Making Tax Digital Software
6 min read
Want a simple overview first?
Download the free guide for UK sole traders and understand the key accounting records, deadlines and Making Tax Digital changes in plain English.
What must the software do?
For MTD for Income Tax, HMRC says your software setup must create digital records, send quarterly updates and submit your tax return. HMRC does not provide its own software and does not recommend one provider over another.
Concrete examples – September 2026
As of September 2026, examples include Clear Books, which advertises a £0 MTD plan for sole traders covering digital records, quarterly updates and the year-end tax return, and Zoho Books, which advertises an HMRC-recognised free sole-trader plan with MTD for Income Tax. Starling and Tide also advertise free business-account tools that can support MTD workflows. Always verify the exact product in HMRC's software finder before relying on it.
What should you compare?
Check whether the free plan covers all your income sources, bank feeds, receipt capture, invoicing, spreadsheet imports, CIS if relevant, support, and the final tax-return submission. A product can be 'free' but still be a poor fit if a feature you need sits behind a paid tier.
A simple way to choose
Make a list of five must-have features, shortlist two or three HMRC-recognised options, enter a few real transactions and test the workflow before committing your records to one system.
Common misconception
“Free software is automatically the best option.”
Not necessarily.
A free plan can be excellent for a simple business, but the best choice is the one that covers your real reporting and bookkeeping needs.
Start with HMRC compatibility, then compare the free plan itself - not just the provider name. Features and pricing can change, so re-check before signing up.
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Explore my practical guides for UK sole traders, covering accounting essentials and Making Tax Digital software in plain English.
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