MTD for Income Tax software: your four options and what they cost

Last checked against GOV.UK guidance

Short answer: You need software that HMRC recognises to send quarterly updates and your final declaration. That can be full accounting software, a cheap “bridging” tool that sends figures from a spreadsheet, or a simpler tool built around your bank statement. Free options exist, but check their limits. A spreadsheet on its own is not enough, because it cannot send anything to HMRC.

Not sure you are in scope yet? Use the MTD checker first. Anyone with qualifying income over £30,000 starts in April 2027 (see MTD from April 2027).

The four approaches

Approach Suits Effort per quarter Digital records Typical cost
Full accounting software People who want invoices, receipts and bookkeeping in one place Low once set up: categorise bank transactions, review, send Kept in the software Free (limited) to about £20 a month, see table below
Bridging software People already happy with a spreadsheet Medium: keep the sheet up to date, link it, send Kept in your spreadsheet Roughly £24 to £50 a year for the bridging tool
Spreadsheet alone Nobody, as a complete solution Not applicable Yes, but it cannot send to HMRC Free, but you still need a bridging tool
Simple bank-statement tool Sole traders and landlords with one business bank account and few transactions Low: upload CSV, check totals, send Depends on the tool, see below Varies; SendMTD plans £5 a month or £50 a year once launched

Full accounting software

This is the traditional route. You connect a bank feed or import transactions, the software categorises them, and it sends the cumulative update. You also get invoicing, receipt capture and reports. The trade-off is that you are signing up to bookkeeping. If you only have a handful of transactions each quarter, that may be more than you need.

Bridging software

Bridging software connects to records you keep elsewhere, usually a spreadsheet, and makes the submission to HMRC. GOV.UK describes it as software that connects to existing records and can make submissions to HMRC for you. The rule to watch is the digital link: once a record has been sent, you must not move it by copy and paste. Formulas and linked cells are fine. See spreadsheets, bank statements and digital links for detail.

Spreadsheets alone

A spreadsheet can hold your digital records, because GOV.UK names it as an example of record-keeping software. But it cannot connect to HMRC’s systems. You need a recognised product to send the update. So a spreadsheet is the record, not the whole answer.

Simple bank-statement tools

These skip bookkeeping. You upload the CSV your bank gives you, check the totals per category, and send the update. SendMTD, our own tool, is built this way, but to be plain: it has not launched yet, it is not on HMRC’s list of recognised software, and there is a waitlist. Until a product appears on HMRC’s list, you cannot use it for MTD for Income Tax. If you need to file before then, pick a product from HMRC’s list, such as one of those below.

Because a bank CSV only has dates, amounts and descriptions, any tool of this kind still has to help you assign a category to each line. See what goes in a quarterly update for the categories.

Example products and prices

These are examples, not recommendations, and HMRC does not recommend any product either. Prices are as of November 2026, taken from each vendor’s own page. Offers and plans change, and VAT treatment differs between vendors.

Product Type Price as stated by the vendor Notes Source
Pandle Accounting Free plan; Pro £5 a month + VAT Vendor says MTD Income Tax submissions are included on the free plan, web app only Pandle
ANNA Business account with MTD MTD free with an ANNA account You need to open an ANNA account. The offer is described on ANNA’s blog, not a pricing page ANNA
Xero Accounting Ignite plan £18 a month ex VAT. Intro offer: 90% off for the first six months (£1.80 a month) Vendor lists “MTD for Income Tax ready” on every plan; billed monthly Xero
Hammock Landlord accounting From £8 a month ex VAT (1 to 3 properties); £76.80 a year if billed annually Quarterly updates and final declaration included on every plan; priced by number of properties Hammock
TaxCalc MTD Quarterly Filer Bridging From £24 a year Spreadsheet-based, sends quarterly updates. The page does not say it submits the tax return, or whether VAT is included TaxCalc
Coconut MTD Bridging Bridging £49.99 a year Year-end declaration is a £49.99 add-on Coconut
Coconut MTD filing Accounting £12.99 a month or £129.99 a year Includes the year-end declaration. Coconut also advertises free use for two years with a Zempler bank account Coconut

Some well-known names, such as FreeAgent, QuickBooks, Sage and Landlord Vision, are missing because we could not confirm a current price on the vendor’s own page. Check their pricing pages and HMRC’s list directly.

Reading the “free” options honestly

GOV.UK warns that free products exist for people with simple tax affairs, but there may be limits on how the product can be used, such as a cap on the number of transactions. Free plans often depend on a condition (a particular bank account, web-only access, a limit on invoices). Read what is excluded before you rely on one.

How to check a product is on HMRC’s list

  1. Go to GOV.UK and open “Find software that works with Making Tax Digital for Income Tax”.
  2. Answer the questions about your income sources and whether you are creating new records or connecting existing ones. The tool gives you a personalised list.
  3. You can also search for software you already use to see whether it works with MTD for Income Tax.
  4. Check the points GOV.UK suggests: it supports all your income sources, works with your accounting period (standard or calendar quarters), and fits your budget.
  5. If a product is not on the list, ask the provider about its plans. A vendor saying it is “MTD ready” on its own site is not the same as being on the list.

After choosing software you must sign up for MTD for Income Tax, if you have not already, and connect the software to HMRC to authorise it.

Which approach fits you

Whichever you choose, updates are cumulative, so a tool that recalculates year-to-date totals each quarter saves you work. Check deadlines and penalties so you know when you need it working.

Sources

Can I do MTD for Income Tax with a spreadsheet or my bank statement?

Spreadsheets can hold MTD digital records, but need bridging software and digital links. See what records must contain and how bank CSVs fit.

What goes in an MTD quarterly update: categories explained

The income and expense categories in an MTD quarterly update for self-employment and UK property, with plain-English examples and what waits for year end.

MTD cumulative quarterly updates explained (and how to fix a mistake)

Each MTD quarterly update covers the tax year so far, from 6 April. See a four-quarter worked example, the spreadsheet mistake and how to fix errors.

This guide is general information, not tax or legal advice. Rules can change: check GOV.UK or speak to an accountant about your situation. SendMTD is not affiliated with HMRC.