Making Tax Digital Software Readiness Checklist for April 2027

From 6 April 2027, sole traders and landlords with qualifying income over £30,000 must use Making Tax Digital for Income Tax, and the threshold falls to £20,000 a year later. For many small businesses, the hard part is not the tax. It is the software: knowing which product to use, how figures get into it, and whether the systems you already rely on are set up to meet HMRC’s digital record-keeping rules.

This checklist is designed to be worked through in the months before your start date. It follows on from our longer guide, Making Tax Digital for Income Tax: What It Means for Your Business Software, which explains the rules in detail. Here, the focus is on what to check and in what order, so your first quarterly update is a quick review rather than a scramble.

This checklist is about systems rather than tax advice. Your accountant or bookkeeper is the right person to confirm how the rules apply to you.

Quick recap: who needs to be ready, and when

• From 6 April 2026: qualifying income over £50,000 in the 2024 to 2025 tax year. If this is you, you should already be sending quarterly updates.
• From 6 April 2027: qualifying income over £30,000 in the 2025 to 2026 tax year.
• From 6 April 2028: qualifying income over £20,000 in the 2026 to 2027 tax year.

Qualifying income is your total self-employment and property income before expenses, not your profit, and salary from a job does not count. GOV.UK has a tool to check if and when you need to use Making Tax Digital for Income Tax.

Section 1: Confirm your position

• ☐ Check your qualifying income for the relevant tax year with the GOV.UK tool or your accountant.
• ☐ Check whether you might be exempt, for example if you are digitally excluded. Exemptions are not automatic in every case.
• ☐ List every income source in scope: each self-employed business and your property income. Each self-employment needs its own records and updates; all UK property counts as one property business.
• ☐ Note your accounting period. If your year runs from 1 April to 31 March rather than 6 April to 5 April, you will need to choose calendar update periods in your software before your first update.
• ☐ Agree who does what with your accountant or bookkeeper: who keeps the records, who reviews them and who sends each update.

Section 2: Map where your figures start

Before choosing software, write down where every income and expense figure begins life. Most small businesses have more sources than they expect.

• ☐ Sales and invoices: accounting software, a job management app, a CRM, an online shop, a booking system or a paper invoice book.
• ☐ Payments received: bank account, card reader, Stripe or PayPal, cash.
• ☐ Expenses: bank and card transactions, supplier invoices, receipts in a folder or an inbox, mileage.
• ☐ Property income: letting agent statements, rent received into a bank account, a property spreadsheet.
• ☐ Spreadsheets: any spreadsheet that collects or totals figures, and who maintains it.

Mark each one: does the figure reach your records automatically, or does someone type or copy it? Every manual step is a time cost four times a year, and a potential problem with HMRC’s digital links rule.

Section 3: Choose your software route

There are three common routes, and the map from Section 2 usually makes the choice obvious.

• ☐ One compatible accounts package for records, updates and the tax return. Simplest when most of your figures can come from bank feeds and receipt capture.
• ☐ Spreadsheet plus bridging software, where you keep a spreadsheet and a separate product sends the updates. Works for straightforward affairs, as long as every link is digital.
• ☐ Connected systems, where your job, booking or sales system feeds your accounts automatically. Best when most of your income starts outside your accounts software.

Whichever you choose, check it against HMRC’s software finder:

• ☐ It supports every type of income you have, for example self-employment and UK property.
• ☐ It can send quarterly updates and submit your tax return, or you know which second product will handle the return.
• ☐ It works with your bank for bank feeds, and with any receipt app you plan to use.
• ☐ Your accountant can access it, ideally a product they already support.
• ☐ If you are VAT registered, it also handles Making Tax Digital for VAT, so you are not running two systems for the same records.

Section 4: Check every digital link

If records are kept in one product and updates are sent from another, HMRC requires the two to be digitally linked. Once a record is part of a quarterly update, it must not be retyped or moved by copy and paste.

• ☐ For each hand-off in your map from Section 2, confirm the link is digital: linked spreadsheet cells, a CSV or XML import, an automated transfer or an API connection.
• ☐ Replace any copy and paste between spreadsheets or systems that happens after records are created.
• ☐ Remember the exception: software that does not itself create your income and expense records, such as a till or booking system, does not need to be digitally linked. The figures still have to reach your records, so automating that step usually saves time anyway.
• ☐ If a connection does not exist, decide whether a ready-made connector will do, or whether a custom integration is worth it. Our guide to connecting Xero or QuickBooks to your website and CRM explains the options.

Section 5: Get your data in order

• ☐ Agree income and expense categories with your accountant, so nothing needs reclassifying at year end.
• ☐ Decide on simpler categorisation if your turnover is under £90,000 and you would like to record items only as income or expense. Remember that you must fully categorise if turnover reaches £90,000 during the year.
• ☐ Remove duplicate customers and suppliers across systems before connecting them.
• ☐ Choose one source of truth for each type of information, for example invoices in your job system and payments in your accounts.
• ☐ Plan the opening position. If you are changing software, decide what history to bring across. Our data migration checklist covers how to move records without losing anything.

Section 6: Set up the day-to-day routine

• ☐ Connect bank feeds for every business account and card.
• ☐ Capture receipts as they arrive, with a receipt app or by forwarding emailed receipts to your software.
• ☐ Set a weekly or monthly review to categorise anything the software could not match automatically.
• ☐ Give your accountant access and authorise them as your agent, so they can spot problems during the year.
• ☐ Write down the routine, especially if more than one person keeps the records.

Section 7: Sign up and do a practice run

• ☐ Sign up for Making Tax Digital for Income Tax through GOV.UK, or ask your agent to, in good time before your first update.
• ☐ Link your software to your HMRC account.
• ☐ Run a practice quarter. Keep records in the new set-up for a full quarter before your start date, then check the totals against your old routine. Problems found now carry no deadlines.
• ☐ Put the deadlines in your diary. For standard tax-year periods, quarterly updates are due by 7 August, 7 November, 7 February and 7 May, and the tax return by 31 January.
• ☐ Understand the penalties. There are no penalties for missed quarterly update deadlines in the 2026 to 2027 tax year, but from 2027 to 2028 each missed deadline earns a penalty point, and four points bring a £200 penalty. If you join in April 2027, that applies from your very first quarter. HMRC’s guidance on penalties for Making Tax Digital for Income Tax has the details.

A suggested timeline for an April 2027 start

1. October to November 2026: work through Sections 1 and 2. Confirm your position and map where your figures start.
2. November to December 2026: choose your software route (Section 3) and agree categories with your accountant.
3. December 2026 to January 2027: set up the software, connect bank feeds and fix any links that are not digital (Sections 4 to 6). Avoid making big changes in the weeks before the 31 January Self Assessment deadline.
4. January to March 2027: sign up and run a practice quarter (Section 7).
5. 6 April 2027: start keeping MTD records for real. Your first quarterly update, for the period to 5 July, is due by 7 August 2027.

If connecting systems is part of your plan, start sooner rather than later. Most integrations take weeks rather than months, but testing them against real transactions takes time you will not have in the run-up to a deadline.

Signs you need more than off-the-shelf software

For most sole traders, a mainstream accounts package is enough. It is worth looking at connected or custom systems if:

• most of your income is invoiced from a job management system, CRM or booking platform that does not connect to your accounts;
• someone spends hours each month re-keying invoices or receipts;
• you run several businesses or income streams and the figures are spread across different tools;
• your records live in a spreadsheet that only one person understands.

Our guide to the signs your business has outgrown spreadsheets goes into more detail.

Making Tax Digital readiness: common questions

Can I keep using my spreadsheet?

Yes, with bridging software, as long as the spreadsheet and the software are digitally linked and figures are never retyped or copied and pasted between them. Many businesses use this as a stepping stone rather than a long-term solution.

Do I need new software if I already use Xero or QuickBooks?

Probably not, but check that your plan supports Making Tax Digital for Income Tax and every type of income you have, and that your accountant is set up to work with it. The bigger question is usually how figures from your other systems reach it.

I am a landlord with a letting agent. What do I need to do?

You still need digital records of your property income and expenses. Ask your agent whether their statements can be imported or exported digitally into your software, rather than typed in, and agree how often you will receive them.

My income is under £30,000. Should I still prepare?

If it is over £20,000, you are likely to join in April 2028, and preparing early spreads the work. Even if you are below every threshold, connected records save time and make your annual tax return easier.

How long does it take to get ready?

Choosing software and agreeing categories can take a few weeks. If systems need connecting, allow longer, and leave time for a practice quarter before your start date.

The bottom line

Making Tax Digital for Income Tax rewards businesses whose figures flow into their records automatically. Work through this checklist in order, fix the manual steps while there is no deadline attached, and your quarterly updates become a quick check rather than a chore.

If your figures are spread across several systems and you would like them to reach your accounts automatically, our software and financial integrations service is built for exactly that. Tell us what you use or call us on 01482 212499, and we will tell you honestly whether a ready-made connector will do the job.