Managing tax obligations in the UK has become more digital. With HMRC’s Making Tax Digital for Income Tax (MTD ITSA) initiative, sole traders and landlords must use MTD‑compatible software to submit quarterly updates and a final declaration. Using the right MTD software makes record‑keeping more efficient, reduces the risk of errors, and makes the reporting process smoother. Whether you are self-employed or managing rental properties, the correct tools provide a clear, accessible way to meet HMRC requirements and keep accurate digital records.
Who Needs HMRC‑Compatible MTD Software?
Sole traders and self-employed individuals with qualifying income above HMRC’s thresholds must comply with MTD ITSA. Since April 2026, individuals with total qualifying income over £50,000 from self-employment and/or UK property will need to use MTD ITSA compliant software, with phased requirements applying to lower thresholds later. This software supports maintaining digital records of income and expenses, generating quarterly updates, and completing the EOPS and final declaration as part of the year-end process.
Landlords who receive rental income from their UK properties and whose total qualifying income exceeds the HMRC threshold must also use compliant software. It allows them to manage multiple properties, track rent payments, and record allowable expenses efficiently. Using digital software reduces calculation errors and ensures HMRC has accurate records. Both sole traders and property owners benefit from systems that organize their financial data in one place, making day‑to‑day compliance work less stressful.
Key Features to Look for in MTD ITSA Software
MTD-compliant software must meet HMRC’s digital record keeping requirements. It needs to store accurate records of income and expenses and allow users to submit quarterly updates, as well as complete the EOPS and final declaration directly to HMRC. You must use software that is listed by HMRC as MTD‑compatible for Income Tax (ITSA). This helps ensure that submissions are made in the correct format and that digital records align with government specifications.
Value-Added Features
Beyond basic compliance, some software offers features that make managing finances easier. Automatic bank feeds import transactions directly, saving time while reducing manual input errors. Categorisation of expenses and multi-property tracking are particularly useful for landlords. Cloud-based platforms and mobile-friendly interfaces enable access from anywhere, while forecasting tools can help to estimate future tax obligations.
Some platforms also offer integrations with invoicing or payroll systems, creating a more complete financial management solution. These features streamline routine tasks, allowing business owners to focus on operations rather than administrative work.
Recommended HMRC‑Compatible Software for Sole Traders
FreeAgent
FreeAgent is widely used by sole traders because of its comprehensive bookkeeping tools, designed for freelancers and small businesses. It handles invoicing, bank reconciliation, and expense tracking, all while helping users keep records in line with MTD requirements. FreeAgent already supports MTD for VAT and is being developed to support MTD for Income Tax, with full functionality expected to roll out as quarterly reporting goes live. Its cloud‑based design allows access from any device, making it convenient for sole traders who want a straightforward, integrated solution. FreeAgent also makes record management easier with built‑in time tracking and project management, features you won’t find in many other tools, although like other software currently involved in MTD ITSA pilots it cannot guarantee outcomes and is still evolving as HMRC’s service develops.
Xero
Xero provides automated transaction imports and robust expense categorisation, offering strong general accounting functions suitable for a wide range of business types. It supports cloud access and is recognised for Making Tax Digital, and is designed to be capable of supporting MTD for Income Tax as those requirements are rolled out in practice. Its simple interface makes it suitable for individuals who want reliable software with clean navigation. Unlike some other options, Xero offers extensive third‑party integrations and support for multiple account types, making it a flexible option for a broad range of financial needs, although its MTD for Income Tax functionality, like that of other providers, will only be fully tested as accountants and businesses use it in live conditions.
QuickBooks Online
QuickBooks Online is a popular choice for UK sole traders seeking an all‑in‑one accounting solution focused on automation. It offers automated bank feeds, expense tracking, and comprehensive invoicing, helping users keep digital records in a format that supports Making Tax Digital requirements. QuickBooks stands out for its easy setup and automation, supporting a variety of bank connections and offering built‑in tools to help estimate tax liabilities during the year. Its cloud‑based design allows access from any device, giving freelancers and small business owners flexibility and convenience. QuickBooks also provides real‑time reporting and insights for those who prioritise frequent financial reviews, although, like other providers, its MTD for Income Tax features will continue to develop as the regime is implemented in practice.
Other Popular Options
Other HMRC‑listed MTD‑compatible solutions for sole traders include Sage Business Cloud, which is known for its scalability and extensive reporting, making it well‑suited for users anticipating growth or requiring advanced analytics. Solutions like Sage Business Cloud provide digital record‑keeping and compliance management, but each targets slightly different needs. It’s important to check their latest status on HMRC’s MTD software list and review up‑to‑date feature sets before choosing a solution.
Recommended HMRC‑Compatible Software for Landlords
Hammock
Hammock is a dedicated MTD service created for landlords. It enables property owners to centrally monitor rental income, allowable expenses, and quarterly Updates. The tool integrates with bank accounts to automatically import rent and expense transactions, with categorisation by property. Hammock being developed to support digital reporting to HMRC under MTD ITSA and helps landlords with multiple properties meet their reporting obligations in an organised manner. It is well-suited to people seeking a landlord‑focused system rather than a general accounting tool.
Xero
Xero is a well‑known cloud accounting platform that landlords also commonly use, especially if they have existing business income. While not built exclusively for rental properties, Xero is flexible, letting you set up separate income and expense tracking for each property alongside business accounts. Its integrations and scalable features allow landlords managing mixed income sources to centralize finances. Xero is being expanded to support MTD ITSA as HMRC rolls out the service, so landlords will be able to submit Quarterly Updates, the End of Period Statement (EOPS) and the Final Declaration digitally once the relevant functionality is available in the software.
QuickBooks Online
QuickBooks Online works for both sole traders and landlords by combining automated bank feeds, expense tracking, and income categorisation into a single tool. It is known for its automation and ease of use, helping landlords manage rent receipts, recurring outgoings, and property‑specific reports. QuickBooks is being developed to support MTD ITSA and is intended to facilitate digital reporting as HMRC’s service expands, but its functionality will continue to evolve as more landlords and advisers use it in practice. Because QuickBooks is widely used among freelancers and small businesses, it appeals to landlords seeking a familiar tool that can unify property and self‑employment accounting with strong automation features, without implying guaranteed readiness for every aspect of MTD ITSA at this stage.
FreeAgent
Like for sole traders, FreeAgent also works well for landlords who want a straightforward, all‑in‑one platform for managing rental income and HMRC submissions. FreeAgent offers landlord‑focused expense tracking, digital preparation of figures for MTD, and accessible record management within an interface built for simplicity. Its cloud‑based access lets you monitor property finances on the go, which is helpful for landlords managing multiple sources of income from one place. FreeAgent includes functionality to support Quarterly Updates, End of Period Statements (EOPS) and Final Declarations for MTD for Income Tax, although, as with other software, its use in practice will depend on how HMRC’s service and guidance continue to develop.
Software in Development & Upcoming MTD Tools
New software is being developed to make MTD compliance easier, including landlord‑focused platforms and lightweight tools for sole traders. Because the market is evolving, it’s best to check the live MTD ITSA software list on GOV.UK for the latest MTD‑compatible software options rather than relying on older provider lists.
Expected Features
Future software is expected to include AI‑assisted error checking, automated bank feed imports, multi‑user collaboration, and forecasting tools for tax liabilities. These tools aim to make quarterly updates, End of Period Statements (EOPS), and Final Declarations easier while retaining accurate digital records. This allows businesses to focus more on key activities and growth while relying on software to handle compliance‑related tasks more efficiently.
How to Choose the Right Software for Your Business
- Prioritize usability, especially if you are not familiar with accounting systems.
- Balance functionality with simplicity to ensure the software meets your needs.
- Look for automated bank feeds and expense categorisation to save time.
- Check pricing schemes to ensure the software provides good value.
- Verify that customer support is responsive.
- Choose software that receives regular updates to help keep pace with HMRC requirements and support smoother reporting.
If you’d like hands‑on help, Swiftacc makes Moving to Making Tax Digital for ITSA much easier. We guide you through strategic MTD readiness and onboarding, integrate HMRC‑compatible software, and support smart digital record‑keeping. Once your data is entered, reviewed and approved, the software can prepare and send Quarterly Updates to HMRC, while we provide proactive checks to help reduce the risk of mistakes and penalties. We also support you with the Final Declaration at year‑end, so your MTD ITSA obligations are managed in a structured, low‑stress way.
