I've been self-employed since 2012, and in all that time I've never had a last-minute panic over my tax return. Not because I love paperwork, but because I've built a routine that means my figures are always up to date.

By the time April comes round, I already know exactly what I've earned, what I've spent and roughly what I owe, and my tax return is filed that month.

This year, that routine has also had to make room for Making Tax Digital. Here's exactly how I stay tax ready all year, how I handle MTD, and the tips that make it easy.

Do your bookkeeping as payments come in

My biggest tip is simple: don't let it build up.

I do my bookkeeping as soon as money comes in or goes out. Every sale, every purchase, every fee gets logged as it happens, not saved up for a dreaded day at the end of the month or, worse, the end of the year.

It only takes a minute or two each time. Compare that to sitting down in January with a year's worth of bank statements, PayPal emails and receipts to work through.

For more ideas, see my bookkeeping tips.

Use a simple spreadsheet

I still use Google Sheets for all my accounts. I love spreadsheets, and I love being able to see exactly where my finances are at, so it works for me. You don't need expensive accounting software to stay organised.

My spreadsheet logs each transaction with the date, what it was for, the amount and any fees. I also use loads of formulas to work things out for me automatically, including my running profit, my available balance, my business expenses and outgoings, my savings, the tax and National Insurance I'm likely to owe, and even my quarterly MTD submission figures.

Fees are easy to forget, so log them too. I get a lot of payments through PayPal, and each one has a fee taken off.

If you only record the amount that lands in your account, your income and expenses won't be accurate.

Check your spreadsheet against your bank balance

About once a week, I check that the available balance in my spreadsheet matches what's actually in my bank account.

If the two don't match, I know straight away that I've missed something, and it's much easier to find one missing transaction from this week than to hunt through months of statements.

Use cash basis accounting

I use cash basis accounting, which means I record income when the money is actually received, and expenses when they actually go out. Cash basis is now the default for sole traders, so unless you've chosen otherwise, it's probably what you're using too.

The other method, traditional (or accruals) accounting, records income when you send an invoice rather than when you're paid. That sounds fine until a client pays late or doesn't pay at all.

Your profits look bigger on paper than the cash in your bank, and if the invoice is never paid, you have to go back and edit your records.

Cash basis keeps things simple. What's in your spreadsheet matches what's in your bank.

If late payers are an issue for you, here's how to deal with unpaid invoices when self-employed.

Choose an accounting year that makes life easier

I run my accounts from 1 April to 31 March, rather than following the tax year exactly from 6 April to 5 April.

It makes things so much tidier, as each month starts on the 1st. HMRC treats an accounting year ending on 31 March as lining up with the tax year, so it doesn't cause any extra complications.

If you're in Making Tax Digital, this is called using calendar periods. Your quarters run from 1 April to 30 June, 1 July to 30 September and so on, rather than the standard 6 April to 5 July.

You can choose which one you want in your MTD software.

Set aside money for tax every month

At the end of each month, I use HMRC's estimate your Self Assessment tax bill tool to work out how much I should be putting aside.

I enter my profit so far and it gives me an estimate of the tax and National Insurance due. I then move that money somewhere separate so I'm never tempted to spend it.

The estimate assumes you'll keep earning at the same rate for the whole year, so it isn't exact. That's why I'd always oversave.

It's much nicer to find you've got money left over than to be scrabbling for it in January.

Don't get caught out by payments on account

Payments on account are the part of Self Assessment that shocks people the most, and I had no idea about them myself until they appeared on my bill. I had to go and research what they were.

If your tax bill is over £1,000, you'll usually have to pay towards next year's tax in advance. Each payment on account is half of your last tax bill, paid on 31 January and 31 July.

That means your first January bill can be huge. You pay the full tax for the year you're filing for, plus the first payment on account for the next year, all at once.

I see so many people who leave their first tax return until the January deadline, and then have only a few weeks to find far more money than they expected.

They can catch you out when your income drops too. My last tax year was my best ever, so my payments on account for this year are big.

My income has dropped this year, but I still have large payments on account to make next January and July.

You can apply to reduce your payments on account if you know you'll earn less, but if you reduce them too much, you'll be charged interest on the difference. So I'll still make my full January payment.

I won't think about reducing my payments on account until my accounting year ends in March, when I can be sure I haven't had a few really high earning months right at the end.

If I reduced them now and then ended up earning the same as last year, I'd be charged interest on top. No thanks!

It's meant oversaving for tax all year, which has really affected our household income.

File your tax return in April

The Self Assessment deadline is 31 January, but I file mine in April, as soon as I can after the tax year ends. Because my figures are always up to date, there's nothing to wait for.

I've seen lots of people leave it until the January deadline, which always shocks me. Filing in April means I can make sure I've worked out my tax correctly, and I know exactly what I owe about nine months before I have to pay it.

It also tells me straight away what my payments on account for the next year will be.

If there's a big payment coming, I've got nine months to plan for it, rather than finding out a few weeks before it's due, or on the day it's due if I filed at the 31 January deadline!

And it's one less thing on my to-do list while everyone else is in the January rush.

What about Making Tax Digital?

From April 2026, Making Tax Digital (MTD) for Income Tax became compulsory for sole traders and landlords with qualifying income over £50,000. The threshold drops to £30,000 from April 2027, so many more self-employed people will be joining over the next couple of years.

Under MTD, you have to keep digital records and send HMRC a summary of your income and expenses every quarter, using MTD-compatible software. You still have to do a final declaration at the end of the year too, which replaces the tax return.

I had to sign up this April, and I've now made my first submissions.

MTD deadlines

Each quarterly update has a fixed deadline. For the quarter from 6 April to 5 July, or 1 April to 30 June if you use calendar periods, the deadline is 7 August.

The next quarters are due by 7 November, 7 February and 7 May.

Miss one and you get a penalty point. Once you reach four points, HMRC charges a £200 fine, and another £200 for every deadline you miss after that. There are no penalty points for late quarterly updates in the first year (2026/27), but you still have to send them.

That's now five filing deadlines a year, four quarterly updates plus the final tax return, and two payment deadlines on 31 January and 31 July. So seven deadlines to remember, and even more if you're VAT registered! It feels like more ways for people to get fined and for HMRC to make more money.

To make sure I never miss one, I've set reminders with alerts in my iCal calendar, and I have a recurring email sent to myself every three months.

One thing that surprised me is that each update is a running total. I assumed HMRC would want each quarter's figures on their own, but you actually submit your cumulative income and expenses from the start of the tax year each time.

How I submit my MTD updates for free

I didn't want to change the way I keep my accounts, so I still use my Google Sheets spreadsheet. I then use free bridging software from a company called My Tax Digital.

Each quarter, I enter my figures and it sends them to HMRC for me. Afterwards, I log in to my HMRC Self Assessment account to check it's been submitted.

It took me a while to find a free option. Lots of companies charge for their MTD software, so it's worth shopping around before you sign up to anything.

Before you pay for anything, check what you already use. Lots of business banking apps now include MTD submissions as part of their service, and so does a lot of bookkeeping software.

You only really need a separate service like mine if you don't use either of those, or you prefer to keep your records your own way.

I have a free Monzo Business account, which offers MTD submissions.

But I get a lot of payments through PayPal as well as into my bank, so every PayPal payment would have meant going into the Monzo app to add the actual total gross income and the PayPal fee, as only the net amount lands in my Monzo Business account.

That's a lot of extra admin, so I stuck with my spreadsheet and bridging software instead.

If you're paid only or mostly by bank transfer, though, this would be a great option. It's easy, and it's free with a free business account.

At the time of writing, you can get £50 when you open a Monzo Business account with my referral link. Here's more about Monzo Business and my referral link.

My honest thoughts on MTD

To be honest, MTD feels like a pointless extra step for me. I was already organised, did my bookkeeping daily and had my figures ready the moment the tax year ended.

Now I just have to send them to HMRC four extra times a year, on top of my tax return, and keep track of even more deadlines.

It feels like bureaucracy and red tape more than anything. I saw someone call it "Making Tax Difficult", which made me laugh!

But if you're already on top of your bookkeeping, it isn't hard. It's just one more job to put in the diary each quarter.

And if you're not organised yet, MTD is a good reason to start now.

My tax ready checklist

• Log every transaction and fee as it happens
• Check your spreadsheet against your bank balance every week
• Use cash basis accounting to keep things simple
• Work out how much tax to set aside at the end of every month, and oversave
• Keep your tax money in a separate account
• Plan for payments on account in January and July
• Set reminders for your MTD quarterly updates if you're signed up
• File your tax return in April, as soon as the tax year ends

Or hire a professional

I do all of my accounts and tax myself. I couldn't hand it over to someone else, as I want to know exactly where my business cash flow is at.

But if you'd rather not do it yourself, hiring an accountant can be well worth it if your finances are more complicated, you're growing fast, or you'd simply rather spend your time on your business.

They can also help you plan ahead and make sure you're claiming everything you're allowed to.

Firms like Alexander & Co can advise on strategies to help your business grow, as well as handle your tax. See more benefits of having an accountant for your business.

Final thoughts

Being tax ready isn't about being good with numbers. It's about doing a little bit often, so nothing piles up.

Get into the habit of logging everything as it happens, and tax time becomes just another job rather than something to dread.

If you blog or create content, see my tax tips for bloggers and self-employed content creators. If you're just starting out, find out when a side hustle becomes taxable in the UK.

I'm not a tax expert, so always check the latest guidance on GOV.UK or speak to an accountant about your own situation.