MTD for Income Tax Prep Checklist (2025)
A 2025 preparation checklist for MTD for Income Tax (ITSA), including records, quarterly update cadence, and software setup.
Not tax advice
Toolfy shares operational guidance, but you must confirm CIS and HMRC requirements with a qualified accountant who understands your business.
The Reality: MTD for Income Tax is not just new software. It is a new rhythm. If you wait until 2026 to build the habit, the first quarterly update will hurt. 2025 is your runway to get this right.
For the full strategy guide, see MTD for Income Tax Survival Playbook (2026).
2025 prep roadmap (simple version)
Q1 2025: Decide your stack
- Confirm the accounting tool your accountant wants
- Decide how you will capture receipts and mileage
Q2 2025: Digitise the workflow
- Move invoices and expenses into one system
- Set monthly tagging rules
Q3 2025: Run a dry run
- Create a mock quarterly update using recent months
- Fix any gaps in categories or evidence
Q4 2025: Lock the routine
- Assign ownership for monthly close
- Schedule quarterly deadlines in your calendar
Step 1: Confirm if you are in scope
You are likely in scope if your self-employment or property income is above the MTD threshold. If you are below, digital records are still a good idea because they simplify year-end reporting.
If you are unsure about thresholds or VAT crossovers, read UK VAT Threshold Review 2026.
Step 2: Build a digital record workflow
Minimum data you need to capture:
- Invoices and income by date
- Expenses with receipts
- Mileage or vehicle usage
- CIS statements (if applicable)
If you need help with deductions, use UK Trades Tax Deduction Checklist 2026.
Recommended folder structure
- 01 Income
- 02 Expenses
- 03 Mileage
- 04 CIS statements
- 05 VAT returns (if applicable)
Make the folder structure consistent so you are not searching at year-end.
Step 3: Pick software that matches your workflow
You need:
- Digital invoicing
- Expense categorisation
- Quarterly export or report view
- Accountant-friendly access
If you want to align bookkeeping with operations, see Small Business Accounting for Service Companies 2026.
Step 4: Create the quarterly cadence
Quarterly updates are not optional. Build a routine:
- Week 1 after quarter end: reconcile income and expenses
- Week 2: check CIS and VAT adjustments
- Week 3: review with accountant
- Week 4: submit
Add those dates into your calendar now. Use End of Tax Year Checklist (31 March 2026) to align year-end tasks.
Step 5: Run a dry run in 2025
Pick the last 3 months of data and run a mock quarterly update. The goal is to find:
- Missing receipts
- Mis-categorised expenses
- Gaps in mileage tracking
Fix those now while it is quiet.
Step 6: Store evidence for 6 years
MTD requires evidence retention. The easiest way to comply is to store receipts and invoices in the same system you use for jobs.
If you want a compliance safety net, read How to Handle VAT Inspection Without Panicking.
A quick checklist you can copy
- Choose MTD-compatible accounting software
- Create a single source of truth for invoices
- Capture every receipt digitally
- Build a monthly tagging routine
- Schedule quarterly update reminders
- Run a dry run before December 2025
Where Toolfy fits
Toolfy keeps invoices, job notes, and payment history organised so you can export clean summaries for your accountant. Start a free trial if you want to align operations and tax prep.
FAQ
Do I need to submit quarterly updates even if income is low? If you are in scope, yes. The updates are required regardless of quarterly profit.
Is MTD the same as VAT MTD? No. VAT MTD already exists. ITSA is a separate requirement focused on income tax.
Should I change my accountant now? Not necessarily. Confirm your accountant can support MTD ITSA and digital data flows.
⚠️ Important Disclaimer
This guide is for general informational and educational purposes only. It does not constitute professional advice of any kind (legal, financial, tax, insurance, or otherwise).
Before making business decisions: Consult with qualified professionals (solicitors, accountants, insurance brokers, etc.) who can assess your specific circumstances. Laws, regulations, and industry standards change frequently and vary by location and situation.
Toolfy and the article authors accept no liability for decisions made or actions taken based on information provided in this guide. You are solely responsible for ensuring compliance with all applicable laws and regulations.
Frequently Asked Questions
When does MTD for Income Tax start?
What records do I need to keep?
How many submissions are required?
Need this workflow in Toolfy?
Spin up the exact checklist, scripts, and automations from this article inside your workspace.
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