Making Tax Digital is changing how many self employed people and landlords keep records and report income to HMRC. From 6 April 2026, qualifying sole traders and landlords with more than £50,000 of qualifying income must use compatible software for Making Tax Digital for Income Tax. The requirements will extend to those with qualifying income above £30,000 from April 2027 and above £20,000 from April 2028.
Choosing the right MTD software can make these changes much easier to manage. Good software should help you keep accurate digital records, organise your income and expenses and submit the information HMRC requires.
What MTD software needs to do
HMRC requires compatible software to create and store digital records for self employment and property income and expenses. It must also allow you to send quarterly updates to HMRC and submit your tax return.
This means choosing software simply because it has basic bookkeeping functions may not be enough. You should check that it supports the Making Tax Digital requirements that apply to your circumstances.
Digital bookkeeping should be simple
One of the most important features of MTD software is reliable digital bookkeeping.
Your software should allow you to record business income and expenses clearly throughout the year. Keeping records regularly can make it easier to identify missing transactions and check your figures before information is submitted to HMRC.
HMRC states that digital records must be created and stored using software that works with Making Tax Digital for Income Tax. You must also continue keeping supporting documents such as invoices and bank statements.
Automatic bank transaction feeds
Bank feeds can make digital bookkeeping much easier.
Software that connects to your business bank account can import transactions automatically, reducing the need to enter every transaction manually. However, imported transactions still need to be reviewed and categorised correctly.
HMRC explains that some bank transactions may not contain all the information needed for a digital record. You remain responsible for checking that your records are accurate before sending a quarterly update.
Receipt and invoice scanning
Receipt and invoice scanning can help you keep supporting evidence organised.
A useful MTD software package should make it easy to capture receipts and invoices and connect them with the relevant business transactions. This can reduce the risk of losing paperwork and make it easier to review expenses later.
Good digital record keeping is particularly useful when you need to check whether an expense relates wholly and exclusively to your business.
Clear income and expense tracking
Your software should make it easy to separate different types of income and expenses.
This matters because quarterly updates contain totals for the income and expense categories used for your self employment or property business. They are summaries of your digital records rather than tax returns.
Clear categorisation can therefore help you review your figures before submitting them to HMRC.
HMRC compatible quarterly submissions
One of the most important features is the ability to submit quarterly updates directly through compatible software.
For the 2026 to 2027 tax year, the first quarterly update for taxpayers using standard update periods is due by 7 August 2026, followed by further updates during the tax year. Your software should make it clear which period you are reporting and when the next update is due.
Choosing software that cannot submit the required information to HMRC could leave you needing additional software or a bridging solution.
Secure connection with HMRC
Your software needs to be properly authorised so that it can communicate with HMRC.
Before creating digital records, HMRC says you need compatible software and must authorise it to connect with HMRC.
A straightforward connection process can make quarterly submissions less stressful, particularly if you are using MTD software for the first time.
Digital linking between software
Some businesses may use more than one software product. If you do, your digital records generally need to be digitally linked where required.
HMRC allows different methods of digital linking, including automated data transfers, linked spreadsheet cells, file transfers and API connections. Manual copying and pasting of records after they have been sent to HMRC is not permitted as a method of digitally moving those records.
If you use spreadsheets alongside other accounting software, check carefully that your setup meets the digital linking requirements.
Support for different income sources
Your circumstances may change as your business grows.
For example, you may start as a sole trader and later become a landlord, or you may have more than one self employment. HMRC recommends checking that your chosen software supports all the income sources you need to report.
It is sensible to choose software that can continue supporting your business rather than having to change systems as soon as your circumstances change.
Tax return support
MTD software should not only focus on quarterly updates.
You will also need to use compatible software to complete your tax return when required. HMRC says your software should allow you to add other income sources and submit your tax return.
This can make the move from regular bookkeeping to end of year reporting more straightforward.
HMRC recognised software
There are many MTD software options available, but HMRC does not recommend one particular provider.
HMRC provides a software finder that allows sole traders and landlords to look for products that meet the requirements for Making Tax Digital for Income Tax. Software listed through the HMRC tool has been through its recognition process.
Before choosing a product, consider its features, cost, ease of use and whether it fits your accounting needs.
Choosing the right MTD software for your business
The right MTD software should do more than simply record transactions.
Look for software that provides:
• Digital bookkeeping for income and expenses
• Automatic bank transaction feeds
• Receipt and invoice capture
• Clear expense categorisation
• Quarterly update submissions to HMRC
• A secure HMRC connection
• Digital links between different software products where required
• Support for all relevant income sources
• Tax return submission
• Reliable record storage and access
These features can help you stay organised throughout the tax year and reduce the pressure of preparing information at the last minute.
Keep your records accurate throughout the year
Good MTD software can make bookkeeping easier, but it cannot replace regular checks.
Review your transactions regularly, make sure expenses are categorised correctly and keep your supporting records. Before submitting a quarterly update, check that the information in your software reflects your actual business activity.
Remember that you remain responsible for the accuracy of your digital records and the information submitted to HMRC.
Make MTD easier with the right support
Choosing suitable MTD software is an important step, but knowing how to use it correctly can be just as important.
If you are unsure which features you need, how to organise your digital bookkeeping or how to prepare your quarterly updates, professional support can give you greater confidence.