Software
MTD software
HMRC requires you to use approved software to file Making Tax Digital returns. You cannot use HMRC's online portal for MTD ITSA submissions. This guide explains what to look for and how different types of software work.
Why you need MTD software
MTD requires software to communicate with HMRC's APIs (Application Programming Interfaces) — the digital channel for submitting tax data. Every MTD-compatible tool must:
- Connect to HMRC via an authorised OAuth 2.0 integration
- Keep digital records of income and expenses
- Submit quarterly updates in the correct HMRC format
- Include mandatory fraud prevention headers on every API call (required by law)
Types of MTD software
Full accounting software
Records every transaction, automatically maps income and expenses to HMRC categories, and submits directly to HMRC. Best for businesses that want everything in one place.
Examples: QuickBooks, FreeAgent, Xero, Sage
Purpose-built MTD tools
Focused specifically on MTD ITSA compliance: connect to HMRC, submit quarterly updates, track obligations, and complete Final Declarations. Simpler and often more affordable.
Examples: ArcTax
Bridging software
Lets you keep your existing spreadsheet records. You export a CSV, upload it to the bridging tool, and it converts and submits the data to HMRC. No change to how you manage your books.
Examples: ArcTax, TaxUpdates
What to look for in MTD software
HMRC-recognised
Listed on HMRC's software choices register. Non-listed tools cannot connect to live HMRC APIs.
Direct API connection
Connects to HMRC without a third-party intermediary. Reduces points of failure and keeps your data under your control.
OAuth 2.0 authorisation
The official secure login flow for HMRC. Never enter your Government Gateway password into the software itself.
Obligation tracking
Shows your open quarterly deadlines pulled live from HMRC so you never miss a submission.
Bridging import
If you want to keep your spreadsheet, the software should support CSV upload and auto-mapping to HMRC categories.
Final Declaration support
Not all tools cover the year-end Final Declaration. Confirm this is included before committing.
Agent portal (if needed)
Accountants and tax agents need a multi-client portal with per-client obligation tracking and submission history.
Audit trail
Every submission stored with HMRC reference numbers and confirmation — essential for disputes or corrections.
Do I need to change my accounting setup?
Not necessarily. If you already use a cloud accounting tool like QuickBooks, FreeAgent, or Xero, they are adding MTD ITSA support — check their release dates.
If you prefer not to move your records, bridging software is the most practical option. You keep your Excel or Google Sheets, export a CSV each quarter, and the bridging tool handles HMRC submission.
The only thing HMRC requires is that your records are digital — paper records are no longer compliant under MTD. A spreadsheet counts as digital record-keeping.
Free vs paid MTD software
A number of MTD ITSA tools are available free or at low cost. Paid tools typically offer more features: full transaction management, receipt capture, VAT returns, and accountant portals. For sole traders and landlords who just need compliant quarterly submissions, a focused MTD tool is often more than sufficient.
ArcTax — purpose-built for MTD ITSA
Direct HMRC API connection, obligation tracking, bridging CSV import, quarterly updates for self-employment and property, and Final Declaration support. Solo plan from £10/month — no credit card required to start.
Try ArcTax freeHMRC software choices
HMRC maintains a public register of MTD-compatible software at find-making-tax-digital-income-tax-software. Each product listing shows supported income types, operating systems, and whether it includes bridging, agent, and free versions.