How to Choose MTD Software: UK Buyer's Guide | Pie Tax

Alan Bermingham

10 Years of Expertise in Fintech Innovation

3 min read

This guide explains what to look for in Making Tax Digital software, who it's for (sole traders, freelancers, and landlords filing under MTD for Income Tax), and where to check HMRC compatibility. MTD for Income Tax is mandatory now for sole traders and landlords with qualifying income over £50,000, since 6 April 2026. The threshold drops to £30,000 from 6 April 2027, and to £20,000 from 6 April 2028.

Choosing the right Making Tax Digital software depends on how complex your income sources are and how you already manage your records. This guide walks you through what MTD-compatible software must do, the main types available, and how to pick the right one for sole trader or landlord income.

What MTD-Compatible Software Must Actually Do

Before comparing options, it helps to know what "MTD-compatible" actually means. At minimum, your software needs to:

Maintain digital records of your income and expenses
Prepare and submit ITSA quarterly updates directly to HMRC via the MTD API
Support the year-end Final Declaration, which replaces the Self Assessment return for MTD for Income Tax users
Preserve a valid digital link between your records and your HMRC submission, with no manual re-keying

If a tool can't submit directly to HMRC, it doesn't meet the requirement, no matter how good its bookkeeping features are. For a full breakdown of what Making Tax Digital is and who it applies to, see our Making Tax Digital for Income Tax guide.

A self-employed woman using an HMRC-compliant accounting software dashboard for Making Tax Digital.

Who Needs MTD Software Right Now

If you're a sole trader or landlord, you're in scope now if your qualifying income was over £50,000 in the 2024/25 tax year, with the next two thresholds arriving over the following two years. Once you know you're mandated, you're expected to choose software before you sign up, not after. If you're unsure whether the latest threshold changes affect you, our MTD Income Tax changes 2026–2027 guide covers what's changed and who's affected.

A sole trader reviewing HMRC Making Tax Digital software for Income Tax compliance.

The Four Types of MTD Software

Cloud accounting software is the most common choice. It's an all-in-one platform handling bookkeeping, invoicing, bank feeds, and submissions in one place. Best for sole traders, landlords, freelancers, and small businesses who want everything under one roof.

Bridging software connects a spreadsheet you already use to HMRC's API. It doesn't do invoicing or reporting, its only job is compliance, so it suits spreadsheet-loyal users or accountants managing several clients at once.

Desktop accounting software is traditional software updated to submit via MTD. It suits users with limited internet access or who don't want to move off an existing desktop system.

Lightweight MTD apps are mobile or browser-based tools built for simple finances and low transaction volumes. They track income and expenses and submit straight to HMRC without the overhead of a full accounting platform. Pie Tax falls into this category, it's a mobile-first, HMRC-recognised app built for sole traders, freelancers, and landlords who want to manage MTD compliance from their phone rather than a desktop accounting suite.

Professionals discussing MTD software compliance with a sole trader.

How to Choose the Right Software: A Checklist

Run any shortlisted software through these five checks before you commit.

1. HMRC compliance

Confirm the software appears on HMRC's official list of recognised software for MTD for Income Tax. Pie Tax, for example, is HMRC-recognised for direct submission, which is the baseline every option on your shortlist needs to clear.

2. Functionality

Look for bank feed integration, receipt capture, and reporting that matches how you actually work, not just what a features page promises.

3. Usability

Guided onboarding and mobile access matter more than they sound. If submitting a quarterly update feels like a chore, you're more likely to miss a deadline.

4. Collaboration

If you work with an accountant or have multiple people managing the books, check for multi-user access. Even if an accountant handles your submissions, you're still responsible for maintaining the digital records yourself.

5. Practical factors

Compare pricing, support availability, and how easily you can export your data if you ever switch providers. Costs vary widely: some providers offer a permanently free tier for simple affairs, while full-featured platforms with bank feeds and multi-user access typically run from around £10 to £35 a month, depending on the provider and how many income sources you need to cover.

What to Look for by User Type

Freelancers and sole traders need software that tracks income and expenses, integrates with bank feeds, supports ITSA quarterly updates, and handles invoicing. Pie Tax is built specifically for this group, combining bookkeeping, real-time tax tracking, and direct HMRC submission in one app. Once you know you're in scope, our guide on how to prepare for MTD for Income Tax Self Assessment walks through the practical setup steps.

Landlords should prioritise software that separates property income from other income and keeps clear records for agent fees, insurance, and mortgage interest. Pie Tax supports this too, alongside self-employment income, if you have both.

New businesses should choose something scalable that sets up compliant digital records from day one, rather than software you'll outgrow within a year.

House models and keys representing HMRC-compatible MTD software choices.

Why Digital Links Matter When You're Choosing Software

A digital link is an electronic transfer of data with no manual re-keying involved, think automated imports, API connections, or structured copy-paste. Manually typing totals from one system into another, or reading a total off a spreadsheet and entering it elsewhere, breaks the link and is the most common MTD compliance error. When you're evaluating software, check exactly how it moves data from your records into HMRC's system, not just whether it says "MTD-compatible" on the box.

Checking HMRC Compatibility Before You Commit

Always check HMRC's own Find software that works with Making Tax Digital for Income Tax service directly, rather than relying on a provider's own claims, and filter by business type and accessibility needs.

Once you've chosen your software, our guide on how to sign up to MTD covers the registration process. For deadline and penalty details once you're up and running, see our guide to MTD ITSA deadlines and requirements: quarterly updates are due 7 August, 7 November, 7 February, and 7 May, with the Final Declaration due by 31 January the following year.

Woman using digital tax software for HMRC compliance.

Final Summary

The right MTD software depends on how complex your income sources are and how hands-on you want to be with bookkeeping day to day. Run any shortlist through the compliance, functionality, usability, collaboration, and cost checks above before you commit.

Pie Tax is one option that meets that checklist for sole traders and landlords: it's HMRC-recognised, handles digital record keeping and direct submission for Income Tax Self Assessment, and runs as a mobile-first app rather than a desktop accounting suite. See how Pie Tax handles Making Tax Digital, or go straight to download the app or sign up here to get started.

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