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Best MTD Compatible Software (2026): Top 10 Compared

Updated October 2026By StatWharf Editorial10 vendorsMethodology

MTD compatible software keeps digital records and sends VAT returns or Income Tax quarterly updates to HMRC through its Making Tax Digital interface. The ten products below fall into three groups. Full accounting packages (Xero, Sage Accounting, FreeAgent, Zoho Books, IRIS KashFlow and Clear Books) handle invoicing, bank feeds and reporting as well as filing. Low-cost and free bookkeeping tools (Pandle and QuickFile) cover sole traders, landlords and micro businesses. Bridging tools (TaxCalc MTD Quarterly Filer and VT Software) submit from spreadsheets or desktop cash books for users who want to keep their existing records.

Order is not a ranking. How entries are ordered.

On this page
  1. Comparison table
  2. Vendor details
  3. Xero
  4. Sage Accounting
  5. FreeAgent
  6. Zoho Books
  7. Pandle
  8. Clear Books
  9. IRIS KashFlow
  10. QuickFile
  11. VT Software
  12. TaxCalc MTD Quarterly Filer
  13. How to choose
  14. Frequently asked questions
  15. Suggest a vendor

Compare at a glance

Select a vendor for details and sources. Scroll the table horizontally on smaller screens.

MTD Compatible Software: vendor fit and recorded pricing
VendorConsider forPricing notesStandout
XerosmbUK small businesses wanting VAT returns, MTD for Income Tax and payroll in one ledgerIgnite £18, Grow £39, Comprehensive £55, Ultimate £70 per month excl. VAT; 90% off the first 6 months for new UK customers Checked Oct 2026Every plan lists VAT submission, MTD for Income Tax and CIS calculations
Sage AccountingsmbSmall businesses wanting accounting and payroll together, plus a free sole trader appStart £20, Standard £43, Plus £59 per month excl. VAT after 90% off for 6 months; Sage Sole Trader is free Checked Oct 2026Payroll and the Sage Copilot assistant included in all three accounting plans
FreeAgentsmbSole traders, landlords, partnerships and limited companies wanting end-to-end MTD filing£10 landlords, £19 sole traders, £27 partnerships, £33 limited companies per month excl. VAT; free with eligible NatWest, RBS, Ulster or Mettle accounts Checked Oct 2026Submits MTD quarterly updates and the final declaration, with a real-time tax timeline
Zoho BookssmbSole traders and landlords wanting a free plan that covers MTD for Income TaxFree plan £0; Standard £12, Professional £24, Premium £30 per organisation per month, or £10, £20, £25 billed annually, excl. taxes Checked Oct 2026Free plan sends quarterly updates, files the final return and submits MTD VAT returns
PandlebudgetSole traders and small businesses wanting free MTD VAT and Income Tax submissionsPandle Free £0; Pandle Pro £5 per month plus VAT, rolling monthly with no annual plan; 14-day Pro trial Checked Oct 2026MTD Income Tax and VAT submissions included on the free plan
Clear BookssmbSole traders and landlords wanting free MTD Income Tax plans, and small companiesFree sole trader and property plans; Sole Trader £5, Sole Trader Plus £15, Small £16, Medium £34, Large £44 per month plus VAT Checked Oct 2026Separate free MTD plans for sole traders, UK landlords and one overseas property
IRIS KashFlowsmbSole traders, contractors and small companies needing VAT returns with payroll includedStarter £13.50, Business £27.50 per month with 90% off 6 months; annual Starter £97, Business £178 plus VAT for new customers Checked Oct 2026Both plans include VAT submission and payroll for up to 5 employees
QuickFilebudgetMicro businesses wanting free MTD VAT software and spreadsheet bridgingFree up to 1,000 ledger entries; £60 plus VAT per year above that; bank feeds £15 plus VAT per year Checked Oct 2026Free tier priced by ledger entries, with MTD VAT bridging and MTD ITSA as power user features
VT SoftwarespecialistUsers of desktop cash books or spreadsheets submitting VAT and Income Tax updatesVT Cash Book free without MTD; VT Transaction+ £85 to £90 plus VAT per user per year; VT Accounts Suite £175 plus VAT per year Checked Oct 2026Unlimited VAT returns and Income Tax quarterly updates for any number of businesses
TaxCalc MTD Quarterly FilerspecialistSole traders and landlords who keep records in spreadsheetsFrom £24 per year for MTD Quarterly Filer for Business; practice editions priced separately Checked Oct 2026HMRC-recognised spreadsheet bridging for MTD for Income Tax with an on-screen cell selector

These comparisons draw on public product information, not hands-on testing of every tool. Source records identify available references and checks; missing evidence is marked. Buyer fit is an editorial assessment, not a measured performance score. How to use this research.

MTD compatible software is the software HMRC requires for Making Tax Digital. Every VAT-registered business must keep digital VAT records and file returns through it, and from 6 April 2026 sole traders and landlords with qualifying income above £50,000 must also use it for Income Tax quarterly updates and the annual return. Buyers also search for the category as MTD software, HMRC-recognised software or Making Tax Digital software.

The ten products compared here all appear on HMRC’s MTD for VAT software finder. They range from full accounting packages to free bookkeeping plans and spreadsheet bridging tools. Pricing notes were checked in October 2026, and every entry has a dated source check, so the order follows content sequence and is not a ranking.

Related pages cover accounting software, affordable accounting software, tax software and payroll software for accounting firms.

Vendor details and trade-offs

Xero

smbxero.com ↗
Consider forUK sole traders, landlords and small companies that want one cloud ledger for invoicing, bank reconciliation, VAT returns and MTD for Income Tax, with payroll available on every plan
Pricing notesXero UK lists Ignite at £18, Grow at £39, Comprehensive at £55 and Ultimate at £70 per month, excluding VAT. New UK customers buying their first organisation were offered 90% off for the first six months, or a free month instead. Ignite limits users to 20 invoices and 10 bills and charges payroll at £1.50 per person; Grow includes payroll for 1 person, Comprehensive 5 and Ultimate 10. Company accounts and tax is an optional £120 a year, excluding VAT (checked Oct 2026)
Feature to evaluateAll four paid plans list 'MTD for Income Tax ready', VAT return submission to HMRC and automated CIS subcontractor calculations

Xero is a cloud accounting platform that HMRC lists as recognised software for MTD for VAT. Its UK pricing page states that each plan is "MTD for Income Tax ready" and includes submitting VAT returns to HMRC, so a VAT-registered sole trader can meet both regimes in one ledger.

Four plans are sold in the UK. Ignite covers essentials with limits of 20 invoices and 10 bills. Grow removes those limits and adds a 60-day cash flow forecast and payroll for one person. Comprehensive adds multiple currencies, a 90-day forecast and payroll for five people. Ultimate adds project time tracking, KPI analysis, industry benchmarking and payroll for ten people. Every plan includes smart document capture, real-time reports and CIS calculations. Hubdoc is included while it is connected to the subscription.

Xero states that it has more than 5 million customers and works with 250,000 accountants and bookkeepers. An optional company accounts and tax add-on costs £120 a year.

Potential strengths

  • No per-user licence fees on any plan
  • Optional company accounts and tax add-on keeps year-end filing in the same product

Trade-offs

  • Ignite caps invoices at 20 and bills at 10
  • Regular prices are high relative to the free MTD options on this page
Sources and status

Sage Accounting

smbsage.com ↗
Consider forUK small businesses that want payroll included with accounting and VAT filing, and sole traders who want a free app for Self Assessment and MTD for Income Tax
Pricing notesSage lists Start at £20, Standard at £43 and Plus at £59 per month, excluding VAT, after an introductory 90% discount for the first six months. Start includes 1 user, Standard 3 and Plus unlimited users. Payroll covers 1 employee on Start and Standard and 5 on Plus, then £1.85 per employee per month. Receipt capture is not included on Start; Standard includes 30 captures and Plus 100, then £0.20 each. Sage Sole Trader is offered free (checked Oct 2026)
Feature to evaluateSage Copilot reminds users of VAT deadlines, flags errors HMRC would care about and assists with filing the VAT return

Sage Accounting is Sage's cloud accounting product for small businesses. HMRC's VAT finder lists it as Sage Business Cloud Accounting: Start/Standard/Plus, separate from the Sage 50, Sage 200 and Sage Intacct entries.

All three plans now include Sage Payroll and Sage Copilot, an assistant that drafts payment reminders, tracks VAT tasks and checks data for common mistakes before a VAT return is filed. Start is aimed at VAT-registered sole traders and new businesses, Standard at businesses with suppliers, CIS or accrual accounting, and Plus at businesses managing inventory or multiple currencies.

For sole traders who are not VAT registered, Sage offers Sage Sole Trader free. Sage describes it as tax and accounting software for Self Assessment and MTD for Income Tax, with bank statement import, automatic categorisation, invoicing and in-product support. Sage states that more than 100,000 UK sole traders use it. The page reviewed did not describe VAT filing in Sage Sole Trader.

Potential strengths

  • Payroll included in every accounting plan
  • Free Sage Sole Trader app covers MTD for Income Tax and Self Assessment

Trade-offs

  • Start plan has no receipt capture
  • Additional employees and captures carry per-unit charges
Sources and status

FreeAgent

smbfreeagent.com ↗
Consider forUK sole traders, landlords, partnerships and small limited companies that want MTD for Income Tax, MTD VAT and Self Assessment filing in one product priced by business type
Pricing notesFreeAgent prices by business type, excluding 20% VAT: £10 a month for landlords, £19 for sole traders, £27 for partnerships or LLPs and £33 for limited companies, with 50% off the first six months on monthly billing. Limited companies can pay £330 a year. It is free for customers with a NatWest, Royal Bank of Scotland or Ulster Bank business current account, or a Mettle account with at least one transaction a month. Unlimited Smart Capture is £5 a month (checked Oct 2026)
Feature to evaluatePricing by business type, from £10 a month for landlords, and free access for customers of four named banks

FreeAgent is a UK cloud accounting product built for freelancers, sole traders, landlords, partnerships and small limited companies. HMRC lists it as recognised MTD for VAT software, and its pricing page describes an end-to-end MTD for Income Tax service that submits quarterly updates and files the final declaration directly to HMRC.

Pricing follows the legal form of the business rather than feature tiers. Each plan includes invoicing and estimates, expense tracking, project tracking, a dashboard, a mobile app and Radar trend insights. A Tax Timeline shows upcoming tax liabilities and deadlines in real time, and the product generates MTD-compatible VAT returns and Self Assessment returns. Limited companies also get Final Accounts and Corporation Tax filing.

The free route through NatWest, Royal Bank of Scotland, Ulster Bank and Mettle accounts makes FreeAgent a no-cost MTD option for many sole traders. Optional add-ons include unlimited Smart Capture and an Amazon UK Marketplace connection at £6 a month.

Potential strengths

  • Covers quarterly updates, the final declaration, VAT returns and Self Assessment
  • 30-day free trial and cancel at any time

Trade-offs

  • Unlimited receipt capture is a paid add-on beyond 10 files a month
  • Free access depends on holding an account with a named bank
Sources and status

Zoho Books

smbzoho.com ↗
Consider forUK sole traders, landlords and micro businesses that want a free plan covering MTD for Income Tax, MTD VAT and the SA100 return, with paid tiers for larger teams
Pricing notesZoho Books UK offers a Free plan at £0 for 1 user plus 1 accountant. Standard costs £12 per organisation per month, or £10 billed annually, for 3 users. Professional costs £24, or £20 annually, for 5 users. Premium costs £30, or £25 annually, for 10 users. Elite costs £99, or £85 annually. Prices exclude local taxes. CT600 and final accounts filing is an add-on on the Free plan (checked Oct 2026)
Feature to evaluateThe free plan includes SA100 Self Assessment filing with pre-filled self-employment and property pages

Zoho Books is the accounting application in Zoho's business software suite, with a UK edition that HMRC lists as recognised MTD for VAT software. The UK pricing page states that its free plan is "MTD for Income Tax ready": sole traders and landlords can send quarterly updates, report adjustments and other income sources, and submit the final tax return.

The same free plan files the SA100 Self Assessment return with the employment, short self-employment and UK property pages, pre-filled for sole traders and landlords. It also tracks and files MTD VAT returns, tracks CIS contractors and includes invoicing, quotes, receipt autoscans, mileage tracking and more than 50 reports.

Paid plans add users and features. Standard adds multiple bank feeds, CT600 and final accounts filing, custom reports and API access. Professional adds bills, CIS return submission, purchase orders, multi-currency and inventory. Premium adds fixed assets, budgets and cash flow forecasting. Elite adds warehouse and batch tracking.

Potential strengths

  • Free plan covers both MTD regimes and the annual tax return
  • Paid tiers add CIS returns, inventory and multi-currency

Trade-offs

  • Free plan is limited to one user plus an accountant
  • Bank feeds for multiple accounts start on the paid Standard plan
Sources and status

Pandle

budgetpandle.com ↗
Consider forSole traders, freelancers and small businesses that want MTD for Income Tax and VAT submissions at no cost, with an inexpensive upgrade for bank feeds
Pricing notesPandle Free costs nothing and Pandle states it will remain free. Pandle Pro costs £5 a month plus VAT on a rolling monthly basis with no contract; no annual subscription is offered. A 14-day Pro trial needs no card details, and an account returns to the free plan if Pro is cancelled (checked Oct 2026)
Feature to evaluateBoth plans include MTD IT submissions, VAT return submissions and EC Sales lists; Pro adds bank feeds

Pandle is UK online bookkeeping software aimed at sole traders, freelancers, small businesses and their accountants. HMRC lists it as recognised MTD for VAT software, and its pricing grid shows MTD IT submissions and VAT return submissions on both the free and paid plans.

Pandle Free includes quotes and invoices, multiple currencies, Stripe feeds, bank rules, business reports, tax estimates and reminders, payment reminders, recurring transactions, transaction locking, EU VAT and EC Sales lists, customer statements and bank imports. Users can import data and export it at any time.

Pandle Pro adds bank feeds, receipt uploads, projects, cash flow forecasting, user permissions, unlimited users, a mileage tracker, PayPal feeds, stock control, multi-company management and live chat support, which Pandle says is provided by bookkeepers. At £5 a month it is among the lowest paid prices on this page. Accountants can manage clients through a separate partner programme.

Potential strengths

  • MTD filing for both regimes on the free plan
  • No contract and no card needed for the Pro trial

Trade-offs

  • Bank feeds, receipt uploads and live chat support require Pro
  • No annual discount
Sources and status

Clear Books

smbclearbooks.co.uk ↗
Consider forUK sole traders, landlords with UK or overseas property and small limited companies that want a free MTD Income Tax plan with paid tiers for VAT and CIS
Pricing notesClear Books offers free Sole Trader, Property and Foreign Property plans with MTD Income Tax quarterly updates. Sole Trader costs £5 a month, Sole Trader Plus £15 (adds MTD VAT), Property £5 and Foreign Property £5. For companies, Small costs £16, Medium £34 (adds MTD VAT and CIS) and Large £44 a month, or 10% less billed yearly and 20% less billed every two years. All prices plus VAT; 50% off the first 3 months for new subscriptions (checked Oct 2026)
Feature to evaluateForeign Property plans handle MTD quarterly updates for overseas rental income, free for a single property

Clear Books is a UK cloud accounting provider that HMRC lists as recognised MTD for VAT software. Its pricing page describes its free sole trader and landlord plans as HMRC-recognised for MTD Income Tax quarterly updates.

Plans are grouped by user type. Sole Trader Free records income and expenses, sends quarterly updates and works for CIS subcontractors. Paid sole trader plans add receipt scanning, bank feeds, invoicing, balance sheet reporting and unlimited users, and Sole Trader Plus adds MTD VAT, flat-rate VAT and domestic reverse charge. Property and Foreign Property plans follow the same pattern for one property free and multiple properties paid.

For limited companies, partnerships and charities, Small covers bank feed matching, invoicing, reporting, integrations, journals and a dividends tool. Medium adds MTD VAT submissions, purchase orders and CIS returns. Large adds project accounting, multi-currency, expense claims and fixed assets. Payroll with RTI submissions is an optional bolt-on.

Potential strengths

  • Free MTD Income Tax plans with no transaction limits
  • Two-year billing cuts company plan prices by 20%

Trade-offs

  • MTD VAT requires Sole Trader Plus or the Medium plan
  • Free plans are self-service without support
Sources and status

IRIS KashFlow

smbkashflow.com ↗
Consider forUK sole traders, contractors and small limited companies that need MTD VAT submission and small-team payroll in one subscription
Pricing notesIRIS KashFlow lists Starter at £13.50 and Business at £27.50 a month, with 90% off for six months for new customers. Annual plans were offered at £97 a year plus VAT for Starter (RRP £162) and £178 a year plus VAT for Business (RRP £291.50) for new customers. Starter is single-user and limited to 10 invoices and 25 reconciled bank transactions; Business is multi-user and unlimited. A 14-day free trial is offered (checked Oct 2026)
Feature to evaluatePayroll for up to 5 employees is included on both plans rather than sold as an add-on

IRIS KashFlow is a UK online accounting product owned by IRIS Software Group, which sells several other HMRC-recognised products including IRIS Elements and IRIS VAT Filer. HMRC lists KashFlow as recognised MTD for VAT software.

Two plans are offered. Starter is for sole traders, contractors and small businesses, with unlimited quotes, 10 invoices, 25 reconciled bank transactions and a single user. Business is for growing businesses and limited companies, with unlimited invoices and reconciliation and multiple users. Both include VAT management and online submission, bank feeds, KashFlow Payments, a mobile app, more than 50 reports, a customisable dashboard, purchase and expense management, mileage tracking, receipt capture, multi-currency and payroll for up to five employees.

The pricing and product pages reviewed describe MTD for VAT submission but do not state MTD for Income Tax support. Sole traders and landlords facing quarterly Income Tax updates should confirm that coverage with IRIS before choosing it.

Potential strengths

  • VAT submission and payroll included on both plans
  • Discounted annual plans for new customers

Trade-offs

  • Starter limits invoices to 10 and bank reconciliation to 25 transactions
  • Pages checked describe MTD for VAT but not MTD for Income Tax
Sources and status

QuickFile

budgetquickfile.co.uk ↗
Consider forUK micro businesses and sole traders with low transaction volumes that want free MTD VAT software, plus bookkeepers who need MTD VAT bridging
Pricing notesQuickFile is free for accounts with up to 1,000 ledger entries (sizes XS, S and M) and costs £60 plus VAT per year for accounts with 1,001 or more entries (L and XL). Accounts above 40,000 nominal entries in a rolling 12 months need an enterprise quote. Automated bank feeds cost £15 plus VAT per year and extra storage £9.99 per GB per year. Smaller accounts can buy a Power User subscription for MTD VAT bridging and MTD ITSA; that price was not shown (checked Oct 2026)
Feature to evaluateHMRC lists both QuickFile and QuickFile Bridging Software as separate recognised VAT products

QuickFile is a UK online accounting system that prices by account size, measured in ledger entries, rather than by feature tier. HMRC's VAT finder lists two QuickFile products: QuickFile itself for record keeping and QuickFile Bridging Software for submitting from other records.

Every account size includes invoicing, a branded client area, purchase and receipt management, banking automation, MTD-compatible VAT returns, estimates, multi-currency and reporting, with free unlimited users, two-factor authentication, 1 GB of storage, automated backups and API access. QuickFile states more than 400 integrations.

Power User features include segmented profit and loss, custom trading styles, invoice revision history, cryptocurrency tracking, MTD VAT bridging and MTD ITSA readiness. Large and extra-large accounts get these with the £60 annual fee; smaller free accounts must buy a Power User subscription. Accountants and bookkeepers can host clients on QuickFile Affinity, a separately priced multi-client portal.

Potential strengths

  • Free unlimited users, API access and multi-currency on every size
  • Annual price above the free tier is £60 plus VAT

Trade-offs

  • MTD ITSA and VAT bridging are power user features on smaller accounts
  • Power User subscription price was not published on the pricing page
Sources and status

VT Software

specialistvtsoftware.co.uk ↗
Consider forBookkeepers, accountants and businesses that prefer downloadable software and want to submit VAT returns and Income Tax quarterly updates from a cash book or spreadsheet
Pricing notesVT Cash Book is free without MTD features. The VT Transaction+ package, which adds MTD submission and includes VT Cash Book, VT Report and VT MTD for Excel, is listed on the same prices page at £85 plus VAT per user per year in the package table and at 90 plus VAT per year in the download section, so buyers should confirm the current figure at checkout. VT Accounts Suite, which adds final accounts and agent services account submissions, costs £175 plus VAT per year for a single user. A licence covers one named person (checked Oct 2026)
Feature to evaluateOne licence submits VAT returns and Income Tax quarterly updates from bookkeeping software or a spreadsheet through VT Report

VT Software is a UK developer of downloadable bookkeeping and accounts production software, listed by HMRC as VT Software Limited among recognised MTD for VAT products. Its MTD page states that VAT returns can be submitted from VT Transaction+ or VT Cashbook, or from a spreadsheet using the VT Report bridging tool, for any number of businesses with no limit on submissions.

The pricing page extends that to Income Tax: VT Transaction+ and VT Report submit both VAT returns and Income Tax quarterly updates, and VT Accounts Suite adds submission through an agent services account. Transaction+ also covers customer and supplier ledgers, foreign currency bank accounts, bank statement imports, reconciliation, departmental analysis and standard, cash accounting and reverse charge VAT.

The model suits practices and bookkeepers who prefer software installed on their own machines. Each licence is for one named person, so firms with several staff pay per user.

Potential strengths

  • No limit on businesses or submissions
  • Bridging from Excel included in the Transaction+ package

Trade-offs

  • Free VT Cash Book has no MTD features
  • Downloadable software rather than a cloud product with bank feeds
Sources and status

TaxCalc MTD Quarterly Filer

specialisttaxcalc.com ↗
Consider forSole traders and landlords above the MTD for Income Tax threshold who want to keep their spreadsheets and submit quarterly updates without adopting bookkeeping software
Pricing notesTaxCalc lists MTD Quarterly Filer for Business from £24 per year. TaxCalc for Individuals (Self Assessment) and VAT Filer for Business are offered as optional add-ons. Accountancy practices buy separate practice editions and tax return production bands on TaxCalc's pricing page (checked Oct 2026)
Feature to evaluateRetrieves MTD obligations and HMRC tax estimates after each quarterly submission

TaxCalc, developed by Acorah Software Products, is best known for tax return and accounts production software used by UK accountancy practices. HMRC lists Acorah Software Products Ltd (TaxCalc) among recognised MTD for VAT products, and TaxCalc describes MTD Quarterly Filer as an HMRC-recognised spreadsheet bridging solution for MTD for Income Tax.

The business edition lets sole traders and landlords keep their spreadsheets. An on-screen cell selector imports figures into each quarterly update. The software retrieves MTD obligations from HMRC to create the standard quarterly periods, accepts add-backs, disallowables and private-use adjustments, and fetches an HMRC tax estimate after each submission. Several sole trade and property businesses can be managed together.

Users who also need the annual return can add TaxCalc for Individuals, and VAT-registered users can add VAT Filer for Business. Accountancy practices use the separate MTD Quarterly Filer practice edition to file for clients.

Potential strengths

  • Lowest published annual price for MTD Income Tax on this page
  • Keeps existing spreadsheet records in use

Trade-offs

  • Bridging only: no invoicing, bank feeds or ledger
  • Self Assessment and VAT filing are separate add-ons
Sources and status

How to choose a vendor

Check which MTD regime applies

MTD for VAT has applied to every VAT-registered business since April 2022, whatever its turnover. MTD for Income Tax began on 6 April 2026 for sole traders and landlords with qualifying income above £50,000, falling to £30,000 from April 2027 and £20,000 from April 2028. Some products here cover both regimes; IRIS KashFlow's pages describe VAT submission only.

Confirm HMRC recognition by product name

HMRC's VAT software finder listed 469 recognised products when checked in October 2026, and a separate finder covers Income Tax. Vendors often sell several editions, and recognition attaches to named products. Sage, for example, appears as Sage Business Cloud Accounting: Start/Standard/Plus, separately from Sage 50 and Sage 200.

Decide between full software and bridging

A business that already keeps reliable spreadsheets can meet MTD with bridging software, which reads the spreadsheet and submits the figures. TaxCalc's quarterly filer starts at £24 a year on that model. A business that also wants invoicing, bank feeds and payroll gets more from an accounting package, at a higher monthly price.

Read the price after the promotion

Xero, Sage and IRIS KashFlow advertised 90% off for six months, FreeAgent 50% off for six months and Clear Books 50% off for three months when checked. Compare the regular monthly figure, the VAT treatment and any per-user, per-payslip or per-capture charges, because those determine the cost from the second half of the first year.

Frequently asked questions

What is MTD compatible software?

MTD compatible software is software that HMRC has recognised for Making Tax Digital. It keeps digital records and sends VAT returns, or Income Tax quarterly updates and the final return, to HMRC through HMRC's interface. It can be full record-keeping software, such as Xero or FreeAgent, or bridging software that submits figures from spreadsheets, such as TaxCalc MTD Quarterly Filer or VT Report.

Who has to use MTD compatible software?

Every VAT-registered business must use it for VAT returns, regardless of turnover, and the old VAT online account stopped accepting returns from 1 November 2022. For Income Tax, sole traders and landlords with qualifying income above £50,000 must use it from 6 April 2026. The threshold falls to £30,000 from April 2027 and £20,000 from April 2028.

How can a business check that software is HMRC recognised?

HMRC publishes two finders: one for MTD for VAT and one for MTD for Income Tax. The VAT finder listed 469 products when checked on 25 October 2026 and includes every vendor on this page. HMRC states that it cannot recommend one product over another. Recognition is by named product, so check the specific edition, such as Sage Business Cloud Accounting rather than Sage 50.

Is there free MTD compatible software?

Yes. Zoho Books, Pandle, Clear Books and Sage Sole Trader offer free plans that their vendors say cover MTD for Income Tax, and Zoho Books and Pandle include MTD VAT filing on their free plans. QuickFile is free up to 1,000 ledger entries. FreeAgent is free for eligible NatWest, Royal Bank of Scotland, Ulster Bank and Mettle customers.

What is bridging software?

Bridging software connects records kept elsewhere, usually spreadsheets, to HMRC. It reads the figures and submits them, so the business does not need to move its bookkeeping into a new system. On this page, TaxCalc MTD Quarterly Filer bridges for Income Tax from £24 a year, VT Report bridges for VAT and Income Tax, and QuickFile sells MTD VAT bridging.

What does MTD for Income Tax require each year?

HMRC requires digital records of self-employment and property income and expenses, a quarterly update to HMRC for each income source, and a tax return by 31 January after the tax year that includes any other income such as pensions, savings, dividends or a partnership share. Quarterly updates are summaries, not tax returns. Only one product can be used for each separate submission.

Can one product handle both MTD for VAT and MTD for Income Tax?

Several can. Xero lists VAT submission and MTD for Income Tax on every plan. FreeAgent, Zoho Books, Pandle and VT Software also state both. Clear Books covers Income Tax on its sole trader plans and adds MTD VAT on Sole Trader Plus. The IRIS KashFlow pages reviewed described VAT only, and TaxCalc sells VAT filing as a separate add-on.

How were these MTD compatible software products selected and checked?

Each product appears on HMRC's MTD for VAT software finder, checked on 25 October 2026. Each vendor's pricing page was fetched on the same date, and prices are quoted only where the vendor publishes them. QuickBooks was considered but left out because its UK prices load at runtime and could not be captured. No product was tested hands-on, no entry is vendor-confirmed, and the order is content sequence, not a ranking.

Suggest a vendor or correction

Send factual corrections to editorial@statwharf.com. Corrections are free. For inclusion or placement enquiries, contact partnerships.

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First published October 2026. Page update dates reflect editorial changes, not a fresh check of every vendor.