# HMRC-Approved Software for Making Tax Digital (MTD ITSA 2026) Last updated: 22 September 2026 HMRC has published a list of approved software providers, including major platforms like Xero, QuickBooks, FreeAgent, Sage, and Zoho Books, which have developed MTD for Income Tax modules to help self-employed individuals and landlords comply with digital record keeping and quarterly reporting requirements from April 2026. These tools are designed to streamline the submission of income and expenses directly to HMRC. ## Key MTD ITSA milestones - **Commencement Date:** April 2026 for those with income over £50,000. - **Lower Threshold:** April 2027 for those with income over £30,000. - **Digital Records:** Mandatory for all MTD-mandated taxpayers. - **Quarterly Updates:** Four submissions per tax year, plus an End of Period Statement and Final Declaration. [View HMRC List](https://www.gov.uk/guidance/find-software-for-making-tax-digital-for-income-tax) ## Understanding Making Tax Digital for Income Tax Self Assessment (MTD ITSA) Making Tax Digital for Income Tax Self Assessment (MTD ITSA) represents a significant transformation in how self-employed individuals and landlords report their income and expenses to HMRC. From April 2026, those with qualifying income exceeding £50,000 will be mandated to keep digital records and submit quarterly updates using MTD-compatible software. This initiative aims to modernise the tax system, reduce errors, and provide taxpayers with a more real-time understanding of their tax position. The shift requires a fundamental change from traditional annual tax returns to a continuous digital reporting process. HMRC has been diligently working with software developers to ensure a robust ecosystem of compatible solutions is available, and the official list of approved providers is now a crucial resource for businesses preparing for this change. Choosing the right software is paramount for seamless compliance and efficient financial management under the new regime. This comprehensive guide explores the requirements of MTD ITSA, details the types of software available, highlights key features to look for, and provides an overview of HMRC-approved solutions to help you prepare for the upcoming changes. **What is the MTD ITSA Timeline?** MTD ITSA is being rolled out in phases. From April 2026, it becomes mandatory for self-employed individuals and landlords with gross income over £50,000. From April 2027, this threshold will reduce to £30,000. The aim is to eventually include all self-employed businesses and landlords. ## Who Does Making Tax Digital for Income Tax Affect? MTD ITSA primarily impacts two key groups of taxpayers: ### Self-Employed Individuals If you run your own business as a sole trader, you will need to comply with MTD ITSA if your qualifying income exceeds the threshold. This includes income from trades, professions, and vocations. ### Landlords with Property Income Individuals who receive income from UK or overseas property, whether residential or commercial, will also be required to comply if their property income alone, or combined with self-employment income, exceeds the threshold. The income threshold for MTD ITSA is based on gross income from self-employment and property. For example, if you have £30,000 from self-employment and £25,000 from property, your combined income is £55,000, meaning you would fall into the MTD ITSA mandate from April 2026. Partnerships are currently excluded from the initial rollout of MTD ITSA but are expected to be brought into the regime at a later date, with specific guidance to be provided by HMRC. ## Core Requirements of Making Tax Digital for Income Tax To comply with MTD ITSA, individuals must adhere to four main requirements, all facilitated by MTD-compatible software: ### Digital Record Keeping All business income and expenses must be recorded digitally from the start of your first MTD tax year. This means no more paper ledgers. ### Quarterly Updates You must submit summaries of your income and expenses to HMRC four times a year, within one month of the end of each tax quarter. ### End of Period Statement (EOPS) After your fourth quarterly update, you must submit an EOPS for each income source, making any accounting adjustments. ### Final Declaration This replaces the traditional Self Assessment tax return, consolidating all income sources and declarations for the tax year. These requirements collectively form a continuous reporting cycle, moving away from the annual submission model. The digital nature of MTD ITSA is intended to give HMRC a more up-to-date picture of taxpayers' finances and help individuals stay on top of their tax affairs throughout the year. ## HMRC-Approved Software for MTD ITSA 2026 HMRC maintains an official list of software providers that have demonstrated their products meet the technical specifications for Making Tax Digital for Income Tax Self Assessment. This list is the definitive source for finding compatible software. Major UK accounting platforms have invested heavily in developing MTD ITSA modules to ensure their users can comply. ### Key Providers and Their MTD Offerings Below is a selection of prominent software providers recognised by HMRC for MTD ITSA, along with a brief overview of their capabilities: #### Xero Comprehensive accounting software with MTD for ITSA features for digital record keeping, quarterly updates, and final declarations. [Learn more](https://www.xero.com/uk/making-tax-digital/) #### QuickBooks Popular choice for small businesses, offering MTD ITSA compliance for income and expenses, quarterly reporting, and tax estimates. [Learn more](https://quickbooks.intuit.com/uk/making-tax-digital/) #### FreeAgent Designed for freelancers and small businesses, providing intuitive MTD ITSA tools for digital record keeping and direct HMRC submissions. [Learn more](https://www.freeagent.com/landing/making-tax-digital/) #### Sage Offers various MTD-compatible solutions, from basic bookkeeping to advanced accounting, suitable for diverse business needs. [Learn more](https://www.sage.com/en-gb/blog/making-tax-digital-for-income-tax/) #### Zoho Books Cloud-based accounting software with MTD for ITSA capabilities, including expense tracking, invoicing, and HMRC submissions. [Learn more](https://www.zoho.com/uk/books/making-tax-digital-for-itsa/) #### AccountsOS Our platform provides seamless MTD ITSA compliance, automating digital record keeping, real-time tax estimates, and direct quarterly updates to HMRC. [Learn more](/features/making-tax-digital) #### Landlord Vision Specialised property management software with MTD for ITSA integration, helping landlords manage income, expenses, and HMRC reporting. [Learn more](https://www.landlordvision.co.uk/making-tax-digital-software) #### TaxCalc Tax software offering MTD for ITSA solutions for accountants and individuals, facilitating digital record keeping and submissions. [Learn more](https://www.taxcalc.com/making-tax-digital/) It is crucial to verify any software's MTD ITSA compatibility directly on HMRC's official website. The landscape of MTD-compatible software is continually evolving, with new providers and enhanced features regularly being introduced. Always ensure the chosen software is explicitly listed by HMRC as suitable for MTD for Income Tax. AccountsOS is fully committed to MTD ITSA compliance, offering a streamlined solution for digital record keeping, automated quarterly updates, and simplified final declarations, ensuring our users are well-prepared for the 2026 mandate. ## Choosing the Right MTD ITSA Software for Your Needs Selecting the appropriate MTD-compatible software is a critical decision that can significantly impact your compliance and efficiency. Consider the following factors when making your choice: ### Key Features to Look For - **Digital Record Keeping:** Automatically captures income and expense data from bank feeds, invoices, and receipts. - **Automated Quarterly Updates:** Prepares and submits summaries of income and expenses to HMRC every three months. - **End of Period Statement (EOPS):** Calculates and submits adjustments, reliefs, and allowances at the end of the tax year. - **Final Declaration:** Consolidates all income sources and submits the final tax declaration to HMRC. - **Tax Estimates:** Provides real-time tax liability estimates based on current records, aiding financial planning. - **Bank Feed Integration:** Connects directly to bank accounts to import transactions, reducing manual data entry. - **Receipt Scanning:** Allows capturing and categorising expenses by scanning receipts with a mobile device. - **Multi-Income Support:** Handles various income streams, including self-employment, property, and other income. - **Data Security and Compliance:** Ensures data is stored securely and transmissions to HMRC comply with regulations. - **User-Friendly Interface:** Intuitive design makes it easy for non-accountants to manage their tax obligations. ### Other Considerations - **Ease of Use:** The software should have an intuitive interface, especially if you are not an experienced accountant. - **Cost:** Evaluate pricing models, including monthly subscriptions, annual fees, and any additional costs for features or support. - **Scalability:** Choose software that can grow with your business, accommodating increased transaction volumes or additional income streams. - **Integration:** Consider if the software integrates with other tools you use, such as e-commerce platforms, CRM systems, or payment processors. - **Support and Training:** Access to reliable customer support, tutorials, and training resources can be invaluable, particularly during the transition to MTD. - **Accountant Access:** If you work with an accountant, ensure the software allows them easy access to your digital records for review and collaboration. **Trial Periods and Demos:** Many software providers offer free trial periods or demonstrations. Take advantage of these to test the software's functionality, ease of use, and MTD ITSA specific features before committing. ## The MTD ITSA Reporting Cycle: A Step-by-Step Guide Understanding the full MTD ITSA reporting cycle is essential for compliance. This goes beyond just keeping digital records and involves several submissions throughout the tax year. ### 1. Digital Record Keeping: The Foundation This is the starting point for MTD ITSA. All relevant business transactions, both income and expenses, must be recorded digitally. This includes: - The date of the transaction. - The amount of the transaction. - The type of income or expense category. - Any other information required by specific tax rules, such as VAT details if applicable. MTD-compatible software automates this by linking to bank accounts, categorising transactions, and allowing for digital receipt capture. This eliminates the need for manual data entry and reduces the risk of errors. ### 2. Quarterly Updates: Regular Reporting Four times a year, you must send a summary of your business income and expenses to HMRC. These updates are not full tax returns; they are a snapshot of your financial activity for that quarter. | Tax Year Quarter | Period Covered | Submission Deadline | | --- | --- | --- | | Quarter 1 | 6 April to 5 July | 5 August | | Quarter 2 | 6 July to 5 October | 5 November | | Quarter 3 | 6 October to 5 January | 5 February | | Quarter 4 | 6 January to 5 April | 5 May | These deadlines are fixed, regardless of your business's accounting period. Your software will automatically collate the data and submit it to HMRC. ### 3. End of Period Statement (EOPS): Annual Adjustments After your fourth quarterly update, and by 31 January following the tax year, you must submit an End of Period Statement for each source of business income (e.g., one for self-employment, one for property). The EOPS includes: - Any accounting adjustments, such as accruals, prepayments, or depreciation. - Capital allowances claims. - Claims for reliefs, such as overlap relief. - Any other adjustments needed to arrive at your taxable profit or loss. This is where professional accounting advice can be particularly valuable, ensuring all legitimate deductions and adjustments are made. ### 4. Final Declaration: The Annual Summary The Final Declaration, also due by 31 January following the tax year, replaces your traditional Self Assessment tax return. It consolidates all your income sources, including those not covered by MTD ITSA (e.g., employment income, dividends, savings interest), and includes: - The figures from your EOPS. - Details of any other taxable income. - Personal allowances and reliefs. - Any capital gains. - Your final tax calculation. Your MTD software will typically pull together all the necessary information from your digital records and previous submissions to help you complete this final declaration accurately. ## Preparing for Making Tax Digital for Income Tax 2026 Even though the mandate for most will begin in April 2026, proactive preparation is key to a smooth transition. Here's a checklist to help you get ready: ### Understand Your Threshold Determine if your gross income from self-employment and/or property will exceed £50,000 for the tax year starting April 2026, or £30,000 for April 2027. ### Review Current Record Keeping Assess your current methods. If you're using paper or basic spreadsheets, plan your transition to digital record keeping. ### Research MTD Software Start researching HMRC-approved software solutions that meet your business's specific needs and budget. ### Set Up Bank Feeds If your chosen software supports bank feeds, set these up early to automate transaction imports. ### Consult an Accountant Discuss MTD ITSA with your accountant. They can advise on software choices, accounting adjustments, and overall compliance strategy. ### Start Early Don't wait until the last minute. Familiarise yourself with the new processes and software well in advance of April 2026. Transitioning to MTD ITSA is an opportunity to streamline your financial processes, gain better insights into your business's performance, and reduce the likelihood of errors. Early adoption of digital record keeping and MTD-compatible software can provide a significant advantage. ## Exemptions from Making Tax Digital for Income Tax While MTD ITSA is becoming mandatory for many, certain individuals and businesses may be exempt from the requirements. It is important to understand if you qualify for an exemption. - **Religious Objection:** Individuals whose religious beliefs are incompatible with using electronic communications or keeping digital records. - **Age or Disability:** Those who are unable to comply due to age, disability, or living in a remote area without internet access. - **Insolvency:** Individuals who are subject to an insolvency procedure. - **Income Below Threshold:** Currently, those with gross income from self-employment and property below £30,000 (from April 2027) or £50,000 (from April 2026). If you believe you qualify for an exemption, you must contact HMRC to apply. Do not assume you are exempt; formal confirmation from HMRC is required. Even if exempt, you will still need to file a Self Assessment tax return through traditional methods. Additionally, individuals with income solely from employment, pensions, or investments that are not self-employment or property income are not currently subject to MTD ITSA, unless they also have qualifying self-employment or property income above the threshold. ## Penalties for Non-Compliance with MTD ITSA HMRC has introduced a new penalty regime for MTD ITSA to encourage compliance. These penalties are distinct from existing Self Assessment penalties and can apply to various aspects of the MTD reporting cycle. ### Understanding the Penalty System The MTD ITSA penalty system is points-based for late submissions and includes fixed penalties for other failures: | Scenario | Penalty | | --- | --- | | Late Quarterly Update | Point-based system, leading to fines for repeated failures. | | Late EOPS/Final Declaration | Initial £100 penalty, then daily penalties for continued lateness. | | Failure to Keep Digital Records | HMRC may issue penalties, amount varies based on severity. | | Inaccurate Submissions | Penalties for errors range from 0% to 100% of the additional tax due, depending on the reason for the error. | **Late Payment Interest:** In addition to filing penalties, HMRC will charge interest on any tax paid late. This interest accrues from the payment due date until the tax is paid in full. The new points-based system for late quarterly updates means that for each late submission, you receive a point. Once you accumulate a certain number of points (e.g., 4 points for annual reporters), a fixed penalty of £200 is issued. Points expire after 24 months of continuous compliance. Accurate record keeping and timely submissions using MTD-compatible software are the best defence against incurring these penalties. ## The Evolving Role of Accountants in MTD ITSA While MTD ITSA aims to make tax digital and potentially more accessible for individuals, the role of accountants remains vital and, in many ways, becomes even more strategic. ### Expert Guidance and Strategy Accountants provide essential advice on choosing the right MTD software, setting up digital record keeping processes, and ensuring all income and expenses are correctly categorised for tax purposes. They can also help with tax planning and identifying reliefs. ### Compliance Assurance They can review your quarterly updates and annual submissions (EOPS and Final Declaration) to ensure accuracy and compliance with HMRC rules, significantly reducing the risk of penalties. ### Handling Complexities For businesses with complex accounting adjustments, multiple income streams, or those needing to claim specific reliefs, an accountant's expertise is invaluable in preparing the EOPS accurately. ### Direct Agent Submissions Accountants can act as your tax agent, submitting all MTD ITSA returns directly to HMRC on your behalf, using their own agent software or by connecting to your chosen MTD software. Many MTD-compatible software solutions offer features specifically designed for accountants, such as client dashboards and enhanced reporting, facilitating seamless collaboration between taxpayers and their agents. This partnership ensures that while the process becomes digital, the strategic oversight and expert advice remain accessible. ## How AccountsOS Helps You Comply with MTD ITSA AccountsOS is designed to simplify Making Tax Digital for Income Tax Self Assessment, providing a seamless and compliant experience for self-employed individuals and landlords. ### Automated Digital Record Keeping Connect your bank accounts for automatic transaction import and smart categorisation. Easily upload receipts and invoices to maintain comprehensive digital records required by HMRC. ### Simplified Quarterly Updates Generate and submit your quarterly income and expense summaries directly to HMRC with just a few clicks. Our system ensures all submissions are MTD-compliant and on time. ### Real-Time Tax Estimates See your estimated tax liability update throughout the year based on your digital records. This helps you plan your finances and avoid year-end surprises. ### EOPS and Final Declaration Support AccountsOS guides you through the process of preparing your End of Period Statement and Final Declaration, ensuring all necessary adjustments and additional income sources are correctly reported. ### Deadline Reminders Receive automatic notifications for all your MTD ITSA quarterly update deadlines, EOPS, and Final Declaration due dates, helping you stay compliant and avoid penalties. ### Secure and HMRC-Compliant Our platform is built with robust security features and is fully compliant with HMRC's MTD ITSA specifications, giving you peace of mind that your data is safe and your submissions are correct. ## Frequently asked questions ### What is Making Tax Digital for Income Tax Self Assessment (MTD ITSA)? MTD ITSA is an HMRC initiative to modernise the tax system, requiring self-employed individuals and landlords to keep digital records of their income and expenses and submit quarterly updates to HMRC using MTD-compatible software, rather than an annual tax return. ### Who needs to comply with MTD ITSA from April 2026? From April 2026, MTD ITSA will apply to self-employed individuals and landlords with gross income from self-employment and/or property exceeding £50,000 in a tax year. The threshold will reduce to £30,000 from April 2027. ### What are the main requirements of MTD ITSA? The main requirements are to keep digital records of all business income and expenses, submit quarterly summaries of this data to HMRC, file an End of Period Statement (EOPS) for each income source, and submit a final declaration consolidating all income for the tax year. ### How often do I need to submit updates under MTD ITSA? You will need to submit quarterly updates of your income and expenses to HMRC. These are due within one month of the end of each tax quarter. Additionally, you will submit an End of Period Statement and a Final Declaration annually. ### Can I use spreadsheets for MTD ITSA? While you can use spreadsheets for digital record keeping, they must be combined with 'bridging software' that can extract the necessary data and submit it to HMRC in the MTD-compliant format. Standalone spreadsheets are not sufficient. ### What happens if I don't comply with MTD ITSA? HMRC has a penalty system for non-compliance, including penalties for late quarterly updates, late End of Period Statements, late final declarations, and failure to keep digital records. Penalties can also be issued for inaccurate submissions. ### Do I still need an accountant with MTD ITSA? Yes, many businesses will continue to benefit from an accountant. While software automates submissions, an accountant can provide expert advice on tax planning, ensure correct categorisation of income and expenses, review submissions, and handle complex tax situations. ### Where can I find a list of HMRC-approved MTD software? HMRC publishes a list of recognised software providers on their official website. This list is regularly updated and includes various solutions for different business needs, from general accounting platforms to specialised property software. ## Related guides - [AccountsOS MTD Features](/features/making-tax-digital) - [Self Assessment Guide](/filing/self-assessment) - [All Tax Deadlines](/deadlines)