Compare accounting software for Making Tax Digital (MTD)

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Sage UK

Price

From £18.00 per month

24/7 phone and online support, webinars, and community forums.

MTD-compliant VAT submissions
Invoicing
Expense tracking
Bank reconciliation
Cash flow monitoring
Inventory management

Eligibility

Recommended for	UK-based sole traders, small, and medium-sized businesses (SMBs) needing a scalable accounting solution.
Not recommended for	Large enterprises with highly complex, multinational financial needs that may require a full ERP system.
Integrations offered	Direct bank feeds with hundreds of UK banks.
AI tools	Sage Copilot provides AI-driven insights, automates data entry, and offers fraud detection

2 months free of Admin Extra

Tide

Price

From £13.99 per month

In-app chat support. Phone support is available for some plans/issues.

integrated invoicing
Expense management
Auto-categorisation
VAT filing tools
Real-time tax estimates

Eligibility

Recommended for	Freelancers, contractors, and small businesses who want banking and simple accounting in a single platform.
Not recommended for	Businesses that require advanced inventory management or multi-currency accounting without using a third-party integration.
Integrations offered	Connects to Tide bank accounts
AI tools	AI features include transaction auto-categorisation and business insights

Special offer for March: 95% off for 6 months

Xero

Invoicing
Bill payments
VAT returns (MTD)
Bank reconciliation
Project tracking
Multi-currency support
Purchase orders
Expense claims

Eligibility

Recommended for	Small to medium-sized businesses, accountants, and bookkeepers, particularly those who value a large ecosystem of third-party app integrations.
Not recommended for	Businesses looking for a free plan, as you'll need to pay a minimum of £7 a month.
Integrations offered	Connects to a wide range of UK and international banks via open banking feeds.
AI tools	AI used for bank reconciliation suggestions, invoice data capture, and anomaly detection.

With free Making Tax Digital tool

Zempler Bank – A Bank Account with accounting features

In-app chat (Paid plans) & UK-based phone support

From £0 Monthly
Includes free ‘Making Tax Digital’ VAT submission tool
With 1 year free of ‘Making Tax Digital’ Income Tax Self Assessment Software (via Coconut)
Categorise spend as you go
Comes with digital receipt capture
Generate Invoices
Integrates with leading accountancy packages (Sage, Xero, Quickbooks etc.)

Eligibility

Recommended for	Sole traders and SMEs who want banking and bookkeeping tightly coupled or have a poor credit history
Not recommended for	Businesses that rely heavily on cheque deposits or physical branch access
Integrations offered	Xero, Quickbooks, Sage, FreeAgent, Coconut & more
AI tools	Automatic transaction categorisation and spending insights

Stay updated on Making Tax Digital

Tax returns are changing. Get expert updates and practical guidance to help you get MTD-ready with confidence.

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What you need to know about Making Tax Digital

Making Tax Digital (MTD) is set to change how sole traders and landlords report their earnings to HMRC. Instead of one annual Self Assessment return, you’ll need to keep digital records and send quarterly updates using MTD-compatible software.

MTD will be introduced in stages:

From April 2026: income over £50,000 (based on your 2024-25 tax year)
From April 2027: income over £30,000 (2025-26 tax year)
From April 2028: income over £20,000 (2026-27 tax year)

If you fall within these thresholds, spreadsheets and paper records alone will not longer be enough.

You’ll need to either:

Use MTD-compatible accounting software, or;
Connect your spreadsheets to bridging software that can submit returns digitally (best for simpler finances).

Getting set up early can make quarterly reporting much easier and help you stay compliant.

Note: VAT-registered businesses with turnover above £90,000 should already be using MTD software, as MTD for VAT has been mandatory since 2019.

Quarterly reporting deadlines under MTD

Under Making Tax Digital, you’ll need to send updates to HMRC every quarter, rather than reporting everything once a year.

If you follow the standard tax year quarters (which most sole traders do), the deadlines are:

6 April-5 July: submit by 7 August
6 July-5 October: submit by 7 November
6 October-5 January: submit by 7 February
6 January-5 April: submit by 7 May

Each update needs to be filed within one month of the quarter ending.

You can choose different accounting periods if they suit your business better, but the same one-month deadline still applies.

Don’t forget the 31 January deadline

It’s important to note that quarterly updates don’t replace your annual return completely.

You’ll still need to submit a final declaration by 31 January, confirming your total income and any adjustments for the year. This works similarly to today’s Self Assessment, but your quarterly submissions will pre-fill much of the information.

Any tax owed is still due by 31 January (and 31 July if you make payments on account).