MTD Compatible Software: What It Is and How to Choose

Introduction

From April 2026, many self-employed people and landlords will have to keep digital records and submit updates to HMRC using Making Tax Digital (MTD) compatible software. If you are above the income thresholds, using the right software is not optional.

This guide explains what "MTD compatible" means, the features you should expect, and how to pick a tool that keeps you compliant.

---

What does "MTD compatible software" mean?

MTD compatible software can:

• keep digital records of income and expenses
• send required updates to HMRC through approved APIs
• support the MTD for Income Tax (MTD ITSA) process

HMRC maintains a public list of compatible software. If a product is not on the list, it should not be used for MTD submissions.

---

Who needs MTD compatible software and when?

The current plan is:

• Income over GBP 50,000 from self-employment and property: MTD ITSA from April 2026
• Income over GBP 30,000: MTD ITSA from April 2027
• Income below GBP 30,000: not mandated yet (this can change)

VAT-registered businesses are already required to use MTD compatible software for VAT.

---

Required features checklist

Look for software that can:

1. Record income and expenses digitally
2. Submit quarterly updates to HMRC
3. Send an End of Period Statement (EOPS) and a final declaration
4. Keep an audit trail of changes and submissions
5. Support your income types (self-employment, property, or both)

---

Spreadsheets and bridging software

HMRC allows spreadsheets only if they are connected to HMRC using bridging software. In practice, this means:

• you keep records in a spreadsheet
• a bridging tool submits updates to HMRC

This can work, but it adds steps and risks missing deadlines.

---

How to choose the right tool

Ask these questions:

• Is the software on HMRC's compatible list for MTD ITSA?
• Does it support my type of income?
• Can I import bank transactions or upload summaries?
• How simple is the quarterly update process?
• What is the total cost (including add-ons)?
• What support is available if I get stuck?

---

How QTax helps

QTax is built for Self Assessment and designed for MTD ITSA compliance. It guides you through:

• recording income and expenses
• calculating your estimated tax
• submitting updates on time
• staying ready for the 2026 rollout

---

FAQs

Can I use free software for MTD?

Some tools are free for very simple cases, but most MTD ITSA users will need a paid solution. Always confirm the tool is listed by HMRC.

Do I need accounting software if I only have one client?

If you are above the threshold, you still need MTD compatible software. The number of clients does not change the requirement.

Can I switch software later?

Yes. You can move between providers, but plan the switch between periods so you do not miss a submission.

---

Conclusion

MTD compatible software is not just a nice-to-have. It is the mechanism HMRC uses to receive your updates and final declaration. Choose a tool that matches your income type, reduces admin, and keeps you compliant through 2026 and beyond.