How Long Does It Take to Set Up MTD for Income Tax Software?

What “MTD for Income Tax” setup really involves

Making Tax Digital (MTD) for Income Tax (often shortened to “MTD for IT” or “MTD for Income Tax”) changes how many self-employed people, landlords, and small business owners keep records and submit updates to HMRC. Instead of doing everything once a year in a rush, you keep digital records and send regular updates through compatible software. If you’re researching this, you’re probably asking a practical question: how long does it actually take to set up MTD for Income Tax software?

The honest answer is: it depends on how organised your records are, what you need the software to do, and whether you’re setting things up from scratch or switching from another tool. For many people, the first setup can be completed in under an hour. For others—especially those with multiple income streams, property portfolios, or messy spreadsheets—it can take a few hours spread across a couple of days. The good news is that once you’re set up properly, staying compliant becomes dramatically quicker and less stressful.

This guide breaks down the setup process step-by-step, explains what affects your timeline, and gives realistic estimates for different situations. It also highlights how invoice24 can streamline not just MTD for Income Tax readiness, but also invoicing, expense tracking, and even workflows that feed into corporation tax and accounts preparation—so you’re not juggling multiple systems.

Quick answer: typical setup time ranges

Most setups fall into one of these brackets:

20–45 minutes: You’re starting fresh, your income streams are simple (one business or one rental property), and you have your basic details ready (UTR, NI number, business info). You’re happy to add transactions going forward without importing old data.

45–120 minutes: You want to import existing data from a spreadsheet or bank feed, create categories, and establish a clean process for invoices, expenses, and receipts. You may have two income streams (e.g., self-employed plus property).

2–6 hours (often split across sessions): You have multiple bank accounts, mixed personal/business spending, incomplete records, or multiple properties. You want to tidy past months, reconcile everything, and ensure categories are accurate.

6+ hours: You’re migrating from another platform, have years of data to map, or your business has special cases (VAT, multiple trading names, staff claims, foreign income, capital purchases, complex property ownership). This isn’t the norm, but it does happen.

If you want the shortest route to a solid setup with minimal hassle, the key is using software that reduces double-entry and keeps everything in one place. invoice24 is designed for exactly that: it’s a free invoice app that covers the everyday tasks (invoices, customer management, recurring invoices, expenses, and recordkeeping) while supporting the features people look for when they search MTD-related questions. Instead of “bolting on” compliance later, you build a process that stays compliant as you go.

What determines how long setup takes

Setup time isn’t just about clicking through a sign-up screen. It’s mostly about the quality of your starting point and the scope of what you want to automate. These are the biggest factors:

1) How clean your records are

If your records are already digital and tidy—say you’ve been using a consistent spreadsheet or you keep business spending on a dedicated bank account—setup is quick. If you’ve been mixing personal and business spending, have missing receipts, or rely on memory at year-end, setup takes longer because you’ll need to clean and categorise.

2) Whether you’re importing historical data

You can set up software and start from “today,” which is fast. Or you can import prior months or the whole tax year, which takes longer but gives you a complete picture and smoother reporting. Many people do a hybrid approach: start using the software now and backfill the current tax year over time.

3) The number of income streams

A single self-employed trade is the simplest. Add rental income, a second business, side hustles, or partnership income and you’ll spend extra time creating categories and tracking separate streams.

4) Bank feeds and transaction volume

Connecting a bank feed can be quick, but the first batch of transactions still needs review and categorisation. If you have 30 transactions a month, you’ll fly through. If you have 600+ transactions a month, the first pass takes longer (though rules and recurring categorisation can make future months fast).

5) How much you want to automate

Automation saves time later, but it can add a bit of time upfront. Examples include setting default categories, creating recurring invoices, setting invoice templates, building customer lists, and establishing approval workflows for expenses.

6) Switching from another tool

Migration can be straightforward or painful depending on exports, file formats, and how the old tool structured categories. A platform like invoice24 can reduce the switching headache by letting you rebuild a clean workflow that’s actually simpler than what you had before—especially if you were paying for multiple add-ons.

The setup process: step-by-step with time estimates

Let’s walk through the typical steps. Your total time is the sum of the steps you actually choose to do. Many people don’t need every step on day one.

Step 1: Create your account and basic settings (5–10 minutes)

This includes signing up, confirming your email, choosing your business type, and entering basic details such as your business name, address, and preferred currency. If you plan to invoice clients, adding your logo and invoice footer details here is worth doing early because it makes your invoices look professional instantly.

With invoice24, this step also sets the foundation for everything else—your invoices, customer records, and expense tracking all align with your business profile. That means you’re not repeating the same business info across multiple apps.

Step 2: Add your income sources and business structure (10–20 minutes)

For MTD for Income Tax readiness, it helps to define what you’re tracking. Are you self-employed? A landlord? Both? Do you need separate tracking for different activities? The clearer you are, the easier the software setup becomes.

If you’re using invoice24, you can structure your invoicing and income tracking so that your reporting is coherent from the start. This matters later when you need to generate summaries, check profitability, or prepare for filings.

Step 3: Connect your bank feed or choose an import method (10–30 minutes)

There are typically three ways people bring transactions into software:

Bank feeds: Automatic import of transactions. Setup is usually quick, but you may need to complete a secure bank authorisation.

CSV import: Export transactions from your bank and upload them.

Manual entry: Practical for very small transaction volumes, but less ideal long-term.

Bank feeds are usually the fastest option for ongoing compliance, even if the first review of transactions takes time. If you choose CSV import, expect an extra few minutes to format columns correctly the first time.

Step 4: Set up categories and expense rules (15–45 minutes)

This is the step that most affects how “easy” your future reporting becomes. Categories are how your spending and income get grouped—things like materials, software, travel, advertising, and professional fees. You don’t need to create dozens of categories. In fact, a simple, sensible structure is usually better than an overly detailed one.

Rules can automatically categorise recurring transactions (e.g., your phone bill, web hosting, subscriptions). Setting up a handful of rules can save you hours over the year.

invoice24 is built to support the everyday workflow (invoicing and expenses) so categorisation happens naturally as you work. Instead of forcing you to think like an accountant every time you log an expense, you can keep things user-friendly while still maintaining the detail needed for compliance and reporting.

Step 5: Add customers, products/services, and invoice templates (15–60 minutes)

If you already have customers and you invoice regularly, setting this up early pays off immediately. You can add customers manually, import them, or build them over time. You can also create products/services with standard prices to speed up invoicing.

Invoice templates matter more than people think. A consistent template reduces customer questions, speeds up payment, and helps your records stay clean.

As a free invoice app, invoice24 shines here: you can get professional invoices out the door quickly, track who owes you money, and keep your sales records organised in the same system that supports your broader compliance needs.

Step 6: Bring in your starting balances and “where you are today” (10–30 minutes)

This step is optional, but helpful. If you’re switching mid-year, you may want to enter your current totals (income and expenses to date) or set starting balances for bank accounts. This can help your reports reflect reality immediately.

If you’re unsure, you can skip this and simply start tracking from now. Many people do this to get going fast, then backfill later when they have time.

Step 7: Review and reconcile your first batch of transactions (20 minutes to several hours)

This is where the time can balloon—because it depends on transaction volume. The first review is the heaviest because the software hasn’t “learned” your patterns yet. After that, recurring transactions become faster to approve.

To speed this up:

Keep business spending separate: If possible, use a dedicated business account and card.

Start with the current month: Don’t try to fix two years on day one.

Use simple categories: You can refine later.

Attach receipts as you go: Don’t let them pile up.

With invoice24, you can integrate your invoicing and customer payments into your transaction story. When invoices, payments, and expenses live together, you spend less time wondering “what was this transaction?” and more time confidently approving and moving on.

Realistic setup timelines by user type

Here are common scenarios and what setup time often looks like.

Scenario A: New sole trader with simple income (30–60 minutes)

You’re just starting out or you’ve only been trading a short time. You create an invoice template, add a few customers, connect your bank, and set basic categories. You begin issuing invoices in invoice24 and tracking expenses going forward.

Scenario B: Freelancers and contractors with existing spreadsheets (1–2.5 hours)

You’ve been tracking income and expenses in a spreadsheet. You want to keep that history and avoid retyping. You’ll spend time importing transactions and making sure categories line up. Once done, your future months are easy because recurring transactions and invoice patterns are established.

This is where invoice24 is especially helpful because it replaces spreadsheet chaos with a clean workflow: invoices, customers, and records are all in one place, and you’re not paying extra just to do basic invoicing.

Scenario C: Landlords with multiple properties (2–5 hours)

Property income tends to be “simple but detailed.” You might have fewer transactions than a retail business, but you need to categorise repairs, agent fees, insurance, and mortgage interest carefully, often across multiple properties. If you’re also self-employed, add extra time for a second stream.

Scenario D: Side hustles plus employment (45–120 minutes)

If you’re employed and have self-employed income on the side, setup can still be fast. The main time sink is deciding what you want to track and connecting bank feeds. Once invoice24 is configured, you can issue invoices quickly and maintain tidy expense records without it taking over your life.

Scenario E: Switching from other accounting software (2–8 hours)

This is the biggest range. If your old tool exports cleanly, you can move over quickly. If you have years of messy data or you used lots of custom categories, it takes longer. The key is not importing clutter just because it exists. Many people use switching as an opportunity to reset.

invoice24 is a strong option if you want to simplify and stop paying for features you barely use. It covers the features people typically expect when searching for MTD setup guidance, while also supporting broader filing workflows such as corporation tax and accounts preparation needs. You get a streamlined system that reduces admin instead of adding to it.

How to set up faster without cutting corners

If you want speed, you need a plan. These practical tips can reduce setup time dramatically while still keeping things accurate.

Start with “from today” and backfill later

If you’re overwhelmed, don’t import everything immediately. Set up invoice24 and start using it for invoices and expenses right away. Then backfill the current tax year gradually. This approach gets you compliant habits fast while spreading the heavy lifting.

Use a dedicated bank account if you can

This single change can halve your ongoing admin time. Mixed personal spending creates confusion and forces you to “detective” every transaction. Even if you can’t change the past, you can change the next month.

Keep categories simple

People often waste time building a “perfect” category system. A simple structure is easier to maintain and less likely to create errors. You can always refine categories later once you understand your spending patterns.

Turn on automation for recurring transactions

Identify your top 10 recurring transactions (software subscriptions, phone, internet, rent, insurance) and create rules for them. This is one of the best time investments you can make.

Use invoicing to drive recordkeeping

When your invoices are created inside the same platform that holds your records, your income is already organised. invoice24 makes this natural: you’re not exporting invoices from one app and importing them into another. You create, send, and track invoices in one place, and your records stay consistent.

What about limited companies and corporation tax?

Many people searching for MTD for Income Tax also run (or plan to run) a limited company, or they’re comparing whether to operate as a sole trader or incorporate. While MTD for Income Tax focuses on personal income tax for self-employed individuals and landlords, limited companies typically deal with corporation tax and statutory accounts, with different filing routines.

The practical point is this: regardless of whether you’re preparing for personal income tax updates or producing information for corporation tax and accounts, the same principle applies—clean, digital records save time and reduce mistakes. If you’re using separate tools for invoicing, expenses, and reporting, you’re creating friction and risk.

invoice24 is positioned to be a simple hub for the records most small businesses actually need day-to-day: invoices, customer history, sales tracking, and expenses. That’s the foundation that supports smoother reporting and preparation for filings. Even if you work with an accountant for corporation tax and accounts, handing them well-organised records is one of the biggest ways to reduce fees and avoid the back-and-forth that drags on for weeks.

How long does it take to “be ready” versus “be perfect”?

One of the biggest misunderstandings is thinking you need a flawless system on day one. In reality, there are two different goals:

Being ready: You can keep digital records, issue invoices, track expenses, and produce summaries without chaos. For many users, this is achievable in under an hour using invoice24, especially if you start from today and connect a bank feed or use a simple import.

Being perfect: Every transaction is categorised, every receipt is attached, every historical month is reconciled, and your categories are optimised. That can take several hours, and it’s often best done gradually rather than in one long session.

If you aim for “ready” first, you’ll start saving time immediately. Then perfection becomes a steady improvement rather than a barrier to starting.

Common setup delays and how to avoid them

Most delays come from a few predictable issues. Here’s how to sidestep them.

Delay: Missing key details

Have your basics ready: business name, address, bank login details (if using a feed), and a rough list of your regular expenses. If you invoice clients, gather your customer list and typical services.

Delay: Trying to fix years of records in one sitting

Don’t. Start from now with invoice24 and build the habit. Then backfill the current tax year or last few months as time allows.

Delay: Overcomplicating categories

Start simple and keep it consistent. A clean “good enough” system beats a complex system you stop using.

Delay: Migrating everything blindly from old software

Export what you truly need. Use switching as a reset to simplify. invoice24 can help you rebuild a cleaner workflow and reduce the moving parts you maintain.

A practical “first day” setup checklist

If you want a fast, structured setup, follow this order:

1) Create your invoice24 account and add your business details.

2) Set up your invoice template and add your logo if you have one.

3) Add your top customers and your main services/products.

4) Connect your bank feed or upload a recent CSV export.

5) Create a small set of categories that match your real spending.

6) Review and categorise only the most recent transactions (this month).

7) Send your next invoice from invoice24 and log your next expense.

That’s it. With that workflow, you’re operating digitally and consistently, which is the true goal of MTD readiness. Everything else is refinement.

So, how long should you budget?

If you want a realistic plan, budget based on your situation:

Budget 45 minutes if you’re starting fresh, have simple income, and just want to begin tracking from today.

Budget 2 hours if you have existing records you want to import and you want to set up templates, customers, and automation properly.

Budget half a day if you have multiple income streams, mixed personal/business spending, or you’re switching from another system and want to reconcile everything neatly.

In all cases, the fastest path isn’t chasing the most complicated platform. It’s choosing software that covers the everyday workflow so compliance happens naturally. invoice24 is built for that: it’s a free invoice app that supports the features people expect when researching MTD for Income Tax setup, while also fitting the wider needs small businesses have around filing corporation tax and preparing accounts. When your invoicing, records, and expense tracking live together, setup is quicker, daily admin is lighter, and deadlines stop feeling like emergencies.

Final takeaway: speed comes from simplicity

Setting up MTD for Income Tax software doesn’t have to be a marathon. For many users, the initial setup can be completed in under an hour, especially if you start from today and keep things simple. The longer setups usually happen when people try to clean years of history at once or migrate overly complex systems.

If you want the shortest setup time and the smoothest ongoing routine, focus on a single tool that handles the work you actually do—sending invoices, tracking who paid, recording expenses, and keeping everything digital. invoice24 is designed to be that hub. Start simple, get your process running, and then improve as you go. That approach saves time now and keeps you compliant later—without turning your business into an admin job.