8 Best Making Tax Digital Software for UK Businesses — Tested and Compared

Confirmed HMRC MTD for ITSA compatibility (not "in development"), pricing, ease of digital record-keeping, bank feed integration, quarterly submission process, support quality, and specific fit for sole traders, landlords, VAT-registered businesses, and payroll users.

Sage Sole Trader + Sage Accounting

Sage offers two distinct products for the MTD for ITSA market, making it uniquely positioned to serve the full range of taxpayers from the simplest sole trader to a growing VAT-registered SME with employees.

Sage Sole Trader is the free entry point — designed specifically for sole traders who need MTD for ITSA compliance without full bookkeeping software. The free plan includes digital income and expense tracking categorised in HMRC-compatible formats, quarterly update submission directly to HMRC, and the final declaration process. For a freelancer or sole trader with a simple business, this covers everything MTD requires at zero cost. The paid Sole Trader plan adds bank feed automation, mobile receipt capture, and enhanced reporting.

Sage Accounting (Start at £15/mo, Standard at £30/mo, Plus at £59/mo) provides the full cloud accounting suite with MTD for ITSA and MTD for VAT built in. Key differentiators include Sage Copilot AI (anomaly detection, cash flow forecasting, natural-language queries), the MTD AI Agent (the UK's first agentic compliance tool that can prepare quarterly submissions autonomously), bundled payroll on Standard and Plus plans, and bank feed automation with all major UK banks. The current promotional pricing — up to 90% off for the first three to six months — makes this one of the most affordable entry points in the market.

• Only platform offering a genuinely free MTD for ITSA-compatible option
• MTD AI Agent automates quarterly submission preparation
• Copilot AI detects anomalies before submission
• Payroll bundled — no per-employee charge on Standard plan
• 40+ years UK market presence, UK phone support
• Seamless upgrade path from Sole Trader to Accounting as business grows

Xero

Xero is the most widely used cloud accounting platform in the UK, with a reputation built on its extensive third-party app ecosystem (1,000+ integrations), clean interface, and strong accountant adoption. Its MTD for VAT compatibility has been established for years, and MTD for ITSA support has been added for the April 2026 mandate.

Xero's plans for UK users include Ignite (£16/mo, 20 invoices/bills per month limit), Grow (£37/mo, unlimited transactions), Comprehensive (£50/mo, multi-currency and expenses), and Ultimate (£65/mo, full payroll). Payroll is available on higher tiers via Xero Payroll. Bank feeds connect with all major UK banks.

Xero's primary advantage for MTD is its accountant ecosystem — most UK accountants and bookkeepers are familiar with Xero, making collaboration between business owner and accountant more efficient. If your accountant is already on Xero, the shared access and Xero Ledger account model simplifies the quarterly review process considerably.

• 1,000+ app integrations — strongest third-party ecosystem
• Most widely used by UK accountants — seamless collaboration
• Strong bank feed automation with major UK banks
• Clean, well-documented interface
• Entry plan (Ignite) has transaction limits — check these suit your volume
• No free plan; payroll costs extra on most plans

QuickBooks Self-Employed and QuickBooks Online

QuickBooks, from Intuit, is the third major player in UK cloud accounting alongside Sage and Xero. It offers a dedicated Sole Trader plan at £10/mo that provides income and expense tracking, mileage logging, invoicing, and MTD for ITSA quarterly submissions — making it one of the most affordable paid options in the market.

Beyond the Sole Trader plan, QuickBooks Online plans (Simple Start at £16/mo, Essentials at £33/mo, Plus at £47/mo) provide full bookkeeping with MTD for VAT support. QuickBooks Payroll is available as an add-on from £8/mo plus £2 per employee.

QuickBooks has invested in AI features including automatic categorisation and a smart assistant that can answer questions about your accounts. The mobile app is strong, particularly for mileage tracking — a feature that is genuinely useful for tradespeople, delivery drivers, and other self-employed people who travel extensively for work.

• £10/mo Sole Trader plan is one of the lowest paid options for MTD compliance
• Excellent mileage tracking via mobile GPS
• Strong for self-employed individuals wanting simplicity
• Good mobile app with receipt capture
• Payroll available but costs extra; not bundled like Sage Accounting Standard
• Less UK-specific than Sage — some features designed for US market first

FreeAgent

FreeAgent is a UK-built accounting platform that has been particularly popular with freelancers and contractors since its founding in Edinburgh in 2007. It was acquired by NatWest Group in 2018, which created its most distinctive competitive advantage: FreeAgent is available free of charge to eligible NatWest, Royal Bank of Scotland, and Ulster Bank business banking customers.

FreeAgent supports MTD for VAT and MTD for ITSA, with quarterly submission built into the platform. The interface is designed with freelancers in mind — project-based invoicing, time tracking, and expense management are core features rather than afterthoughts. The tax estimate feature, which shows a running estimate of your income tax and National Insurance liability updated in real time as you record income and expenses, is particularly useful for self-employed people managing their own cashflow and tax provisions.

For self-employed individuals and small businesses banking with NatWest or RBS, the free access to FreeAgent makes it the most cost-effective MTD-compatible solution available — effectively zero software cost for full MTD compliance.

• Free for NatWest, RBS, and Ulster Bank business banking customers
• Running tax estimate updated as you record transactions
• Purpose-built for freelancers with project tracking and time logging
• MTD for ITSA and MTD for VAT compliant
• Scottish-based company with strong UK market understanding
• Limited payroll features — better suited to sole traders without staff

IRIS

IRIS is one of the UK's largest accountancy software providers, with a product range that spans tax, payroll, practice management, and accounts production for professional accounting firms. IRIS software is used by a significant proportion of UK accountancy practices to manage client portfolios — filing tax returns, managing payroll, and producing accounts for hundreds or thousands of clients.

For MTD purposes, IRIS provides MTD for VAT bridging tools and is developing MTD for ITSA capability within its practice management and accounts production software. IRIS is not primarily a self-service product for individual business owners — it is software used by accountants on behalf of their clients. The pricing reflects this positioning: IRIS products start from around £850 per year and scale significantly with the size of the practice.

Individual business owners looking for DIY MTD compliance software should look elsewhere. But if you use an accountant who manages your records and submissions on your behalf, there is a good chance they are using IRIS — which means your MTD compliance is handled within their existing workflow.

• Used by thousands of UK accountancy practices
• Comprehensive practice management alongside MTD compliance
• Strong compliance track record — decades of HMRC integration
• Not designed for self-service use by individual business owners
• High pricing — suited to practices, not individual taxpayers
• Best accessed through your accountant rather than directly

BrightPay

BrightPay is a payroll software tool primarily used by UK businesses and payroll bureaus to manage PAYE, RTI filing, pension auto-enrolment, and P60/P45 generation. It is not a general accounting tool and is not directly MTD for ITSA compatible in the way that Sage Accounting or Xero are.

BrightPay's relevance to MTD is in the payroll dimension — payroll records are part of the digital record-keeping requirement for employers, and BrightPay's RTI-compliant payroll system ensures that employment tax obligations run alongside income tax obligations. BrightPay Connect (a cloud add-on) provides employee self-service, automated payslip distribution, and cloud backup of payroll data.

For businesses using BrightPay for payroll, it will need to be used alongside a separate MTD-compatible accounting tool (such as Sage Accounting, Xero, or QuickBooks) for income and expense record-keeping and quarterly ITSA submissions. BrightPay is an excellent payroll tool but is not a standalone MTD for ITSA solution.

• Excellent, affordable payroll software — strong RTI compliance
• Used by tens of thousands of UK businesses and payroll bureaus
• Pension auto-enrolment with all major UK pension providers
• BrightPay Connect adds cloud access and employee self-service
• Not an MTD for ITSA income/expense platform — needs pairing with accounting software
• One-off annual licence fee — no per-employee charges up to included employee count

Hammock

Hammock is a niche but genuinely interesting player in the MTD landscape — a platform built specifically for UK property landlords. Founded with the goal of simplifying property finance management, Hammock provides bank feed connectivity (including Open Banking links to landlord-specific accounts and mortgage lenders), rental income and expense tracking, and MTD for ITSA quarterly submission capability specifically designed for property income.

For landlords with a small to medium property portfolio who want MTD-compliant record-keeping without the overhead of a full accounting system, Hammock offers a focused alternative. The platform understands property-specific categories — mortgage interest, lettings agent fees, repairs and maintenance, insurance, ground rent — and structures the MTD submissions accordingly.

Landlords with both property income and self-employment income will typically need Hammock alongside a separate accounting tool, or a combined platform like Sage Accounting or Xero that handles both income streams in one place. Pure landlords with no self-employment income will find Hammock the most property-focused MTD solution available.

• Built specifically for UK property landlords
• Understands property income categories natively
• Open Banking bank feeds including landlord-focused accounts
• MTD for ITSA submissions for property income
• Limited for landlords who also have self-employment income
• Smaller platform — less established than Sage, Xero, or QuickBooks

Crunch

Crunch is a hybrid product — online accounting software bundled with actual accountant services. Rather than DIY bookkeeping with software, Crunch provides a cloud accounting platform alongside access to qualified accountants who review your accounts, handle your annual accounts and tax returns, and advise on tax planning. The pricing reflects this professional service element.

Crunch supports MTD for VAT and is building out MTD for ITSA capability. For self-employed individuals who want MTD compliance handled by professionals rather than managing it themselves, Crunch's accountant-inclusive model removes the anxiety of quarterly submissions — your accountant handles them on your behalf, using the software on the back end.

The trade-off is cost — £25.50/mo and above is significantly more than Sage Sole Trader (free) or QuickBooks Sole Trader (£10/mo). But for individuals who want a one-stop professional service rather than software to manage themselves, Crunch's model has genuine appeal.

• Accountant service included — not just software
• Quarterly MTD submissions handled by professionals
• Suitable for self-employed individuals who want hands-off compliance
• Significantly more expensive than self-service alternatives
• Good for those who prefer professional oversight to DIY compliance

Our MTD Software Verdicts for 2026