extra time to correct any issues.

Step 7: Create a simple monthly tax routine

Perhaps the biggest challenge of MTD is consistency.

Instead of doing all your bookkeeping once a year, you need a regular monthly routine.

A simple monthly process might include:

• Reviewing incoming payments
• Categorising expenses
• Uploading receipts
• Checking bank transactions
• Reviewing estimated tax liability

This routine ensures that when quarterly deadlines arrive, everything is already prepared.

📋 Checklist:

• Schedule a monthly bookkeeping review: Set aside time each month to check your income, expenses, and financial records.
• Keep receipts and invoices organised: Store and organise supporting documents consistently so they are easy to find when needed.
• Review tax estimates frequently: Check your estimated tax liability regularly so you can plan ahead.

Step 8: Automate as much as possible

MTD is designed to push businesses toward accounting automation and real-time financial visibility.

Automation can handle tasks such as:

• Capturing receipts
• Categorising transactions
• Calculating tax estimates
• Submitting updates automatically

The more automated your system is, the easier compliance becomes. This is where modern financial platforms, such as ANNA, provide a major advantage.

ANNA and Making Tax Digital – for FREE

While MTD introduces new responsibilities for freelancers, sole traders, and landlords, the right tools can make compliance effortless. ANNA’s clever MTD solution is built to handle the UK tax system – and it’s free.

Whether you’re a new or existing customer, we’ll do your 2025/26 MTD Self Assessment for you, for free. If you’ve already filed your return using different software, we’ll refund the cost when you open an ANNA account.

You’ll get:

• MTD updates that are prepared automatically and ready to file quarterly
• Year-end Self Assessment filed, allowing you to submit your final declaration to HMRC easily
• 2025/26 Self Assessment filed for free (connect your HMRC account to unlock)
• Auto Accountant that takes care of your bookkeeping
• 24/7 Auto-Accountant support, providing jargon-free answers to any tax queries
• Automatic VAT Return calculation and direct filing with HMRC
• Invoicing with card payments, so you get paid faster
• Personalised tax calendar for your business
• Easy payment for one employee through payroll with automated PAYE and NICs

Make signing up to ANNA the first point on your MTD checklist – and we’ll handle everything else. Questions? We’re here to help, 24/7, in the app.