Guides › Choosing MTD for Income Tax Software: Sole Traders

Choosing MTD for Income Tax Software: Sole Traders

Short answer: You need commercial software that works with MTD for Income Tax. HMRC's finder tool lists software that has been through HMRC's recognition process. HMRC does not recommend any product or provider.

What the software must do (HMRC)

• create, store and correct digital records of self-employment and property income and expenses;
• send quarterly updates (summaries, not returns);
• add other income sources and submit your tax return by 31 January after the tax year.

You should choose software before you sign up.

Two types

1. Software that creates digital records: links to a business bank account to import transactions, scans receipts and invoices, or lets you enter by hand. Usually does updates and returns.
2. Software that connects to your records ("bridging software"): connects spreadsheets or other tools and makes the submissions. Some bridging products send updates and returns.

You can use more than one product, but records must be digitally linked between your record-keeping software and the software that submits to HMRC.

Criteria HMRC lists

• supports all your income sources for MTD, including any you may add (for example a landlord starting a business);
• lets you send quarterly updates and submit your return;
• lets you report your other income sources on the return (pensions, partnership share, savings, dividends);
• works with your accounting period (standard tax year, calendar periods, or neither);
• if VAT-registered, works with your VAT needs (check your VAT software's compatibility);
• allows multiple agents if you have more than one;
• HMRC Assist built in, if you want feedback on errors for your return;
• price: free products exist for simple affairs but may limit transactions.

How to check a product

1. Use HMRC's software finder: https://www.gov.uk/guidance/find-software-thats-compatible-with-making-tax-digital-for-income-tax
2. Search for the exact product and plan; ask the supplier to confirm it meets your needs.
3. Confirm it is set up for the right tax year and update periods.

Authorising software

After signing up you must authorise your chosen software; see GOV.UK's guide to sign up and to using MTD.

Free options?

GOV.UK says free products are available for those with simple tax affairs, but with possible limits such as number of transactions. Check the details of any product.

Names we can point to

Xero and Sage are two well-known providers, named only as examples. We have not verified here whether a given Xero or Sage plan is currently listed for MTD for Income Tax in HMRC's finder or whether it fits your circumstances. Check the finder first.

FAQ

Is a spreadsheet enough? Not alone; you need compatible bridging software to submit, with digital links from your records.

Can my accountant use different software? Yes; you or your agent can choose the product (HMRC page).

Will any accounting software work? No; check the finder.

Does it cost anything? It depends on the product.

What we could not verify

• Which specific products are currently in HMRC's finder or what they cost.
• Product features and prices.

Sources (GOV.UK / HMRC)

• GOV.UK, Choose the right software for Making Tax Digital for Income Tax — https://www.gov.uk/guidance/find-software-thats-compatible-with-making-tax-digital-for-income-tax (last updated 13 July 2026; read 17 October 2026)
• GOV.UK, Use Making Tax Digital for Income Tax: Create digital records — https://www.gov.uk/guidance/use-making-tax-digital-for-income-tax/create-digital-records (read 17 October 2026)
• GOV.UK, Sign up for Making Tax Digital for Income Tax — https://www.gov.uk/guidance/sign-up-your-business-for-making-tax-digital-for-income-tax (last updated 13 October 2026; read 17 October 2026)

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Not tax advice. Examples use made-up figures. Nothing here has been reviewed by a tax professional. See the disclosure.