Last updated: July 2026
What software do I need for MTD for Income Tax?
For MTD for Income Tax you need HMRC-recognised software that keeps your income and expenses digitally, sends quarterly updates to HMRC, and lets you submit a Final Declaration each January. It becomes mandatory from April 2026 for sole traders and landlords with qualifying income over £50,000, April 2027 over £30,000 and April 2028 over £20,000. Established options such as Xero, QuickBooks, FreeAgent and Sage support it. AccountsOS is HMRC-recognised for MTD for VAT today, with quarterly Income Tax filing on the roadmap ahead of the 2026 and 2027 waves, so you can keep digital records in it now and be ready.
Making Tax Digital for Income Tax (often shortened to MTD for Income Tax or MTD ITSA) is the biggest change to Self Assessment in a generation. Instead of one tax return a year, affected sole traders and landlords will keep digital records and send HMRC four quarterly updates plus a Final Declaration. You cannot do this on paper or through the old online form. You need compatible software, and choosing it is the first practical step.
The good news is you have time to get it right, and picking the software now is more about avoiding a scramble later than meeting an immediate deadline. Below is who is caught and when, exactly what the software has to do, what to look for, and where AccountsOS honestly fits.
The fastest way to know if this affects you is the free MTD checker. It confirms which wave you are in, or whether you are out of scope for now.
Who has to comply, and when
Qualifying income over £50,000
The first wave. Whether you are caught is based on the qualifying income on your 2024-25 Self Assessment return. Sole traders and landlords in this band must keep digital records and send quarterly updates from April 2026.
Qualifying income over £30,000
The second wave brings in sole traders and landlords with combined qualifying income above £30,000. If you are in this band, moving to digital record-keeping now makes the switch painless.
Qualifying income over £20,000
The third wave lowers the threshold to £20,000 of combined qualifying income.
No mandate announced yet
HMRC has not set a date for income below £20,000. You can sign up voluntarily to keep digital records ahead of any future change, but nothing is mandatory yet.
Watch the qualifying income trap. The threshold is your gross self-employment income plus gross property income combined, before expenses. Two smaller income streams can add up to more than £50,000 and pull you into the first wave even though neither alone crosses the line.
What MTD for Income Tax software must do
Keep digital records
Every item of business income and expense must be recorded digitally, with a digital link running through to the figures you report. A paper cashbook or a shoebox of receipts no longer meets the requirement.
Send quarterly updates
Four times a year you submit a summary of your income and expenses to HMRC through your software. These are running totals, not final figures, and they replace the single annual return as the rhythm of the year.
File a Final Declaration
After the fourth quarter you confirm your figures, make any adjustments, add other income such as dividends or interest, and submit a Final Declaration by 31 January. This is what actually settles your tax for the year.
What to look for when choosing
Any compliant tool will file. The differences that matter across a year of quarterly updates are these:
- HMRC recognition for MTD for Income Tax, not just VAT. Check the tool covers the income type you have, whether that is self-employment, property, or both.
- Automatic categorisation, so your quarterly update is a review rather than a data-entry marathon four times a year.
- Deadline tracking, so each quarterly update and the January Final Declaration is flagged before it is due, not after.
- A clear route to submit, whether you file yourself or your accountant does. Know who presses the button each quarter.
- Plain-English help, so when you are unsure what a figure means or whether an expense counts, you can get an answer without booking an accountant.
Confirm your MTD for Income Tax wave
The free MTD checker works out your qualifying income band and tells you exactly when you are mandated.
Where AccountsOS fits, honestly
AccountsOS is HMRC-recognised software for MTD for VAT today and files VAT returns directly to HMRC. Quarterly MTD for Income Tax filing is on the roadmap ahead of the 2026 and 2027 waves, rather than live right now. We would rather tell you that plainly than overclaim.
What this means in practice: if you are heading into an MTD for Income Tax wave, the single most useful thing you can do today is start keeping your income and expenses digitally. You can do that in AccountsOS now. Finn, the AI accountant inside it, categorises your transactions and reconciles as you go, so your records are already in shape the moment quarterly filing switches on. You are not left doing a year of catch-up bookkeeping the week before your first update.
If you need to file MTD for Income Tax the day it becomes mandatory for you, check where the established platforms stand as your date approaches, and compare them on price and ongoing admin in our best MTD software comparison.
MTD for Income Tax software: frequently asked questions
What software do I need for MTD for Income Tax?
You need software that HMRC recognises for MTD for Income Tax, that keeps your income and expenses digitally, sends quarterly updates to HMRC, and lets you submit a Final Declaration. Bridging software that links a spreadsheet to HMRC can meet the letter of the rules, but full accounting software that also categorises transactions and tracks deadlines saves far more time across four quarterly updates a year.
When does MTD for Income Tax start?
MTD for Income Tax is mandatory from 6 April 2026 for sole traders and landlords with combined qualifying income over £50,000, based on their 2024-25 Self Assessment return. The threshold drops to £30,000 from April 2027 and £20,000 from April 2028. There is no announced date yet for income under £20,000.
What is qualifying income for MTD for Income Tax?
Qualifying income is your gross self-employment income plus your gross UK property income, added together, before deducting any expenses or allowances. For example, £40,000 of self-employment income and £15,000 of rental income is £55,000 of qualifying income, so you would be in the April 2026 wave even though neither source alone exceeds £50,000.
Does MTD for Income Tax apply to limited companies?
No. MTD for Income Tax applies to individuals with self-employment or property income, not to companies. A limited company is out of scope. But watch a common trap: if you personally earn £50,000 or more from self-employment or rental income (dividends and PAYE salary do not count), you can be caught as an individual even though your company is not.
Can I use my existing accountant's software?
Often yes. Most established platforms such as Xero, QuickBooks, FreeAgent and Sage support MTD for Income Tax, so if your accountant already uses one you may be able to keep digital records in it. The thing to confirm is that it handles the full quarterly cycle for your income type, and who is responsible for submitting each update, you or your accountant.
Do I need software if I only have rental income?
If your gross property income takes your combined qualifying income over the threshold for your wave, then yes, the same rules apply and you need MTD-compatible software to keep digital records and file quarterly updates. Landlords are explicitly in scope for MTD for Income Tax alongside sole traders.
Is there free MTD for Income Tax software?
Some free tools and low-cost bridging software will exist for MTD for Income Tax, and FreeAgent is free for NatWest, Royal Bank and Mettle business banking customers. Free options tend to do the minimum: they file, but they do not categorise your transactions or chase your deadlines. Across four quarterly updates a year, software that removes the admin usually pays for itself.
Is AccountsOS ready for MTD for Income Tax?
AccountsOS is HMRC-recognised software for MTD for VAT today and files VAT returns directly to HMRC. Quarterly MTD for Income Tax filing is on our roadmap ahead of the 2026 and 2027 waves. You can keep your income and expenses digitally in AccountsOS now, so your records are ready the moment your mandate begins. Use the free MTD checker to confirm exactly when you are caught.
Get your records ready for MTD for Income Tax
Keep your income and expenses digital in AccountsOS today and let Finn do the categorising, so you are ready the moment quarterly filing begins. HMRC-recognised for MTD for VAT now. Free for 14 days, then £20 a month.
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