Choosing MTD Software in June 2026 Without Making Your Bookkeeping More Complicated
With the first Making Tax Digital for Income Tax quarterly update deadline due on 7 August 2026, many sole traders and landlords are still choosing software and worrying that the change will add hours of admin. The reality is that the right software should make your bookkeeping cleaner, not more complicated.
The key is to choose software that matches your income type, your transaction volume, your VAT position and the way you work with your accountant. If you choose a platform built for a business nothing like yours, you can end up paying for features you do not need or discovering too late that it does not support the way your income needs to be reported.
From 6 April 2026, MTD for Income Tax applies to sole traders and landlords with qualifying income over £50,000, based on their 2024/25 Self Assessment return. The first quarterly update is due by 7 August 2026. That means June is the right time to get the software decision made, the connection to HMRC authorised, and the first quarter’s records tidied up.
The Two Types of MTD Software Explained
MTD software generally falls into 2 broad categories.
Full cloud accounting software lets you keep records, connect bank feeds, categorise income and expenses, raise invoices, store receipts, send quarterly updates, and submit your tax return through the same platform. Xero, QuickBooks, FreeAgent and Sage are examples of products many sole traders and landlords consider. Plans and prices change regularly, so check the current cost and the exact MTD for Income Tax features before subscribing.
Bridging software connects to existing records, such as Excel or Google Sheets, and sends the required figures to HMRC. This can work if you are confident with spreadsheets and already keep clean digital records. However, it does not automatically sort your bookkeeping, categorise bank transactions or capture receipts.
Need Expert Accounting Advice?
If you are unsure about tax, bookkeeping, payroll, property accounts or business finances, speak to the team at FHP Accounting for clear, practical guidance.
HMRC requires software that can create or connect to digital records, send quarterly updates, and submit your tax return. Free and low-cost software products are available for simple cases, but HMRC does not recommend one provider over another. You should use HMRC’s software finder to check that any product you choose is recognised for MTD for Income Tax and supports your income sources.
If you want fewer hours spent on finances overall, full cloud accounting is usually the better long-term choice. If your spreadsheet system is already accurate and you only need a compliant submission route, bridging software may be enough.
How to Compare the Main Software Options
Do not choose software purely because a friend uses it. The right choice depends on your circumstances.
| What to check | Why it matters |
|---|---|
| Income sources supported | You may need support for self-employment, UK property and foreign property |
| Quarterly update filing | The software must send MTD for Income Tax quarterly updates |
| Tax return submission | It must also support the final MTD tax return |
| Bank feeds | These reduce manual entry and make reconciliation easier |
| Receipt capture | Useful for sole traders and landlords with frequent expenses |
| VAT support | Essential if you are VAT registered |
| Accountant access | Makes quarterly reviews and corrections much easier |
| Pricing and plan limits | Some entry plans restrict transactions, users, features or income types |
As one of the established teams of xero accountants Nottingham businesses rely on, our experience is that Xero is often a strong fit for sole traders and landlords who want cloud bookkeeping, bank feeds, accountant access and MTD support in one place. However, the best choice is still the one that fits your records, income streams and support needs.
Match the Software to Your Income Type
The most common mistake is choosing software before checking how your income needs to be reported.
If you are a sole trader with one straightforward trade, most recognised cloud platforms should be able to handle your records. You need bank feeds, income and expense categories, receipt capture, and the ability to send quarterly updates and your tax return.
If you are a landlord with UK property income, check that the software supports property categories properly. If you own more than one UK property, they are usually treated as one UK property business for MTD, but you may still want property-level tracking for your own management accounts.
If you have both trading income and property income, make sure your software can keep them separate. MTD requires quarterly updates for each relevant business or property source, so a combined rough total is not enough.
If you have jointly owned property, you need to understand your share of income and expenses. HMRC allows some simplification for jointly let property, but the records still need to be handled correctly. Our MTD for jointly owned property guide explains the position in more detail. For landlords with more complex portfolios, our accountant landlord team and property tax accountant specialists can advise on the right setup before you commit.
The VAT Question
If you are VAT registered as well as in scope for MTD for Income Tax, your software needs to support both areas. MTD for VAT has been in place for years, but MTD for Income Tax is a separate requirement. Do not assume your current VAT software automatically covers your income tax obligations.
Check whether your plan can handle VAT returns, MTD for Income Tax quarterly updates, and the MTD tax return itself. If you use Xero, our VAT in Xero guide covers the setup steps, and our Xero integrations explained post covers useful add-ons for payment processors, payroll and other systems.
For businesses approaching the £90,000 VAT registration threshold, our bookkeeping Nottingham team can help you manage VAT and MTD filing together, rather than treating them as separate admin problems.
Why Your Accountant’s Platform Matters
The most important factor in choosing software is often whether your accountant can work with it efficiently.
When you and your accountant use the same platform, they can review your records in real time, correct categories before the quarter closes, and submit updates on your behalf if authorised to do so. When you use a system they do not support, they may need to export data, rebuild records or charge extra for manual work.
Ask your accountant before subscribing. If you are not yet working with one, choose software with strong UK accountant support and a clear MTD for Income Tax roadmap.
For businesses that want the whole quarterly cycle handled professionally, our finance outsourcing services team covers bookkeeping, quarterly updates and year-end tax return support under one arrangement. The wider case for professional help is set out in our benefits of outsourcing your accountant post.
Getting Set Up Without Disrupting Existing Records
If your April, May and June 2026 records are currently in spreadsheets, switching software in June may feel daunting. It is manageable if you approach it in order.
Start by deciding whether you will use standard update periods or calendar update periods. Standard periods run from 6 April, while calendar update periods run from 1 April. You need to choose calendar periods before sending your first quarterly update if you want to use them.
Next, import or enter your records from the start of the tax year. Connect your bank feeds, categorise transactions, and reconcile the months already completed. Then check whether your software is authorised to connect to HMRC. Signing up for software is not the same as signing up for MTD or authorising the HMRC connection.
Our from spreadsheets to Xero guide walks through migration step by step. Our Xero bookkeeping basics post covers chart of accounts, bank feeds and daily workflows. Once you are set up, our automations in Xero and receipt capture workflow articles help keep your ongoing admin low.
Common Mistakes to Avoid
A few avoidable errors come up repeatedly when people choose MTD software in a rush.
Choosing software that does not support all your income sources is the biggest risk. A sole trader with rental income needs software that can handle both. A landlord with foreign property needs to check that foreign property is supported.
Another mistake is assuming bank feeds do the bookkeeping for you. They import transactions, but you still need to categorise and reconcile them properly. Our Xero bank reconciliation guide explains the weekly habits that prevent a backlog, and our 5 quick Xero tips post is useful once your software is running.
You also need to avoid broken digital links if you use spreadsheets and bridging software. HMRC does not allow you to manually copy and paste records between systems once they form part of your digital record trail. The links between your spreadsheet and submission software need to be digital.
If your records were already patchy before you switched, our bookkeeping health check can identify gaps before they become a submission problem. Our why accurate bookkeeping is crucial post explains why the underlying discipline matters just as much as the software.
For new businesses, our accountants for startups service includes software setup as part of the onboarding process. Our MTD quarterly reporting and MTD quarterly update returns guides cover the submission process once your software is ready.
For landlords, the expense categories need to be right from the start. Our deductible expenses for landlords post and Section 24 and mortgage interest guide explain the categories that matter most. Once you are into the rhythm, our month end in Xero walkthrough keeps each period clean before the next quarter opens. For year end, our filing returns for landlords post explains how the tax return ties everything together.
Working with established nottingham accounting firms like ours means you get software setup and ongoing compliance support from the same team.
Frequently Asked Questions
Can I still use a spreadsheet for MTD?
Yes, but only if you use compatible bridging software and maintain digital links. Spreadsheets can work for simple records, but cloud accounting is usually easier once transaction volume grows.
Is there an HMRC free tool?
HMRC provides guidance and a software finder, but you still need compatible software. Some recognised third-party products offer free or low-cost options for simple tax affairs, but limits may apply.
What if I choose the wrong software?
You can switch, but moving records mid-year creates extra work. It is better to check income-source support, VAT features, accountant access and submission capability before you commit.
Do I need separate software for each income source?
No. You can use one platform if it supports all your income sources. HMRC also allows more than one product, but each product must work together properly and only one product can be used for each separate submission.
Will the software submit automatically?
No. You or your accountant must confirm the submission. The software prepares the totals and sends them through HMRC’s system once authorised, but it should not file without approval.
Ready to Choose the Right Software and Get Your First Quarter Submitted on Time
The 7 August deadline is close enough that software decisions should not be left until the last week. Choose a recognised product, make sure it supports your income sources, authorise the HMRC connection, and clean up your first quarter’s records before the pressure builds.
Our team helps sole traders, landlords and property investors across Nottingham and nationwide get onto the right platform and stay on top of every quarterly submission. Call us on 0115 648 8686 or get in touch through our website to book a free, no-obligation conversation about your MTD setup.
I lead FHP Accounting, an accountancy practice specialising in Commercial and Residential Property Accounting. Our goal is to make the administration of running property portfolios easier for landlords, managers, and investors — allowing you to focus on what you do best, while we take care of everything behind the scenes.
Need Expert Accounting Advice?
If you are unsure about tax, bookkeeping, payroll, property accounts or business finances, speak to the team at FHP Accounting for clear, practical guidance.
