What is the best Making Tax Digital software in 2026?
Seven HMRC-recognised products, compared on what they really submit and what they cost in pounds.
The short answer: if you work with an accountant or run a small limited company, go with QuickBooks, the most complete product here, but skip its Sole Trader plan if you're VAT-registered. On a tight budget, Zoho Books has a free plan that files VAT, quarterly updates and the final declaration. Sole trader who wants to keep a spreadsheet? Coconut bridges it for £49.99 a year. Selling in euros or dollars: Xero Comprehensive (£55 a month + VAT) for multi-currency. Bank with NatWest, RBS, Ulster Bank or Mettle? FreeAgent costs you nothing.
Making Tax Digital is really two regimes. MTD for VAT already covers every VAT-registered business. MTD for Income Tax covers sole traders and landlords with qualifying income over £50,000 from the 2026-27 tax year, then £30,000 and £20,000 in the two years after. Most guides list "MTD-ready" apps without saying which of the two they handle, or whether they file the final return. That's the gap we looked at.
Some links may be affiliate links. The ranking is editorial: a sponsored spot is always labeled on its card, and no affiliate link changes a score.
The best MTD software for how you work
VAT and Income Tax, multi-currency from Essentials
Zero budgetFree plan files VAT, quarterly updates and final return
Keep your spreadsheetBridging from £49.99 a year, no VAT
Multi-currency invoicingFrom Comprehensive, £55 a month + VAT
NatWest, RBS, Ulster or Mettle customerFree with a partner business account
Low VAT volumeFree up to 1,000 ledger entries
7 Making Tax Digital products side by side
The column that matters most is the second one: what each product actually submits to HMRC. An app can be "MTD-ready" for Income Tax and still unable to file a VAT return, or the reverse. Prices exclude VAT, as each vendor shows them. Click a product to read its card.
| Best for | What it files with HMRC | Free plan | Team size | Visit | ||||
|---|---|---|---|---|---|---|---|---|
| 1 | QuickBooks | Company with an accountant | VAT (not Sole Trader), quarterly, final return | 4.2/5 | Shown at sign-up; 90% off for 6 months or 30-day trial | — | Sole trader, small company, accountancy client | Visit → |
| 2 | Zoho Books | Zero budget | VAT, quarterly, final return, even on Free | 4.0/5 | £0; Standard £12/month (£10 billed yearly) | ✓ | Sole trader and small company | Visit → |
| 3 | Coconut | Keep your spreadsheet | Quarterly and final return, no VAT | 3.9/5 | Bridging £49.99/yr; MTD filing £129.99/yr | — | Sole trader not registered for VAT | Visit → |
| 4 | Xero | Multi-currency | VAT, quarterly, final return | 3.8/5 | Ignite £18/month; Comprehensive £55 | — | Company, ecommerce, exporter | Visit → |
| 5 | FreeAgent | Partner bank | VAT; quarterly and final return for sole traders | 3.8/5 | Sole trader £19/month; Limited £33 | — | Freelancer, one-person company | Visit → |
| 6 | Sage Accounting | Sole trader, no VAT | MTD Income Tax; VAT on paid plans | 3.6/5 | Free (non-VAT sole trader); paid plans priced on site | ✓ | Sole trader below VAT | Visit → |
| 7 | QuickFile | Low VAT volume | VAT; Income Tax as an advanced add-on | 3.5/5 | Free to 1,000 entries; £60/yr above | ✓ | Micro business, low volume | Visit → |
Prices exclude VAT, in pounds, read on each vendor's official pricing page in 2026. QuickBooks and Sage only show prices inside their sign-up flow, so we don't quote a figure the vendor doesn't display.
Is your tool missing from this page? Email us: hello@hackceleration.com
How we compared and scored
We started from one question: which product files what HMRC asks of you, without paying for features you won't use? Every product here appears on HMRC's own software finders, one for VAT and one for Income Tax. HMRC doesn't recommend any product and doesn't supply software itself; a listing only means the product passed its recognition process.
For each product we read the official pricing page and checked three things: does it file VAT returns, does it send quarterly updates, does it file the final declaration? That last one is where most free tools fall short. Of the roughly thirty free products on the Income Tax list, several only send quarterly updates, and you'll need something else in January. We then read recent UK reviews, worst first: support, bank feeds, price rises, cancelling. A product keeps the same score across every Labs page.
- MTD coverage (VAT, quarterly, final return)What the product really files with HMRC, and on which plan.30%
- CostPublic price in pounds, genuine free plans, discounts and recent rises.25%
- Accounting featuresInvoicing, bank feeds, multi-currency, accountant access.20%
- Ease of useHow fast a non-accountant gets up and running.15%
- SupportPhone, chat and response times, from user reviews.10%
Some links may be affiliate links. The ranking is editorial: a sponsored spot is always labeled on its card, and no affiliate link changes a score.
QuickBooks
QuickBooks is the most feature-rich product in this ranking, and one plenty of UK accountants already run. Every plan handles MTD for Income Tax, quarterly updates and final return included. VAT is where the range has a catch.
The Sole Trader plan can't file a VAT return. Once you're VAT-registered you need Simple Start at least, and multi-currency only arrives with Essentials. Pick the plan from your obligations, not from the headline price.
The official pricing page loads its figures during sign-up, so we don't repeat a number we couldn't read there. You get either 90% off for six months or a 30-day trial, not both. Look at the post-discount price before committing: that's what you'll pay from month seven.
UK reviewers praise patient onboarding trainers. They also report steep year-on-year price rises, a redesigned interface many find confusing, and cancellation that has to go through a phone call. Practitioner comparisons add that the final return needs more manual checking than in FreeAgent.
- MTD for Income Tax on every plan
- VAT returns from Simple Start
- Multi-currency from Essentials
- 90% off for six months
- ✓Deepest accounting features here
- ✓Familiar to many UK accountants
- ✓Onboarding help users rate highly
- ✗Sole Trader plan can't file VAT
- ✗Frequent price rises
- ✗Cancel by phone only
The safe pick if your accountant already uses it or your company is growing. Go for Simple Start at minimum once you're VAT-registered, and Essentials if you invoice in other currencies.
Zoho Books
Zoho Books is the real surprise here. Its free plan doesn't stop at a token submission: it files MTD VAT returns and handles Income Tax end to end, quarterly updates, year-end adjustments and the final declaration. Plenty of free products on HMRC's list stop at the quarterly updates.
The Free plan's limits are spelled out: one user plus your accountant, 1,000 invoices and 1,000 expenses a year. For a sole trader or small service business, that's plenty. Above it, Standard is £12 a month, or £10 billed yearly.
One thing to watch: some comparison sites mention a turnover cap on the free plan. The official pricing page doesn't. Go by the two published limits and recheck the page when you sign up.
The weak spot is support. Reviews across the whole Zoho suite mention slow replies and a cluttered interface; those about Zoho Books itself are kinder, with easy moves from QuickBooks. Zoho also doesn't refund annual plans pro rata.
- Free plan includes the final declaration
- MTD VAT from £0
- Free accountant seat
- Yearly discount on every plan
- ✓Most complete free plan in this ranking
- ✓Clear public limits
- ✓Readable price grid
- ✗Support called slow in reviews
- ✗Less hand-holding than FreeAgent
- ✗No pro-rata refunds
The best starting point if you want to comply without paying: VAT and Income Tax, final return included, for £0. Move to Standard once you pass 1,000 invoices a year.
Coconut
Coconut is built for the sole trader who doesn't want to change habits. MTD Bridging links your spreadsheet to HMRC for £49.99 a year: you keep logging income and expenses the way you do now, and Coconut sends the quarterly updates. The catch is the year-end return, which costs another £49.99.
If you'd rather have everything in one place, MTD filing covers quarterly updates and the final declaration for £129.99 a year or £12.99 a month. The 14-day trial needs no card, and Coconut is free for two years with a Zempler business account.
The limit is clear-cut: Coconut doesn't do VAT. It covers Income Tax for sole traders and landlords, not VAT returns. A company, or a VAT-registered sole trader, needs something else.
Reviewers find it simple. They also flag no phone support, patchy bank feeds, the odd sync error with HMRC and a cancel option that's hard to find.
- Spreadsheet bridging at £49.99 a year
- Final return included in MTD filing
- 14-day trial, no card
- Free for two years with Zempler
- ✓Cheapest way to keep your spreadsheet
- ✓Very easy to pick up
- ✓Public yearly prices
- ✗No VAT returns
- ✗No phone support
- ✗Cancellation hard to find
The right fit for a non-VAT sole trader who lives in a spreadsheet. Go straight to MTD filing if you want the final return in the same tool.
Xero
Xero covers both MTD regimes on every plan: VAT returns, quarterly updates and the Income Tax final return. For a company that trades abroad, multi-currency is where it earns its place.
That feature only comes with Comprehensive, at £55 a month + VAT. If you invoice clients in euros or dollars, that's the tier to budget for. Ignite, at £18, caps you at 20 invoices and 10 bills a month in a single currency.
Prices went up in 2026, and add-ons stack quickly: automatic bank reconciliation at £3.50 a month on Ignite, CIS at £5, and statutory accounts with Corporation Tax filing at £120 a year. The 90% discount for six months softens year one, not year two.
UK reviewers like the setup calls and time saved. They dislike the lack of phone support, a chatbot as first contact, and bank feeds that sometimes drop for weeks.
- VAT and Income Tax on every plan
- Multi-currency from Comprehensive
- Accounts and Corporation Tax add-on
- 90% off for six months
- ✓Full MTD coverage across the range
- ✓Strong multi-currency for exporters
- ✓Detailed public price list
- ✗Ignite too limited for a real business
- ✗Prices rose in 2026
- ✗No phone support
The pick for a business that invoices in more than one currency. Budget £55 a month + VAT for Comprehensive: below that you lose multi-currency.
FreeAgent
FreeAgent is one of the best-rated tools among UK freelancers, and it may cost you nothing. With a NatWest, RBS, Ulster Bank or Mettle business account, the subscription is free. Mettle requires at least one transaction a month, and partnerships can't use the Mettle route.
Without a partner bank, it's £19 a month + VAT for a sole trader, £27 for a partnership or LLP, £33 for a limited company. New customers get 50% off for six months on monthly billing, or the first year on annual.
What it files depends on your structure. MTD for VAT is on every plan. MTD for Income Tax applies to the sole trader and landlord plans: on the limited company plan FreeAgent files your VAT, since Corporation Tax isn't part of MTD.
Its reviews are the best in this ranking: easy to use, real people on support. Complaints focus on the chatbot and unexpected renewals.
- Free with four UK banks
- MTD VAT on every plan
- Income Tax for sole traders and landlords
- Human support you can reach
- ✓Simplest option for freelancers
- ✓Best reviews in this ranking
- ✓Free if you bank with a partner
- ✗Free deal tied to partner banks
- ✗Multi-currency not a focus
- ✗Renewals catch some users out
The top choice for a freelancer or one-person company, especially if you already bank with NatWest, RBS, Ulster Bank or Mettle.
Sage Accounting
Sage answered MTD with a free plan, Sole Trader and Landlord Free, for sole traders and landlords who aren't VAT-registered. It covers MTD for Income Tax; check on HMRC's finder that it also handles the final declaration for your situation. The engine is solid enough that others build on it: SumUp's free MTD offer runs on Sage.
The free tier is deliberately tight on volume. Once you invoice a lot, or register for VAT, you move to a paid plan, and those prices only show inside the sign-up flow. Compare them with Zoho Books' published grid before you commit.
Users credit Sage with knowledgeable support and guided setup. Critics mention a phone line that's hard to reach and partly replaced by chat, software that feels complex, account lockouts and price rises.
- Free plan for sole traders and landlords
- MTD for Income Tax
- Engine reused by other MTD tools
- Knowledgeable support
- ✓Free for non-VAT sole traders
- ✓Long-standing name accountants know
- ✓Clear path to fuller plans
- ✗VAT only on paid plans
- ✗Paid prices hard to find
- ✗Feels complex
A solid free option for a non-VAT sole trader. Once VAT comes in, compare its paid plans with Zoho Books and FreeAgent.
QuickFile
QuickFile is a UK accounting package that stays free under 1,000 ledger entries. Above that it's £60 a year + VAT up to 4,000 entries, the lowest paid price here for a business that files VAT.
It files MTD VAT returns and also offers VAT bridging for spreadsheet users. Automatic bank feeds cost £15 a year + VAT. MTD for Income Tax sits in its advanced paid features, so check that cost before relying on it for quarterly updates.
It's a plain tool, closer to bookkeeping software than a consumer app, and expects a bit of discipline to set up.
- Free up to 1,000 entries
- MTD VAT returns
- VAT bridging for spreadsheets
- £60 a year above that
- ✓Cheapest paid option for VAT
- ✓Short, clear price list
- ✓VAT bridging available
- ✗Income Tax is an advanced add-on
- ✗Plain interface
- ✗Bank feeds cost extra
The budget pick for a small business whose main job is VAT. For Income Tax, Zoho Books or FreeAgent are more direct.
Which Making Tax Digital actually applies to you
Before you pick software, know what you have to file. VAT and Income Tax run on separate timetables, separate audiences and separate HMRC software lists. A business can be in one and not the other.
MTD for VAT
Every VAT-registered business must keep VAT records in compatible software and file returns from it, including businesses below the registration threshold, since 2022. HMRC signs up those that haven't done it themselves.
Overseas businesses with a UK VAT number
They file under MTD too. Non-established businesses have no UK registration threshold, and accounting software from their home country can't submit to HMRC. The options are UK software or a bridging tool fed from a CSV export.
MTD for Income Tax
It covers sole traders and landlords in Self Assessment. Qualifying income is gross (self-employment turnover plus rent, before expenses): over £50,000 in 2024-25 brings you in from the 2026-27 tax year; over £30,000 in 2025-26, from 2027-28; over £20,000 in 2026-27, from 2028-29. Salary, dividends and pensions don't count.
Who's out, for now
Limited companies for Corporation Tax, partnerships (no date set), qualifying income of £20,000 or less, and anyone without a National Insurance number before the tax year starts. If you filed the SA109 residence pages in your 2024-25 return, you're exempt until 2027.
Deadlines
Four updates a year, due by 7 August, 7 November, 7 February and 7 May, then the final return by 31 January. You can use tax-year quarters (6 April to 5 April) or calendar quarters.
Penalties
Each late submission earns a point; at four points you pay £200, for VAT and Income Tax alike. During the 2026-27 tax year, no points are given for late quarterly updates. A late final return is still penalised.
- If you're VAT-registered, MTD for VAT already applies
- Add up gross self-employment and rental income to see when Income Tax catches you
- Pick a product listed on the right HMRC finder
- Check it files the final return, not just quarterly updates
- Keep digital links between files: no retyping figures
Six expensive mistakes with Making Tax Digital
MTD software rarely fails on the submission itself. It fails on a plan that doesn't cover the right tax, a badly linked spreadsheet, or a free tool that stops at year end. These are the six cases UK users and accountants raise most, with the fix.
Picking a free tool that only sends quarterly updates
Most commonHMRC's Income Tax list has around 160 products, about thirty with a free version. Several of those free tools, often from banks (Starling, Lloyds Bank, Tide and others), only send quarterly updates. Starling's tool is free with its sole trader account, but the year-end return is still marked "coming soon". Come January, you need a second product.
The fix: on HMRC's finder, confirm the product also handles the final declaration. Zoho Books Free does, at £0.
- Products on the Income Tax list
- ≈ 160
- With a free version
- about 30
Choosing a plan that can't file VAT
QuickBooks Sole Trader, Coconut and Sage Free don't submit VAT returns. Fine below the threshold; a problem the day you register.
The fix: if you're close to the VAT threshold, pick a product that handles both taxes now, such as Zoho Books, Xero or FreeAgent.
Copy-pasting figures between files
For VAT, data has to move between files through a digital link: linked cells, CSV or XML import and export, an API connection, or sending the file. Copy-paste and retyping don't count, so your records aren't compliant even if the return goes through.
The fix: if your bookkeeping exports CSV, import that file into your bridging tool rather than retyping totals.
Leaving an old spreadsheet untouched
Bridging lets you keep Excel, but you own the file. As UK accountants point out, it has to keep up with every rule change, and a submitted return can't be fixed with one click: you go through HMRC's error correction process.
The fix: have your template reviewed once a year, or move to full software once entries pile up.
Counting on a bank-linked free deal
FreeAgent is free with NatWest, RBS, Ulster Bank or Mettle, Coconut with Zempler, Starling's tool with its sole trader account. Switch banks and the free deal goes with it.
The fix: work out what you'd pay without the bank deal. Zoho Books Free has no banking condition.
Signing up on the discount price
Xero and QuickBooks offer 90% off for six months, FreeAgent 50%. Year two is full price, and UK reviews describe sharp annual rises, with phone-only cancellation at QuickBooks.
The fix: work out twelve months after the discount. Xero Comprehensive at £55 a month is £660 a year + VAT. The software is an allowable business expense.
- Xero Comprehensive, one year
- £660 + VAT
- Zoho Books Standard, yearly
- £120 + VAT
Find the software for your case
Letting property, or after a broader accounting package? Here are our other rankings.
Making Tax Digital software: common questions
Which software is compatible with Making Tax Digital?
Anything listed on HMRC's two software finders, one for VAT and one for Income Tax. Xero, QuickBooks, FreeAgent, Zoho Books, Sage and QuickFile are all there. What matters is that your plan covers your tax: some only handle Income Tax, others only VAT.
Is there free Making Tax Digital software?
Yes. Zoho Books Free files VAT, quarterly updates and the final return, up to 1,000 invoices a year. QuickFile is free up to 1,000 ledger entries. Sage has a free plan for non-VAT sole traders, and FreeAgent is free with a NatWest, RBS, Ulster Bank or Mettle business account.
Does HMRC provide free MTD software?
No. HMRC doesn't supply or recommend software; it only lists recognised products. It has committed to free options existing for simple tax affairs, which is why about thirty free products appear on the Income Tax list.
Can you still use spreadsheets for MTD?
Yes, with bridging software that submits from the spreadsheet. Coconut does it for Income Tax from £49.99 a year, QuickFile for VAT. The data has to stay digitally linked: no copy-paste between files.
Does a limited company need MTD software?
Only for VAT, if you're VAT-registered. MTD for Income Tax doesn't apply to Corporation Tax. Directors who also have self-employment or rental income above the threshold are covered personally.
What happens if you miss a quarterly update?
In the 2026-27 tax year, nothing: no penalty points for late quarterly updates. After that, each late update is a point and the fourth triggers a £200 penalty. A late final return is penalised now.
Do non-residents have to use MTD for Income Tax?
Not automatically. Only UK income reported in Self Assessment counts towards the threshold. You're exempt if you had no National Insurance number before the tax year began, and filing the SA109 residence pages in your 2024-25 return exempts you until 2027.
Do you need an accountant for Making Tax Digital?
No. A sole trader can handle it alone with FreeAgent or Zoho Books. An accountant earns their fee on a company, cross-border VAT or income from several sources. Zoho Books, for one, includes an accountant seat even on its free plan.