Best MTD-Compliant Accounting Software UK 2026
Find the top MTD-compliant accounting software for your UK business in 2026.
Making Tax Digital (MTD) is a key government initiative to modernize the UK tax system. Our comprehensive guide helps you compare and choose the best MTD-compliant accounting software to ensure your business stays compliant and efficient.
All 15 Options Ranked
| Software | Rating | From | Action | MTD Compliant | Payroll | Inventory | Multi-Currency | Time Tracking | Bank Feeds | Expenses | Tax Filing |
|---|---|---|---|---|---|---|---|---|---|---|---|
QuickBooks Online Most Popular | 4.7 | £10/mo | |||||||||
Xero Editor's Pick | 4.6 | £7/mo | |||||||||
FreeAgent UK Favourite | 4.6 | £0 eligible customers, £10/mo landlord or £19/mo sole trader | |||||||||
 Sage Accounting UK Favourite | 4.4 | £20/mo | |||||||||
Zoho Books Best Value | 4.4 | Free | |||||||||
QuickFile Free Option | 4.4 | Free | |||||||||
Crunch | 4.3 | Free or £10/mo + VAT | |||||||||
FreshBooks | 4.2 | £16/mo | |||||||||
Sage 50 Accounts Enterprise | 4.2 | £115/mo | |||||||||
 Pandle Free Option | 4.2 | Free | |||||||||
Oracle NetSuite Enterprise | 4.1 | Custom quote | |||||||||
Clear Books | 4.1 | Free | |||||||||
 Odoo Free Option | 4.1 | Free; UK price unavailable | |||||||||
Microsoft Dynamics 365 Business Central Enterprise | 4.0 | £6.20/user/mo | |||||||||
IRIS KashFlow | 4.0 | £13.50/mo |
What MTD means for UK businesses
Making Tax Digital (MTD) is a government initiative to make it easier for individuals and businesses to manage their taxes. It requires businesses to keep digital records and use MTD-compatible software to submit their VAT returns.
MTD for VAT deadlines
All VAT-registered businesses, regardless of turnover, must now follow MTD rules for VAT. This means keeping digital records and submitting VAT returns using MTD-compatible software.
MTD for Income Tax 2026
MTD for Income Tax Self Assessment (ITSA) will be introduced from April 2026 for self-employed individuals and landlords with income over £50,000, and from April 2027 for those with income over £30,000. It will require digital record keeping and quarterly updates.
Penalties for non-compliance
Businesses that fail to comply with MTD rules may face penalties. These can include points-based penalties for late submissions and financial penalties for inaccurate returns. Ensuring your software is MTD-compliant is crucial to avoid these.
Frequently Asked Questions
What is Making Tax Digital (MTD)?
Making Tax Digital (MTD) is a government initiative to modernize the UK tax system, making it easier for businesses and individuals to manage their taxes online. It requires digital record-keeping and the use of MTD-compatible software to submit tax returns.
Who needs to comply with MTD for VAT?
As of April 2022, all VAT-registered businesses in the UK, regardless of their turnover, must comply with MTD for VAT. This means keeping digital records and submitting VAT returns using MTD-compatible software.
When does MTD for Income Tax Self Assessment (ITSA) come into effect?
MTD for ITSA will be introduced from April 2026 for self-employed individuals and landlords with business or property income over £50,000. It will extend to those with income over £30,000 from April 2027.
What are the penalties for not complying with MTD?
Non-compliance with MTD can result in penalties. These include a points-based penalty system for late submissions and financial penalties for errors in tax returns. It's essential to use MTD-compliant software to avoid these.
How can I find MTD-compliant software?
HMRC provides a list of software suppliers that have confirmed their products are MTD-compatible. Additionally, comparison sites like AccountingCompare can help you find and compare various MTD-compliant accounting software options.