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tax-deadlinesUpdated 2026-02-27

What software is compatible with Making Tax Digital?

Quick Answer

MTD-compatible software must be on HMRC's list of compatible software. Free options include QuickFile, My Tax Digital, and FreeAgent (via NatWest/Mettle). Paid options include Xero, QuickBooks, Sage, and AccountsOS (on HMRC's own list for MTD for VAT; 14-day free trial, then £20/month).

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Detailed Explanation

To comply with Making Tax Digital, you must use software that can connect directly to HMRC's systems to keep digital records and submit quarterly updates. HMRC maintains an official list of compatible software.

Free MTD-compatible software: - QuickFile

free cloud accounting with MTD VAT and ITSA support - **My Tax Digital

Paid MTD-compatible software: - AccountsOS

14-day free trial, then £20/month; AI-native with chat interface and direct HMRC submission of VAT returns - **Xero

Bridging software is also available if you prefer to keep records in spreadsheets. Bridging tools read your spreadsheet data and submit it to HMRC in the required format.

AccountsOS is on HMRC's own list of software compatible with Making Tax Digital for VAT, listed since October 2026. You can check it at https://www.tax.service.gov.uk/making-tax-digital-software by searching for AccountsOS. That listing covers VAT only.

For MTD for Income Tax, HMRC keeps a separate list at https://www.gov.uk/guidance/find-software-thats-compatible-with-making-tax-digital-for-income-tax. Check the right list before choosing, as both are updated regularly.

Source: HMRC MTD Compatible Software List

Real-World Examples

Sole Trader Choosing Free Software

You are a self-employed plumber earning £55,000 and need MTD software from April 2026. You already bank with NatWest, so FreeAgent is free for you. Alternatively, QuickFile offers a fully free option.

Spreadsheet User Needing Bridging

You have tracked expenses in Excel for years and do not want to switch. You can use bridging software like My Tax Digital to pull data from your spreadsheet and submit quarterly updates to HMRC.

Landlord Wanting AI Assistance

You manage three rental properties and want to ask questions about your finances in plain English. AccountsOS provides AI-native bookkeeping with MTD compatibility, with a 14-day free trial then £20/month.

Common Mistakes to Avoid

  • Assuming any accounting software is MTD-compatible — it must be on HMRC's official approved list.
  • Not checking whether your bank offers free access to accounting software like FreeAgent.
  • Waiting until the last minute to choose software — getting familiar with digital record-keeping takes time.
  • Forgetting that bridging software exists if you want to continue using spreadsheets.

Can I use a spreadsheet for MTD?

Not directly. You must use MTD-compatible software to submit to HMRC. However, you can use bridging software that reads data from your spreadsheet and submits it in the required format.

How do I check if my software is approved?

Visit the HMRC website and search for "find software that's compatible with Making Tax Digital". The list is updated regularly and shows which software supports MTD for VAT, MTD for ITSA, or both.

Can I switch MTD software mid-year?

Yes. You can switch software at any point. Your new software will need to pick up from where you left off, so export your data from the old tool before switching.

Does my accountant's software count?

If your accountant uses MTD-compatible software to submit on your behalf, that satisfies the requirement. However, you still need to keep your own digital records throughout the year.

Practical Tips

  • If you bank with NatWest, Mettle, or Lloyds, check if you qualify for free FreeAgent access before paying for software.
  • Trial two or three options before committing — most offer free trials or free tiers.
  • Ensure your chosen software supports both MTD for VAT (if applicable) and MTD for ITSA to avoid needing two tools.
  • Ask your accountant which software they prefer to work with — compatibility with your accountant's workflow saves time.

Related Questions

What is Making Tax Digital (MTD)?

Making Tax Digital is HMRC's initiative requiring businesses to keep digital records and submit returns using compatible software. VAT is already under MTD; Income Tax follows in April 2026.

Do I need accounting software for Making Tax Digital?

Yes, if you're VAT-registered you must already use MTD-compatible software. From April 2026, self-employed and landlords earning over £50,000 must also use MTD-compatible software for Income Tax.

Is there free MTD software available in the UK?

Yes. Free MTD-compatible options include QuickFile, My Tax Digital, FreeAgent (free via NatWest, Mettle, or Lloyds business accounts), and Clear Books (free tier). AccountsOS offers a 14-day free trial, then £20/month.

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