Do I need MTD software? Your options explained

Last updated: 18 October 2026

Yes: if Making Tax Digital for Income Tax applies to you, you need MTD software that HMRC recognises. HMRC does not provide its own, and its current online Self Assessment service will not work for MTD tax returns. The good news is you have more choice than you might think, including free options and a way to keep using spreadsheets.

What MTD software has to do

Whatever you choose, between them your products must be able to:

• Keep digital records of your business and property income and expenses, with a date, amount and category for each one.
• Send quarterly updates to HMRC: category totals, not individual receipts.
• Submit your tax return by 31 January after the tax year ends, including other income such as savings interest or dividends.

Your three options

1. Record-keeping (bookkeeping) software

This is an all-in-one option. You record income and expenses in the software, often by linking your business bank account so transactions flow in automatically. Many include a phone app for photographing receipts. These products usually handle every MTD step on their own.

Good for: anyone who wants the least admin, has lots of transactions, or is starting from scratch.

2. Bridging software plus a spreadsheet

If you already keep tidy records in a spreadsheet, bridging software connects that spreadsheet to HMRC and sends your updates. Your spreadsheet becomes your digital record. If you need to correct something, you fix it in the spreadsheet and then send it through the bridge again.

Good for: people with simple affairs who are comfortable with spreadsheets and want to change as little as possible.

3. Free software

Some providers offer free versions for simple tax affairs. They can be a great fit, but read the small print: some limit the number of transactions, some are time-limited trials that turn into a paid plan, and some are only free if you bank with a particular provider.

How to choose MTD software

Run through this checklist before you commit:

• Does it cover all your income? Self-employment, UK property, foreign property. Some products charge extra for each business.
• Can it file your full tax return? Including other income like dividends, savings interest or a partnership share.
• Does it fit your accounting period? Standard tax year or calendar quarters.
• Are you VAT registered? Ideally use one product for both, rather than keeping two sets of records.
• Does your accountant use it? If someone helps you, pick something they can access.
• Can you export your data? You must keep records for at least five years, so make sure you can get them out if you switch.
• What support is included? Phone, chat or email only. HMRC can help with MTD rules, not with software problems.

Then use HMRC's software finder. It asks a few questions and gives you a list of recognised products you can filter by price and features. Our software overview explains what the tools we cover actually do.

Can I use more than one product?

Yes, as long as they are digitally linked (for example by import, export or a direct connection) and you only use one product for each separate submission. You cannot copy figures across by hand once they are part of your records.

When should I set it up?

Choose your software before you sign up for MTD and ideally a few months before your start date. If you start on 6 April 2027, try your chosen product with real transactions in early 2027 so the first quarterly update (due 7 August 2027) is not your first time using it.

What to do now

1. Check whether MTD applies to you with our date checker or our guide to qualifying income for MTD.
2. Decide which option suits you: bookkeeping software, bridging software, or a free product.
3. Shortlist two or three products using HMRC's software finder.
4. Use a free trial with a month or two of real transactions.
5. Pick one, set it up, and then sign up for MTD.

Frequently asked questions

Is there free MTD software?

Yes. Some recognised products are free for simple tax affairs. Check for transaction limits, time-limited trials and offers tied to a specific bank before you rely on one.

Can I keep using my spreadsheet for MTD?

Yes, if you use bridging software to send your updates and tax return to HMRC. The spreadsheet acts as your digital record.

Does HMRC provide free MTD software?

No. HMRC is not producing its own software for MTD for Income Tax, and its current online Self Assessment service will not be available for MTD returns.

Do I need separate software for my rental property?

Not necessarily. Many products cover both self-employment and property, but some charge for each business, so check before you buy.

Can my accountant use the software for me?

Yes. You can use the software yourself or an agent can use it on your behalf. You are still responsible for meeting the deadlines.

Sources

• GOV.UK: Choose the right software for MTD for Income Tax
• GOV.UK: Create digital records
• LITRG: Choosing Making Tax Digital software

This article is general information, not tax advice. Facts checked on 18 October 2026.