How to prepare for Making Tax Digital
What to do in each of the six months before Making Tax Digital for Income Tax starts for you, from checking you are in to sending your first update. Rules as at 2026/27.
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The six-month plan for 6 April 2027
If your qualifying income was over £30,000 in 2025/26, Making Tax Digital starts for you on 6 April 2027. Counting back six months:
| When | What to do |
|---|---|
| October 2026 | Confirm you are in. Run your qualifying income through the Making Tax Digital checker, using the 2025/26 tax year: that return decides the April 2027 phase. Remember it is turnover plus rent, before expenses. |
| November 2026 | Choose software. Use HMRC's software finder to shortlist products that handle what you have: self-employment, property or both. Check the free versions first; if you like your spreadsheet, look at bridging software instead. |
| December 2026 | Separate the business money. A separate bank account for the business, connected to your software by a bank feed, turns most record-keeping into categorising transactions. Decide now whether you want standard quarters (ending the 5th) or calendar quarters. |
| January 2027 | File the deciding return on time. Your 2025/26 return is due by 31 January 2027, and it is the figure HMRC uses. Start recording this month's income and expenses in the new software as practice. |
| February 2027 | Sign up. Sign up for Making Tax Digital for Income Tax on gov.uk with your Government Gateway user ID and National Insurance number, or ask your accountant to do it. Then authorise your software to connect to HMRC. |
| March 2027 | Practise a quarter. Enter a full month or quarter of real transactions and look at the totals the software would send. Put the four deadlines in your diary: 7 August, 7 November, 7 February and 7 May (the quarterly updates guide has every date). |
| 6 April 2027 | Go live. Record every transaction from 6 April. Your first quarterly update, for 6 April to 5 July 2027, is due on 7 August 2027. |
Joining a different year? The steps are the same; shift the dates to the six months before your phase. 6 April 2026: over £50,000 in 2024/25. 6 April 2027: over £30,000 in 2025/26. 6 April 2028: over £20,000 in 2026/27.
Software, including the free options
You need software HMRC recognises for Making Tax Digital for Income Tax. HMRC does not make its own, but its software finder lists the products that work, and lets you filter by what you need:
- Free versions. Several recognised products have a free version, usually for simple affairs such as one business with straightforward expenses. If that is you, start there; check what the free tier leaves out before you commit.
- Bridging software. If you keep good spreadsheets, bridging software sends the figures from them to HMRC. Some of it is free.
- Full accounting software. Bank feeds, receipts, invoicing and the updates in one place, for a monthly fee. Worth it if your records are busy or you have more than one income source.
- An accountant. They can sign you up and send the updates on your behalf, usually from their own software.
Where our invoicing tool fits
Plainly: the free invoicing tool on this site is not Making Tax Digital software. It is not on HMRC's list, it does not record your expenses and it cannot send a quarterly update or a final declaration.
What it does is the income half of the record. Every invoice is numbered and dated, every payment is logged with the date it arrived, and a running estimate shows the tax to set aside on what you have been paid. When a quarterly update is due, your income for the period is in one list, ready to enter or check against your MTD software.
One part of the digital record, done now
Invoicing through this site keeps every invoice numbered and dated and every payment logged, with a running estimate of the tax on it, so your income is already digital when MTD starts. It is not MTD software: it does not record expenses, send quarterly updates or appear on HMRC's list, so you need recognised software as well.
- Clean, numbered invoices in about a minute, with a PDF at the end.
- Every invoice and the date it was paid in one place, ready for each quarterly update.
- A live set-aside figure for the income tax and National Insurance on what you have been paid.
No password and no card. Enter your email, click the link we send, and you are in.
Frequently asked questions
When should I start preparing for Making Tax Digital?
About six months before your start date. That leaves time to choose software, move your records into it, sign up and practise a quarter before the first real update is due.
Is there free software for Making Tax Digital for Income Tax?
Yes. HMRC does not make its own, but its software finder lets you filter for products with a free version, typically for simple affairs such as one business with straightforward expenses. Bridging software, some of it free or low cost, lets you keep a spreadsheet and send the figures from it.
Can I keep using a spreadsheet under Making Tax Digital?
Yes, if you pair it with bridging software that reads the totals from your spreadsheet and sends them to HMRC. The spreadsheet itself has to hold your records digitally; typing totals in from paper does not count.
How do I sign up for Making Tax Digital for Income Tax?
Online at gov.uk, with your Government Gateway user ID and National Insurance number, once you have chosen software. If an accountant files for you, they can sign you up instead.
Is the invoicing tool on this site Making Tax Digital software?
No. It creates invoices and keeps a record of what you invoiced and what you were paid, with an estimate of the tax on it. It does not record expenses or send anything to HMRC, so you still need recognised MTD software or an accountant for the quarterly updates and the final declaration.
Tools sole traders use
Accounting software that keeps your records ready for Self Assessment and Making Tax Digital.
- Xero - Online accounting with bank feeds and invoicing, widely used by UK accountants.
- QuickBooks - Bookkeeping and invoicing software with features for sole traders.
- Sage Accounting - UK accounting software for invoices, expenses and VAT returns.
Affiliate links: we may earn a commission if you sign up, at no extra cost to you.
Sources
Making Tax Digital guides
- Making Tax Digital checker: enter your qualifying income to see whether you are in, from when, and your first quarterly deadline.
- Making Tax Digital for Income Tax explained: what it is, who it covers and the 2026, 2027 and 2028 timeline.
- MTD quarterly updates: the 7 August, 7 November, 7 February and 7 May deadlines and what each update contains.
- Self Assessment deadlines 2026/27: every filing and payment date, which MTD does not move.
- Payments on account calculator: what you pay on 31 January and 31 July, under MTD or not.