Last updated: March 2026
HMRC maintains a list of software that is recognised as compatible with Making Tax Digital. If you are a sole trader or landlord preparing for MTD for Income Tax, or already filing VAT returns under MTD, you need to use Making Tax Digital software from this list — whether income tax software or VAT tax software — to keep digital records and submit your tax return to HMRC.
This guide explains what “HMRC-recognised” actually means, lists the main software providers by category, and helps you choose the right option for your situation.
What does “HMRC-recognised” mean?
HMRC-recognised software has been tested and confirmed to work with HMRC’s Making Tax Digital systems. The software provider must demonstrate that their product can:
- Keep digital records of income and expenses
- Submit quarterly updates
- File income tax returns via the final declaration (for MTD for Income Tax) or VAT return (for MTD for VAT), including end-of-year adjustments
- Maintain digital links between records, calculations, and filed returns
HMRC does not “approve” or endorse any specific product. The term means the software meets the technical requirements — it is not a quality rating. You still need to choose the right software for your business needs.
recognised software for MTD for Income Tax
MTD for Income Tax begins in April 2026 for those with qualifying income above £50,000. You will need compatible software to keep digital records and submit quarterly updates.
Full accounting software
These packages handle your complete bookkeeping, from recording transactions to submitting your tax return:
| Software provider | Price (from) | Best for |
|---|---|---|
| Xero | £15/month | Sole traders and landlords wanting full accounting with bank feeds |
| QuickBooks Self-Employed | £10/month | Sole traders with straightforward income |
| FreeAgent | £14.50/month (free with NatWest/Mettle) | Freelancers and contractors; free for NatWest, RBS, and Mettle customers |
| Sage Accounting | £12/month | Small businesses already using Sage products |
| Taxscouts | £119/year | Simple tax affairs with accountant review included |
| GoSimpleTax | £58.70/year | Budget-conscious sole traders with simple income |
Free MTD software
The government offers its own free tool for MTD for Income Tax, suitable for sole traders or landlords with a sole trader account and straightforward income from trading or UK property. You can record income and expenses directly in the tool. See our detailed guide to free MTD software for the full list of no-cost options.
Bridging software
If you prefer to keep records in a spreadsheet, bridging software connects your spreadsheet to HMRC’s systems. It does not replace your record keeping or how you create digital records — it simply bridges the gap between your spreadsheet and the MTD submission requirement.
| Bridging software | Price (from) | Works with |
|---|---|---|
| 123 Sheets | Free (basic) | Excel, Google Sheets |
| BTCSoftware | £60/year | Excel |
| VitalTax | From £25/year | Excel, CSV files |
Recognised software for MTD for VAT
All VAT-registered businesses already use MTD-compatible software for VAT returns. The most widely used options include:
- Xero — VAT return filing with bank reconciliation
- QuickBooks — VAT tracking and one-click filing
- FreeAgent — automatic VAT calculation and filing
- Sage — comprehensive VAT management for growing businesses
- HMRC’s free tool — basic VAT filing only
For a side-by-side comparison, use our MTD software comparison tool to filter by price, income type, and features.
How to check if software is HMRC-recognised
The official list is maintained at gov.uk. You can filter by:
- Whether you need software for Income Tax or VAT
- Whether you have self-employment income, property income, or both
- Whether you need a bridge for existing spreadsheet users
- Whether you want free or paid software
The list is updated regularly as new providers complete testing. If a product is not on the list, it has not been confirmed as compatible with HMRC’s systems.
Worked example: choosing the right software
Sarah is a freelance graphic designer in Bristol with annual self-employment income of £62,000 and a small buy-to-let property earning £9,600 in rent. She currently tracks her income and expenses in a spreadsheet and files a Self Assessment tax return each January.
From April 2026, Sarah must comply with MTD for Income Tax. She checks the recognised software list and considers three options:
- Full accounting software (Xero, £15/month) — would replace her spreadsheet entirely, with automatic bank feeds, receipt capture, and quarterly filing built in
- Budget accounting software (GoSimpleTax, £58.70/year) — cheaper, handles both self-employment and property income, but no bank feeds
- Bridging software (VitalTax, £25/year) — keeps her current records as the main source, just submits the figures to HMRC
Sarah chooses Xero because she wants automatic bank feeds to reduce her bookkeeping time. She connects both her business account and property account, sets up categories for rental income and expenses, and is ready for her first quarterly update in August 2026.
How HMRC-recognised software works with quarterly updates
From the 2026/27 tax year, sole traders and landlords affected by Making Tax Digital for Income Tax must send quarterly updates to HMRC. Your recognised digital software handles this by submitting a summary of your income and expenses at the end of each quarter.
The quarterly deadlines are 7 August, 7 November, 7 February, and 7 May. After the final quarter, you submit a final declaration by 31 January following the end of the tax year. Your software must be able to handle both quarterly updates and the final declaration.
Most full accounting software packages include quarterly submission as standard. These tools also support quarterly filings, though you will need to prepare the figures in your records before sending them through the digital software to HMRC.
Key things to check before you buy
- Does it support your income types? Some software handles self-employment only. If you have property income or foreign property, check the software covers both
- Does it include quarterly filing? MTD for Income Tax requires four quarterly updates plus a final declaration. Make sure you can submit MTD updates without extra charges. Check what happens when you start using the software for the first time
- Is there a free trial? Most providers offer 30 days free. Test the software with real data before committing
- Can your accountant access it? If you work with an accountant, check they can connect via an agent services account
- Does it keep proper digital records? The rules require digital links between your records and submissions. Manual re-typing is not compliant
Frequently asked questions
Is HMRC-recognised the same as HMRC-approved?
No. The tax authority does not approve or endorse specific software. “HMRC-recognised” means the software has been tested to work with HMRC’s MTD systems. It confirms technical compatibility, not quality or value for money.
Can I use more than one piece of software?
Yes, but there must be a digital link between them. For example, you could use a spreadsheet for record-keeping and bridging software for submission, as long as data flows digitally between the two without manual re-entry.
What if my software provider is not on the HMRC list?
You should not use software that is not on HMRC’s recognised list. Submissions from unrecognised software may be rejected. Check the official list before purchasing.
Do I need different software for VAT and Income Tax?
Not necessarily. Most full accounting packages like Xero, QuickBooks, and FreeAgent handle both MTD for VAT and Income Tax. However, you may need to check that your current VAT software also supports the Income Tax quarterly updates starting April 2026.
Is HMRC’s free tool good enough?
HMRC’s free tool handles basic Income Tax submissions for sole traders and landlords with straightforward income. It does not include bank feeds, receipt scanning, or detailed reporting. For most businesses, a paid option provides significantly more value for the cost.
Sources
Need help choosing MTD software?
Jack Ross Chartered Accountants can recommend the best the best recognised software for your business and handle the setup. Get in touch for a free initial consultation.
