Making Tax Digital:

MTD Compatible Software 2026

Choosing Approved Software for Making Tax Digital

From April 2026, if you are required to join Making Tax Digital (MTD) for Income Tax, you must use MTD-compatible software to keep records and submit updates to ensure tax compliance.

The traditional Self Assessment submission process will not apply to those mandated into MTD. Therefore, using compliant software becomes a necessity.

What Is MTD-Compatible Software?

MTD-compatible software is digital accounting software that:

Keeps required digital income and expense records

Stores bookkeeping data securely

Submits quarterly updates digitally

Submits the Final Declaration at year end

You cannot manually enter figures into an online form each quarter. Submissions must be sent through approved compatible software to maintain tax compliance.

Who Needs MTD Software?

If your 2024/25 qualifying income exceeds £50,000, you will be required to use MTD-compatible software from April 2026. This applies to:

Sole traders

Landlords

Individuals with both business and rental income

The requirement is based on income threshold, not business size or simplicity.

Check the Official Approved Software List

Before choosing any provider, you should review the official list of software recognised for Making Tax Digital on the HMRC CHOOSING SOFTWARE page. When reviewing providers, ensure they are approved specifically for MTD for Income Tax, not just VAT.

Types of MTD-Compatible Software

There are different types of software available:

Full accounting software

Simpler bookkeeping systems

Bridging software (for spreadsheet users)

Spreadsheets alone do not meet submission requirements. If using spreadsheets, digital linking through compatible software is still required to ensure compliance with tax regulations.

Choosing the Right MTD Software

Software providers vary in:

Cost

Features

Ease of use

Suitability for sole traders vs landlords

The cheapest option is not always the most suitable for your tax compliance needs. Your choice should reflect:

How you currently record income

Whether you deal with cash, invoices, or eCommerce

Your level of bookkeeping confidence

Choosing software without understanding how MTD works can create unnecessary confusion regarding tax compliance.

Understand the Process Before You Commit

Many people feel pressured into software decisions because of marketing or bank promotions.