Choosing MTD-compatible software

Two routes

To meet MTD requirements, you have two main options: a full bookkeeping platform, or a spreadsheet plus bridging software. Each suits different situations.

Full bookkeeping platform

Cloud platforms (Xero, QuickBooks, FreeAgent, Sage Business Cloud, etc.) handle everything: bank feeds, invoicing, expenses, VAT returns, and (when MTD ITSA arrives) Income Tax submissions.

Pros

• Bank feeds reconcile automatically
• Receipt capture via mobile app
• Reports for management decisions
• Multi-user access for accountant collaboration

Cons

• Monthly subscription cost (typically £10-£40/month)
• Some learning curve
• Data lock-in — moving to a different platform later means a migration

Spreadsheet + bridging software

Keep records in Excel or Google Sheets, then use a bridging tool (e.g. Tax Optimiser, VitalTax, etc.) to submit to HMRC. The bridge pulls totals digitally — no manual re-entry.

Pros

• Cheaper than full platforms (often pay-per-submission)
• Familiar interface if you already use spreadsheets
• Maximum flexibility on layout

Cons

• You handle bank reconciliation manually
• No bank feeds, no receipt capture
• Less suitable as transaction volume grows

What to look for

• HMRC-recognised — check the gov.uk list of compatible software
• Covers the right MTD obligations (VAT today, Income Tax from 2026 if relevant)
• Bank feed for your bank if you want automation
• Easy access for your accountant
• Reasonable pricing as you grow

Don't pick last minute

The worst time to choose software is the week your MTD obligation starts. Trial something for a quarter before you're forced into it. Most platforms offer 30-day free trials.