MTD for Income Tax Software 2026/27: Compatible Options and How to Choose
MTD for Income Tax software 2026/27: who must buy compatible software, full vs bridging options, the gov.uk recognised list, free routes, and how to choose.
Making Tax Digital (MTD) for Income Tax makes HMRC-recognised software a legal requirement for sole traders and landlords above the qualifying-income thresholds. Once you are mandated you must keep digital records and file through compatible software - the free HMRC online Self Assessment return is no longer an option. This guide sets out who is in scope and from when, the difference between full software and bridging software for spreadsheet users, how to choose, where the official recognised-software list lives, and the free routes that exist. It does not rank products or invent prices.
Who must use MTD ITSA software, and from when
MTD for Income Tax is phased in by qualifying income. Per GOV.UK, the mandation timeline is:
| Qualifying income | Mandatory from | Status |
|---|---|---|
| Over £50,000 | 6 April 2026 | In force |
| Over £30,000 | 6 April 2027 | In force |
| Over £20,000 | 6 April 2028 | Announced at Autumn Budget 2024; government legislating to confirm |
Qualifying income is the total gross income you get in a tax year from self-employment and property combined, before you deduct any expenses - what HMRC calls your turnover (per GOV.UK). It is measured against the thresholds on gross income, not on profit. So a landlord with £22,000 of rent, or a sole trader with £35,000 turnover plus £18,000 of property income (£53,000 combined), can be in scope even if profit after expenses is much lower.
The £20,000 step is scheduled policy: it was announced at Autumn Budget 2024 and GOV.UK states the government is introducing legislation to confirm it. If your qualifying income is between £20,000 and £30,000, treat April 2028 as the planned start date and check GOV.UK before you buy, rather than assuming it is fixed.
Why you need compatible software
MTD for Income Tax replaces the once-a-year online return with digital record-keeping plus in-year updates, and both must run through HMRC-recognised software. Once you are mandated:
- You must keep digital records of your business income and expenses in compatible software or a linked spreadsheet.
- You must send four quarterly updates through that software. The standard cumulative periods and deadlines are 6 April to 5 July (due 7 August), 6 April to 5 October (due 7 November), 6 April to 5 January (due 7 February) and 6 April to 5 April (due 7 May the following tax year).
- You must submit a final declaration to finalise the year, which is due by 31 January following the end of the tax year, again using compatible software.
- You cannot use the free HMRC online Self Assessment return for that income once mandated. The recognised software is the filing route.
Missing quarterly or final deadlines feeds into the MTD points-based penalty regime - see our MTD ITSA penalty points guide. For the full compliance and deadline picture, see the MTD for Income Tax guide.
Full software vs bridging software
GOV.UK groups recognised products into two types. Choosing between them is mostly about whether you already keep spreadsheets you are happy with.
| Type | What it does | Best suited to |
|---|---|---|
| Full software | Keeps your digital records (manual entry, receipt capture or bank feeds), categorises income and expenses, and files quarterly updates plus the final declaration. | People who want bookkeeping and filing in one place, or who do not currently keep organised records. |
| Bridging software | Connects to records you already keep in a spreadsheet or other accounting tool and submits them to HMRC. Per GOV.UK, this is sometimes called bridging software. | People with tidy spreadsheets who do not want to change how they record income and expenses. |
Either type satisfies MTD provided it is on the GOV.UK recognised list. Bridging is not a loophole to avoid digital records - your spreadsheet still has to hold the required digital records and link to the bridging tool; you just are not typing figures into HMRC by hand.
How to choose
Work through these factors against your own situation rather than any product ranking:
- Your income types. Filter the recognised list for products that cover what you have - self-employment only, property only, or both. Landlords in particular should confirm property income is supported.
- Full vs bridging. Keep a spreadsheet you like? Bridging may be enough. Want records and filing together? Choose full software.
- Agent access. If your accountant files on your behalf, check the software supports agent access so they can submit your updates and final declaration.
- Cost and free tiers. Prices vary; some products are free for simple affairs or for certain bank customers (see below). Confirm the free tier actually covers your income types and volume.
- Ease of use. You will use this quarterly, so the interface and bank-feed quality matter more than a long feature list you will not touch.
The GOV.UK recognised-software list
HMRC publishes the definitive list at Find software that works with Making Tax Digital for Income Tax. It includes a software finder tool that lets you filter by the features you need, and it separates software that keeps digital records from bridging software that connects to spreadsheets. Only products shown there are recognised by HMRC for MTD for Income Tax.
Named products appear and change as HMRC recognises more each year - the GOV.UK page currently lists products such as EasyBooks, Gbooks, Hnry, HSBC My Business Finances, Taxfix and TELUS Farm Accounting among those in development, and mainstream accounting packages have added MTD for Income Tax support too. Because the list moves, always check GOV.UK for the current position rather than relying on any single guide - including this one. This page does not rank products or score them; use HMRC's finder to shortlist, then confirm suitability with the provider.
Costs and free routes
Paid products are priced per month or per year and vary widely, so check the vendor's current pricing directly - this guide deliberately does not quote figures that would go stale. Two free routes are worth knowing about:
- Free products for simple affairs. GOV.UK states that free products are available for those with simple tax affairs, though there may be limits on how the product can be used. Confirm any free tier covers your income types before relying on it.
- Bank-linked free access. FreeAgent is free for as long as you hold a business current account with NatWest, Royal Bank of Scotland or Ulster Bank, or with a Mettle account if you make at least one transaction a month (and set Mettle as your primary business account in FreeAgent). FreeAgent supports MTD for Income Tax, letting you submit quarterly updates and the final declaration to HMRC.
A free tier can be a strong reason to pick one product over another, but only if it genuinely covers your self-employment and property income and your transaction volume. Do not choose on price alone if it means your income type is not properly supported.
Your timeline to act
- Confirm your mandation date. Add up your gross self-employment and property income. Over £50,000 means April 2026; over £30,000 means April 2027; over £20,000 means the scheduled April 2028 start.
- Choose compatible software. Use the GOV.UK finder, filter for your income types, and decide between full and bridging software - before your start date, not after.
- Sign up. Sign up for MTD for Income Tax through GOV.UK and connect your chosen software so it can file on your behalf.
- Capture from day one. Your first quarter runs from 6 April, so have records flowing from the start of the tax year to avoid a scramble before the 7 August deadline.
Even if your first mandated year is 2027 or 2028, setting software up early lets you learn the quarterly rhythm before it is compulsory.
Related calculators and guides
- MTD for Income Tax guide - full compliance, digital records and deadline picture.
- MTD ITSA penalty points guide - what happens if you miss quarterly or final deadlines.
- Self-employed tax calculator - estimate your Income Tax and National Insurance as a sole trader.
- Sole trader vs limited company guide - whether your structure affects your MTD obligations.
Frequently asked questions
What software do I need for MTD for Income Tax?
You need HMRC-recognised software that works with Making Tax Digital (MTD) for Income Tax. Once you are mandated you must keep digital records and send your quarterly updates plus final declaration through compatible software - you can no longer file using the free HMRC online Self Assessment return. You can use either full accounting software that keeps your records and files, or bridging software that connects to a spreadsheet and submits it to HMRC. GOV.UK publishes a recognised-software finder listing every compatible product, including some free products for people with simple tax affairs.
Is there free MTD ITSA software?
Yes for some people. GOV.UK states that free products are available for those with simple tax affairs, though there may be limits on how the product can be used. Separately, FreeAgent is free for as long as you hold a business current account with NatWest, Royal Bank of Scotland or Ulster Bank, or with a Mettle account if you make at least one transaction a month - and FreeAgent supports MTD for Income Tax. Always check the recognised-software finder on GOV.UK and confirm any free tier covers your income types before relying on it.
Can I still use a spreadsheet for MTD ITSA?
You can keep your records in a spreadsheet, but you cannot type your figures straight into the old HMRC online return once you are mandated. You need bridging software that connects to your spreadsheet and submits the quarterly updates and final declaration to HMRC digitally. GOV.UK lists bridging software alongside full accounting software in its recognised-software finder. Bridging suits people who already run tidy spreadsheets and do not want to change their bookkeeping; full software suits people who want the record-keeping, categorisation and filing in one place.
When do I need MTD software?
It depends on your qualifying income. You must use MTD for Income Tax from 6 April 2026 if your qualifying income is over £50,000, from 6 April 2027 if it is over £30,000, and from 6 April 2028 if it is over £20,000 (the £20,000 step was announced at Autumn Budget 2024 and the government is legislating to confirm it). Set your software up before your start date so your first quarterly update period is captured from day one - the first quarter of the tax year runs from 6 April.
What is qualifying income for MTD for Income Tax?
Qualifying income is the total gross income you get in a tax year from self-employment and property combined, before you deduct any expenses (also called your turnover). HMRC assesses your gross income against the £50,000, £30,000 and £20,000 thresholds. So a sole trader turning over £40,000 and also receiving £15,000 of rent has £55,000 of qualifying income and is in scope from 6 April 2026, even though profit after expenses is lower.
What are the MTD ITSA quarterly deadlines?
You send four quarterly updates through your software. The standard cumulative periods and deadlines are: 6 April to 5 July, due 7 August; 6 April to 5 October, due 7 November; 6 April to 5 January, due 7 February; and 6 April to 5 April, due 7 May the following tax year. You then submit a final declaration to finalise the year, which must be submitted by 31 January following the end of the tax year, using compatible software.
Do I still file a Self Assessment tax return under MTD?
You still finalise your tax position once a year, but the mechanism changes. Instead of the annual SA100 online form, you send four quarterly updates and then a final declaration through MTD-compatible software. The final declaration replaces the old return and is due by 31 January following the tax year. You can no longer use the free HMRC online Self Assessment return service once you are mandated for MTD for Income Tax.
How do I choose MTD ITSA software?
Start with the GOV.UK recognised-software finder and filter for products that cover your income types - self-employment, property income, or both. Then weigh: whether you want full accounting software or bridging software for an existing spreadsheet; whether your accountant needs agent access to file on your behalf; the cost and whether a free tier applies to you; and how the interface fits your bookkeeping habits. Only use products on the GOV.UK recognised list, and check with the provider that it meets your specific needs before you commit.