Choosing the right software is one of the most important decisions you’ll make before MTD for Income Tax begins in April 2026. Every sole trader and landlord above the qualifying income threshold must submit quarterly updates through HMRC-recognised compatible software.
We’ve compared 13 of the most popular MTD ITSA-compatible options below. Use the filters to narrow by software type or who it’s best suited for, and click any column header to sort. For a broader overview of software requirements, see our compatible software guide.
What is MTD compatible software and why you need it
Making Tax Digital software, also written as MTD software or MTD compatible software, is any tool listed by HMRC as able to send Income Tax and VAT submissions through the Making Tax Digital API. There is no halfway compliance: either your software is on HMRC’s list of compatible software for Making Tax Digital, or it is not. The list is public, updated when new providers pass HMRC’s testing, and split into MTD for VAT (mandatory since April 2022) and MTD for Income Tax (mandatory from 6 April 2026 for sole traders and landlords with qualifying income over £50,000, then £30,000 from April 2027 and £20,000 from April 2028).
You do not have to use Making Tax Digital software to run your business, but you do have to use it to file. Spreadsheets and paper records are still allowed for day-to-day record keeping, but the data has to flow into MTD compatible software at some point before the quarterly update deadline – either by typing it into the software directly or by using bridging software that sits on top of an Excel spreadsheet and does the API submission for you. HMRC calls this the digital records requirement: from the point of first entry, your income and expenses must be in a digital format that connects to a recognised MTD software product.
Best software for Making Tax Digital: how the categories differ
The compatible software market for MTD splits into three product types, and the right software for one sole trader will not always be the right software for another. The 13 providers in the comparison table below cover all three categories.
Full cloud accounting software covers everything: invoicing, expense tracking, bank feeds, MTD quarterly updates, the Final Declaration that replaces the annual Self Assessment tax return, and VAT returns where applicable. Xero, QuickBooks, FreeAgent and Sage Business Cloud are the main UK options. Pricing usually runs from £7 to £15 a month for sole traders and landlords; the bigger plans go higher for limited companies and multi-user setups. This is the right software for a sole trader who wants automation and accountant collaboration.
Mobile-first sole trader software targets self-employed people with light affairs – typically a single trade, a small number of invoices a month, and minimal stock or staff. Coconut, Untied and FreeAgent’s basic plans sit in this bracket. Pricing can be free with restrictions, or up to £7 a month. Designed for finding the right software for sole traders who use a phone for everything; less suited to landlords with multiple properties or businesses with VAT and Income Tax obligations to file.
Bridging software is the route for spreadsheet users. VitalTax, 123 Sheets and similar tools work with making tax digital by sitting on top of your existing Excel or Google Sheets workbook and submitting the totals to HMRC through the MTD API. Pricing is the lowest in the market: VitalTax is £30 + VAT a year for one person, 123 Sheets is similar. Bridging software keeps your existing record-keeping workflow but adds the HMRC submission layer that makes you compliant. It is the cheapest legitimate route to MTD compliance and works for both VAT and Income Tax.
Will HMRC provide free software for Making Tax Digital?
Yes. HMRC is launching its own free MTD tool for sole traders with simple affairs – one trade, no employees, modest transaction volumes. It handles the digital record keeping requirement and the quarterly update submissions, but it does not include bank feeds, invoicing, accountant access or detailed reporting. For anyone with a more complicated setup, the free HMRC tool is too limited; for the simplest cases it does the job. Several private providers also offer free tiers: Zoho Books Free for businesses with turnover under £35,000, Landlord Studio Free for landlords with up to two properties, and Untied Free for single-source sole traders. Our free MTD software guide compares every option.
Do I need special software for MTD if I already have an accountant?
You still need MTD compatible software, but your accountant can run it for you. Under MTD for Income Tax, the digital records have to live in compatible software somewhere – that can be your accountant’s software rather than your own. Many sole traders forward their bank statements and receipts to their accountant each quarter and let the practice handle the quarterly update submission through their own MTD software. This works particularly well for landlords with one or two properties: the volume of transactions is low enough that paying an accountant to run the software costs less than a standalone subscription plus your own time.
Choosing the right software for Making Tax Digital: a four-question test
Before clicking “buy” on any MTD software product, run these four checks. Each one corresponds to a column in the comparison table.
- Is the software provider on HMRC’s compatible software list? If the software provider is not on gov.uk’s official list, you cannot use software from that provider to file your quarterly update or your Final Declaration. No exceptions.
- Does it cover both your income types? A self-employed person with property income on the side needs software that handles separate quarterly updates for both sources, including the property income pages. Most cloud accounting software does; some mobile-first apps and bridging software products only handle one income type.
- Does the price fit the volume? A landlord with two properties does not need full cloud accounting at £15 a month. A sole trader with 200 invoices a quarter and a VAT registration cannot use free bridging software for long without losing time on manual entry.
- Will your accountant use software from the same provider? If your accountant uses Xero, QuickBooks or Sage, picking the same software saves friction. If you are using bridging software with a spreadsheet, check whether your accountant supports that workflow before committing.
If you already use Sage 50 or Sage Business Cloud, our dedicated Sage for Making Tax Digital guide walks through Sage Accounting tiers, Sage 50 v30 onwards, and the new Sage for Sole Traders product for MTD ITSA.
How to keep digital records that match your MTD software
HMRC’s keep digital records rule is the hidden step that catches most sole traders out. The income and expenses you submit each quarter must originate in compatible software or in a spreadsheet linked to bridging software – they cannot be copied across from a paper diary at the end of the quarter. In practice this means three things: (1) your transactions go straight into MTD software when they happen, ideally via a bank feed, (2) you keep the digital records for at least five years after the relevant 31 January filing date, and (3) the link between your records and the HMRC submission is itself digital, with no manual retyping in between. Bridging software was designed to keep digital records in Excel while still meeting that “all-digital” rule. Cloud accounting software does the same job inside one product. Either route is HMRC-compliant; what is not compliant is keeping a paper diary all year and typing the totals into your software at the end of each quarter.
Property income deserves a specific note. Each rental property counts as a single trade for record-keeping purposes, but the quarterly update consolidates them into a single property income line per quarter. If you have one UK furnished holiday let and one standard buy-to-let, your software needs to handle both – the furnished holiday lettings rules attached to capital allowances changed in April 2025, and most cloud accounting software has been updated to reflect that. Bridging software with a spreadsheet works fine here too, provided the spreadsheet structure separates the two property types.
For a focused walk-through of QuickBooks Online and QuickBooks Sole Trader for MTD, see our QuickBooks MTD review.
MTD ITSA Software Comparison
Compare 13 HMRC-recognised software options for Making Tax Digital
| Software ▲ | Type ▲▼ | Best For ▲▼ | Price ▲▼ | MTD VAT ▲▼ | MTD ITSA ▲▼ | Bank Feeds ▲▼ | Receipt Scan ▲▼ | Multi-Income ▲▼ |
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Independence disclosure
This comparison is independent. Jack Ross Chartered Accountants is a Xero Gold Partner — this is the only commercial relationship disclosed. All software listed is recognised by HMRC’s compatible software list. Pricing shown was accurate at the time of publication and may change.
MTD for Income Tax applies from 6 April 2026 for those with qualifying income above £50,000. See our MTD Income Tax guide for the full timeline and requirements, or check the penalties page to understand what happens if updates are submitted late.
For a deeper look at Xero UK plans, Xero Simple pricing, and MTD ITSA setup inside Xero, see our Xero MTD review.
How to choose MTD software
The right choice depends on your circumstances. Here are the key questions to consider:
- What income sources do you have? If you have both self-employment and property income, you need software that supports multiple income types. Most cloud options do; some mobile and bridging tools are limited.
- Do you already use a spreadsheet? Bridging software like #GoFile, 123 Sheets, or VitalTax lets you keep your existing Excel or Google Sheets workflow and simply submits data to HMRC. #GoFile is particularly popular with accountants, supporting both VAT and Income Tax submissions for over 1,500 practices.
- Do you work with an accountant? Cloud software like Xero, QuickBooks, or Sage lets your accountant access your records in real time, which can reduce year-end fees and avoid last-minute scrambles.
- Are you a landlord only? Hammock and GoSimpleTax are built specifically for property income and tend to be simpler (and cheaper) than full accounting suites.
- What's your budget? Free options exist: VitalTax offers a free tier, FreeAgent is free for NatWest/RBS customers, and Untied has a free tier for simple cases.
All software listed above appears on HMRC's official compatible software list. You can also read our detailed MTD compatible software guide for more on what features to prioritise, or visit our Xero for MTD page for a closer look at one of the most widely used options.
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