If you run your own business or rent out property, you’ve probably come across the term Making Tax Digital, or MTD for short. It’s the government’s big push to move tax reporting fully online — and from April 2026, many self-employed individuals and landlords will have to use digital accounting software to stay compliant.
Now, let’s be honest: software and tax aren’t the most exciting topics in the world. But choosing the right MTD software is one of those small decisions that can save you a lot of time and hassle later on. The right system will make life easier and keep HMRC happy. The wrong one could leave you frustrated — or accidentally non-compliant.
In this guide, we’ll walk you through how to choose the right MTD for Income Tax software, what features to look for, and how an accountant can help make the transition smooth and stress-free.
What is Making Tax Digital?
In short, Making Tax Digital for Income Tax replaces the old once-a-year Self Assessment with a more regular, digital process. From 6 April 2026, anyone earning more than £50,000 from self-employment or property will have to record and submit their income digitally every quarter. Those earning over £30,000 will join the scheme from 2027.
Instead of submitting one large Self Assessment every January, you’ll send four quarterly updates throughout the year and then a final end-of-year submission to confirm the totals.
Why your choice of software really matters
Your MTD software will become the heart of how you manage tax. It’s where you’ll record income and expenses, send updates to HMRC, and keep everything organised for your accountant. The best software will:
- Save you hours of admin time.
- Cut down on mistakes.
- Keep you compliant automatically.
- Give you a clear picture of your business finances.
But not every product is built the same. Some are designed for simplicity, others for complex businesses. Some work brilliantly for landlords, while others are better suited for freelancers or tradespeople.
That’s why it’s worth taking time now to find one that fits how you actually work — not just what HMRC says you must do.
What your software must be able to do
According to HMRC, your software must be able to:
- Create and store digital records of your income and expenses for self-employment or property income.
- Send quarterly updates directly to HMRC.
- Submit your final tax return after the end of the tax year.
- Report other income sources like pensions, dividends or savings.
Basically, it replaces the old spreadsheet-and-calculator system with something cleaner and more connected. You won’t have to handle any of the technical submissions yourself — the software does that for you.
Types of MTD software
There are two ways you can approach MTD compliance: using full digital record-keeping software or bridging software.
1. Software that creates digital records
This is a complete accounting solution. It lets you record your income and expenses, link your bank account, upload receipts, and send submissions — all in one place.
Many of these systems, like Xero, QuickBooks, FreeAgent, or Pandle, automatically import transactions from your bank and generate reports ready for submission.
If you’d like an all-in-one platform that handles everything from bookkeeping to tax returns, this is the simplest option.
2. Bridging software
If you already use spreadsheets or your own accounting setup, bridging software acts as a connector. It links your existing records to HMRC’s system, allowing you to stay compliant without changing how you currently record your income.
It’s a good halfway solution if you’re not ready to switch fully to a new platform. Many landlords and small business owners prefer this approach because it feels familiar but still ticks the compliance box.
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Can you use more than one product?
Yes, you can. Some businesses use one main software for bookkeeping and another for submitting their MTD updates. That’s perfectly fine, as long as the systems can talk to each other.
For instance, you might record your income in a spreadsheet, use bridging software to send updates, and let your accountant handle the final submission from their own software. The key is that everything links together and meets HMRC’s digital requirements.
Features to look out for when choosing software
Not all software will suit every business. Before subscribing to anything, take a few minutes to check whether it includes what you need. Ideally, your software should:
- Handle all your income sources (self-employment, UK property, or foreign property)
- Allow quarterly submissions and an end-of-year finalisation.
- Support multiple agents if you and your accountant both need access.
- Match your accounting periods — some use the standard tax year, others allow calendar quarters.
- Offer clear pricing, with no hidden extras.
- Have room to grow if your situation changes — for example, if you start renting out another property or open a new business.
It’s worth remembering that some free software options exist, but they may have limits on how many records or submissions you can make.
How to find HMRC-recognised software
HMRC has an official tool that helps you find software approved for MTD for Income Tax. It’s called the Software Finder Tool, and it’s available on the GOV.UK website.
You simply answer a few questions about your business — for example, whether you’re a landlord or self-employed — and it gives you a list of compatible software options.
Some of the recognised or developing products include:
- Pandle
- Landlord Vision
- Taxd
- Gbooks
- Tide Accounting
- AbraTax
- Farmplan Business Cloud
- Smart Property Manager
- Monzo
Remember: HMRC doesn’t recommend one product over another. Each provider offers different features, so it’s about finding what fits your needs best.
How can we help you choose the right one?
Choosing software is not just about ticking a compliance box — it’s about making your accounting life simpler. That’s where we come in.
We work closely with clients to:
- Review your current bookkeeping setup.
- Recommend software that fits your business type and comfort level.
- Help you get everything connected and MTD-ready.
- Manage your quarterly updates and year-end submissions.
- Provide training so you can confidently handle things day to day.
Think of us as your guide through the digital transition. Whether you’re a sole trader or a landlord with several properties, we’ll help you find a practical, affordable solution that works long term. Get in touch and we’ll help you get set up before the April 2026 deadline — stress-free.
