What's the cheapest software I can use for Making Tax Digital for Income Tax? What is the best value software can I use? How do a file a Self Assessment tax return under Making Tax Digital?
This is a freeview 'At a glance' guide to software for Making Tax Digital for income tax.
At a glance
We compare the pricing and capabilities of software that will enable you to file your five tax returns per year under Making Tax Digital for Income Tax.
- From April 2026, sole traders and landlords will move into the next phase of Making Tax Digital for Income Tax. The change will require business owners to submit their accounting data to HMRC using 'functionally compatible' software.
- Businesses and landlords with income over £50,000 must submit in this way from April 2026.
- Those with income over £30,000 are scheduled to join from April 2027.
- This change comes at quite a cost as it means that many business owners will need to start to do their own bookkeeping in real-time, as opposed to handing their accountant or bookkeeper a large bag of receipts at the end of each year.
- Returns have to be filed on a quarterly basis: the data transmitted may be only in a simple three-line format, however, most software will analyse your data into standardised accounting headers for different types of income and expense.
As of 10 April 2024, five companies are listed by HMRC as Compatible for Making Tax Digital for Income tax.
Twenty-one other companies are listed as having software in development.
It is optional for taxpayers to join the MTD pilot scheme: you can still use the software without taking part in the pilot.
| Cost | |
| 123 Sheets | From £19.75 - bridging software. |
| Sage | Packages start at £4+VAT pm per client for Accountants and £12+VAT pm for businesses. |
| QuickBooks Online (Intuit) | Packages start at £7+VAT pm for Accountants and £10+VAT pm for businesses. |
| SE_reports | Bridging only - free. |
| self assessment direct | Businesses only - not agents. Basic record-keeping version is free. |
Useful guides on this topic
Making Tax Digital for Income Tax: Data required by HMRC
Making Tax Digital for Income Tax: the schedule and likely categories of information.
MTD: Income Tax Pilot Tool
Making Tax Digital (MTD) for Income Tax. Are you eligible to take part in the MTD Pilot?
MTD: Toolkit for accountants
What is the current timetable for Making Tax Digital (MTD)? How will it work? Which clients will be excluded? What planning needs to be undertaken?
Making Tax Digital: Survival guide (for the self-employed & landlords)
A guide for the many self-employed taxpayers, company owners and property landlords who are unaware of HM Revenue and Custom's radical plans to transform the tax online filing system.
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