Making Tax

Jack Ross Chartered Accountants

The 5 Best Making Tax Digital Software

With HMRC’s introduction of Making Tax Digital (MTD) to streamline tax compliance, businesses and freelancers must keep digital records and submit VAT returns online. For businesses in the UK, finding the right accounting software to meet these new requirements can be daunting. This article presents the top 5 best Making Tax Digital software products to help you select the right software for your business accounting needs. It’s a must-read for anyone who understands the software options for making taxes digital.


  1. What is Making Tax Digital (MTD)?
  2. Why is it essential to choose the right MTD software?
  3. What should you consider when choosing MTD software?
  4. Top 5 Tax Digital Software-Making Tips
  5. How to submit VAT returns using MTD software

What is Making Tax Digital (MTD)?

Making Tax Digital, or MTD, is an HMRC initiative aimed at making the UK’s tax system more efficient and making it easier for taxpayers to get their business affairs right. The MTD rules require businesses above the VAT threshold to maintain digital records and submit VAT returns digitally via MTD-compatible software. Using MTD for VAT, businesses can streamline their tax filing process and ensure they meet all HMRC Making Tax Digital requirements.

Why is it essential to choose the right MTD software? 

The right MTD software can make keeping digital records and submitting VAT returns much more superficial. It’s not just about HMRC compliance; a good software package can help you manage your tax affairs more effectively, provide software support for your accounting needs, and offer the best value for your money. Furthermore, if you’re a business owner, freelancer, or sole trader, having compatible software can be instrumental in taking care of tax and accounting hassle-free.

What should you consider when choosing MTD software? 

When choosing the best Making Tax Digital software, consider its user-friendliness, compatibility with HMRC’s Making Tax Digital rules, the ability to include VAT directly, and the support it provides for submitting your VAT returns online. Additionally, you may want to consider if the software package caters to specific needs, such as whether it’s designed for VAT-registered businesses, small businesses, or sole traders.

Top 5 Tips for Making Tax Digital Software

  1. Xero: Xero provides a comprehensive software solution for businesses to manage their accounting and taxes, including VAT. It’s compatible with MTD for VAT and income tax.
  2. QuickBooks: Known for its intuitive interface, QuickBooks is fully MTD-compliant, allowing you to submit VAT returns directly to HMRC and keep digital records seamlessly.
  3. FreeAgent: Ideal for freelancers and small businesses, FreeAgent includes MTD-compliant features that enable you to handle VAT and other tax affairs efficiently.
  4. Sage Business Cloud Accounting: This MTD software offers robust VAT management and digital tax record-keeping features.
  5. Zoho Books: Affordable and user-friendly, Zoho Books supports filing VAT returns online and keeping track of digital records in line with MTD rules.

How to submit VAT returns using MTD software 

Submitting VAT returns using MTD software is straightforward. You enter your VAT information into the software, creating a VAT return. The software then submits the VAT return to HMRC on your behalf. You should ensure your software is fully MTD-compliant and can digitally handle your VAT registration and records.

Key Takeaways:

  • Making Tax Digital (MTD) is an HMRC initiative that requires businesses above the VAT threshold to keep digital records and submit VAT returns online.
  • The right MTD software should be user-friendly, compatible with HMRC’s MTD rules, and provide ample support for your VAT and accounting needs.
  • QuickBooks, Xero, FreeAgent, Sage Business Cloud Accounting, and Zoho Books are top-rated MTD software options.
  • Submitting VAT returns using MTD software involves inputting your VAT data into the software, which then submits to HMRC.
  • Always ensure your chosen software is fully MTD-compliant, meeting all HMRC’s MTD for VAT requirements.
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