If you’re a sole trader or landlord still doing your books with a spreadsheet and a prayer, it’s time for a reality check. Making Tax Digital (MTD) for Income Tax is rolling out. It’s not a distant thunderstorm on the horizon; it’s the forecast. HMRC wants your data in tidy digital packets, not scribbled on the back of a receipt from 2017.
So, what now? You need software for Making Tax Digital, and no, Excel won’t cut it anymore. Let’s look at what’s available without making your brain melt.
Why this matters (and why now)
The short version: MTD for Income Tax means sending HMRC quarterly updates using approved software. This applies to you if:
- You earn over £50,000 from self-employment or property (from April 2026).
- You earn between £30,000 and £50,000, your turn comes in 2027.
- You earn between £20,000 and £30,000 (from April 2028).
- You earn below £20,000 (potentially! HMRC is “reviewing” this group for now).
And yes, there’s a good chance the dates will shift again, but sticking your head in the sand won’t help either way.
We’ve written before about what Making Tax Digital actually is (read it here), but now we’re talking tools. Software. The practical stuff.
The basic rule: pick something that speaks to HMRC
HMRC isn’t fussy about brand names, but it is fussy about whether the software connects to its systems. So, before you even think about what features you want, make sure it’s on the HMRC-approved list. That narrows it down. A lot.
Let’s break down your options for software for Making Tax Digital. But also, let’s be clear. I’ve got my favourite for a reason!
If you like things simple…
If your finances are pretty straightforward and you’re allergic to software that requires a degree to operate, these are good places to start.
- Xero Simple is a low-cost option. Yes, I’m talking about the Xero we all know, as it comes in several variants. This version is focused on landlords and low-transaction businesses and is £7/month.
- 1-2-3 Sheets is clean, clear and made specifically for MTD for Income Tax. It’s not fancy, but that’s the point. You can enter your income and expenses, and it submits them to HMRC without a fuss. Starts at around £20 a year for a single taxpayer, no hidden surprises.
- APARI is another no-frills option that focuses solely on MTD for Income Tax. It’s designed for landlords and sole traders, and it’s cheap. You won’t get bells and whistles, but it’ll do the job without drama.
These kinds of tools are ideal if you’re not VAT-registered, don’t need to send invoices, and just want something that does the MTD bit without trying to run your life.
| Want an accountant’s advice?My feeling is, if you are going to spend money on an app, then make it a good one – just head for Xero. |
If you want an all-in-one system…
Got more going on? You might want software that not only handles MTD, but also helps you run your business day-to-day.
- Xero is slick and modern, and reasonably intuitive for beginners; it’s powerful once you get the hang of it. Yes, it does MTD for Income Tax, along with all the usual features you’d expect and a few useful extras. It’s the market leader for a reason.
- QuickBooks is another well-known software. It can do everything from MTD submissions to payroll, invoicing, bank feeds, and more. It’s not the cheapest, but it’s useful.
- FreeAgent is a great shout – especially if you bank with NatWest or Mettle, because you should get it for free with a business account. It handles MTD submissions and gives you a solid set of tools to track expenses, projects, and invoicing. However, if you have to pay for it, check out Xero instead!
These are all proper accounting packages, which give you some great advantages. After all, if you are loading data into an accounting package, you want to get more out than just the MTD reports.
A proper accounting package is also helpful in ways you don’t realise until you try it! If you’re planning to grow or want better visibility over your numbers, or to connect another app as well, they’re really worth a look.
Of them all, Xero is the clear winner. It’s both my favourite and the UK’s best seller, so it’s always worth checking it out before making your final decision.
Don’t leave it until the last minute!
It’s tempting to stick with what you know until the deadline is staring you down. But don’t. Setting up software for Making Tax Digital takes time. You’ll need to learn the system, maybe connect your bank, possibly invite your accountant (hi!), and test a few submissions.
None of that’s impossible, but it’s easier when you’re not under pressure. So pick your software for Making Tax Digital, get it set up, and do a dry run before HMRC starts expecting the real thing.
A friendly nudge…
Look, no one starts a business because they love tax software, but picking the right one now will save you hours (and grey hairs) later. Whether you want something minimal or all-singing, there’s a tool out there that’ll get you MTD-ready without wrecking your week.
| Still not sure what to choose? That’s what we’re here for. We can help you figure out what fits your business, and even get you set up. Just drop us a line at [email protected]. |
