MTD Software — A Plain-English Guide

To meet HMRC’s requirements, MTD software must be able to:

• Capture and store your income and expense records digitally.
• Categorise each transaction against HMRC’s required categories.
• Submit data to HMRC through the official MTD API (no copying, no manual re-entry).
• Receive obligations and confirmations back from HMRC.

• Full MTD-compatible software — bookkeeping or accounting software that handles records, categorisation and submission end-to-end. Best for most sole traders, landlords and small businesses.
• Bridging software — connects your spreadsheet to HMRC, preserving your existing workflow. Best if you already rely heavily on Excel or Google Sheets.
• Free or freemium MTD software — lower-cost options designed for simpler businesses, sometimes with paid upgrade tiers.

• Sole traders and self-employed — look for invoicing, mileage tracking, bank feeds and mobile receipt capture.
• Landlords — look for property-specific categories, joint ownership splits and support for the mortgage interest restriction.
• VAT-registered businesses — most existing MTD-VAT packages can extend to MTD for Income Tax for the directors/owners.
• Accountants — practice-grade tools with bulk client management, agent services and review workflows.

1. Check the product is on HMRC’s current list of MTD-recognised software.
2. Match it to your income sources (self-employment, property, VAT).
3. Confirm it supports the way you actually work (mobile-first, spreadsheet-first, accountant-shared).
4. Compare cost, including upgrade tiers and add-ons.
5. Trial it before your MTD start date so you have time to clean up your data.

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Avoid tools that require manual copy-paste between spreadsheets and submission tools, force you to re-enter data already in your bank feed, or lack the HMRC categories needed for your business type. These create error risk and additional admin every quarter.