What's the cheapest software I can use for Making Tax Digital for Income Tax? What is the best value software that I can use?
This is a freeview 'At a glance' guide to software for Making Tax Digital (MTD) for Income Tax.
At a glance
- This guide compares the pricing and capabilities of software that will enable you to keep digital records and send quaterly updates to HMRC to comply with Making Tax Digital (MTD) for Income Tax requirements.
- From April 2026, MTD for Income Tax will start to become mandatory for self-employed businesses and landlords, see Making Tax Digital: Index & timeline.
- 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 every quarter, providing HMRC with the relevant Update information.
Types of software
- There are three main types of software:
- Software packages: Allows taxpayers to keep digital records and file returns to HMRC.
- Application Programming Interface (API) spreadsheets: These spreadsheets have an inbuilt function allowing them to file returns via HMRC's (API).
- Bridging software: Allows taxpayers to use spreadsheets to store digital records, which are then digitally linked to the bridging software, before being submitted to HMRC.
As of 14 November 2024, 11 companies are listed by HMRC as compatible with MTD for Income Tax. There are other companies listed as having software in development.
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|
Type | Cost/ Details - check if monthly or annually |
| 123 Sheets |
Bridging software Record keeping: Application Programming Interface (API) spreadsheets |
From £19.75 + VAT per year. |
| Sage | Record keeping: Software packages | Packages start at £7+VAT pm per client for Accountants and £12+VAT pm for businesses. |
| Dext | Record keeping: Software packages | Packages start at £2.50 per client, per month (minimum of 5 clients) |
| QuickBooks Online (Intuit) |
Record keeping: Software packages Bridging software |
Packages start at £7+VAT pm for Accountants and £10+VAT pm for businesses. |
| SE_reports |
Bridging software Record keeping: Application Programming Interface (API) spreadsheets |
Bridging only - free. |
| self assessment direct |
Bridging software Record keeping: Software packages |
Businesses only - not agents. Basic record-keeping version is free. |
| Digita Personal Tax — Thomson Reuters |
Bridging software Record keeping: Software packages |
Software for accounting practices/ agents. |
| APARI |
Record keeping: Software packages |
£144 per year (Including VAT) Digital record keeping |
| FreeAgent |
Record keeping: Software packages
|
From £4.17 + VAT per month for landlords and £7.92 + VAT per month for sole traders. Provide discounted pricing options for accountants clients that are registered on the practice dashboard. |
|
|
Record keeping: Software packages | From £5.99 per month. |
| Xero | Record keeping through to submission | From £16 -£59 per month |
It is optional for taxpayers to join the MTD pilot scheme: you can still use the software without taking part in the pilot.
Useful guides on this topic
Making Tax Digital: Index & timeline
When does Making Tax Digital (MTD) apply? What does Making Tax Digital really mean? How will it affect you? Does MTD mean quarterly reporting? Is my business exempted from Making Tax Digital?
Making Tax Digital for Income Tax: Data required by HMRC
What information do you need to submit under Making Tax Digital for Income Tax? What are the requirements for relevant persons under the VAT threshold? What are the categories of information required?
MTD: Toolkit for accountants
What is the current timetable for Making Tax Digital? 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)
This is a freeview factsheet 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.
MTD: Income Tax Pilot Tool
Making Tax Digital (MTD) for Income Tax. Are you eligible to take part in the MTD Pilot?
Making Tax Digital: Pricing for Accountants
How much can you charge? How much should you charge?
External Links
Compatible for Making Tax Digital for Income Tax.
