How We Evaluated MTD Software

MTD Software (Buyer’s Guide)

Key Factors to Consider

Your Business Type

Service-based businesses (consultants, freelancers) have different needs than product businesses. Contractors working through limited companies need different features than sole traders. Landlords managing property portfolios have specific requirements around rental income tracking. Match the software to your actual workflow, not generic “small business” assumptions.

Current vs. Future MTD Requirements

If you’re only VAT-registered, any software on HMRC’s MTD for VAT list works. But if you’ll also need MTD for Income Tax from April 2026, consider whether your chosen software is preparing for that transition. Switching platforms mid-tax-year creates headaches – choose software that can grow with requirements.

Accountant Involvement

If you work with an accountant, ask what they prefer. Many accountants have Xero or Sage partnerships and can provide discounted access. More importantly, they’ll provide better support if they know the platform. If you’re doing everything yourself, prioritise ease of use over accountant-friendly features.

Bank Feed Compatibility

Before committing, verify your bank accounts connect properly. Most major UK banks work with most platforms, but business accounts from smaller banks or building societies sometimes have gaps. Check this during any free trial.

Free vs. Paid MTD Software

Genuinely free MTD software exists, but with significant limitations. HMRC’s own basic tools handle submissions but lack the bookkeeping features that make compliance practical. Some banks offer free access to platforms like FreeAgent – if you’re eligible, this is often the best value route.

Paid plans typically range from £10-40/month for sole traders and small businesses. At the lower end, expect basic bookkeeping and MTD submissions. Higher tiers add features like multi-currency, additional users, advanced reporting, and payroll.

Switching from Spreadsheets

Many businesses used spreadsheets with bridging software for early MTD compliance. While technically allowed, this approach becomes increasingly impractical as MTD requirements expand. The “digital links” requirement means manual copy-paste between spreadsheets and filing software isn’t compliant.

When migrating from spreadsheets, most software can import opening balances and customer/supplier lists. Historical transactions typically need re-entering or can be left in your legacy system. Start fresh at a natural break point like the beginning of a VAT quarter or tax year.How We Evaluated MTD Software

We tested and researched each platform across five key criteria, weighted by importance to UK small businesses:

HMRC MTD Support (30%)

Does the software appear on HMRC’s official compatible software list? Does it support both MTD for VAT and (where applicable) MTD for Income Tax? How seamless is the actual submission process?

Day-to-Day Usability (25%)

How intuitive is the interface for non-accountants? Can you complete routine tasks (invoicing, bank reconciliation, expense logging) without friction? Mobile app quality also factors in here.

UK-Specific Features (20%)

VAT scheme support (flat rate, cash accounting, standard), UK bank feed coverage, CIS compliance for construction businesses, and proper handling of UK-specific tax codes.

Value for Money (15%)

Total cost of ownership including add-ons (payroll, multi-currency, additional users). We flag where core MTD features are locked behind higher tiers.

Support & Onboarding (10%)

Quality of UK-based support, availability of phone support, onboarding resources, and accountant collaboration tools.