Making Tax Digital has moved from a future worry to a present requirement for most UK businesses. VAT registered businesses already keep digital records and file through compatible software, and Making Tax Digital for Income Tax is bringing many sole traders and landlords into quarterly digital reporting. Whatever your situation, you now need software that HMRC recognises for the job.
The good news is that every serious UK accounting product is built for this, so the choice is about which one fits your business best rather than whether it handles MTD at all. We have ranked the strongest HMRC recognised options for 2026, on how cleanly they handle digital submission alongside price and ease of use.
What to look for in Making Tax Digital software
The essential requirement is that your software is recognised by HMRC for the specific obligation you face, whether that is Making Tax Digital for VAT or the newer Making Tax Digital for Income Tax. Recognition means you can keep digital records and file directly to HMRC, and HMRC publishes a full list of recognised products. Every option we recommend is recognised.
Beyond that, look for features that make the quarterly rhythm painless: reliable bank feeds that keep your digital records current, a clear view of the tax you owe as you go, and a checking step that flags likely errors before a submission. If you are a sole trader or landlord newly brought into MTD for Income Tax, prioritise simplicity, since you need to satisfy the rules rather than run a full ledger. And remember that a plain spreadsheet is not compliant on its own, though bridging software can connect one to HMRC.
How we assessed these tools
Every product here was judged on the things that actually decide whether software works for a UK business: the real published price excluding VAT, how it handles HMRC obligations such as Making Tax Digital, RTI or CIS where relevant, the depth of the core job it is bought for, how quickly a non specialist can get productive, and the quality of UK support. We read each vendor's own pricing pages rather than repeating third party figures, and we weight verified user ratings from people who run these tools day to day.
We also try to be honest about fit rather than crowning a single winner, because the right tool for a ten person business is rarely the right tool for a two hundred person one. Each entry below carries its real starting price, its current Assaylist rating and a clear note on who it suits and where it falls short, so you can match the software to your own situation rather than to an average. Where we earn a commission from an outbound link we say so, and it never changes the order of this list.
The best options ranked
1. Xero
Xero is HMRC recognised and handles both Making Tax Digital for VAT and for Income Tax cleanly, with VAT returns filed directly from the software in a few clicks. Its fast bank reconciliation keeps your digital records tidy, which is exactly what MTD rewards, and it is the tool most accountants already know.
What you get: The New Zealand built platform that reshaped UK cloud accounting. Four tiers, bundled payroll from the Grow plan upwards, and a very large app ecosystem. It holds a 4.1 out of 5 rating across 293 reviews on Assaylist.
Pricing: The plans run Ignite at £16, Grow at £37, Comprehensive at £50 and Ultimate at £65 per month, excluding VAT.
Why we rate it:
- Fastest bank reconciliation in the category
- Unlimited users on every tier
- Payroll included from the Grow plan
- Huge app marketplace and strong API
Bear in mind: the entry Ignite plan is tight, so most will want Grow.
Read our full Xero review →
2. QuickBooks Online
QuickBooks Online is recognised for MTD for VAT and Income Tax, and its strong automated bank categorisation keeps your digital records accurate with minimal effort. It includes CIS from the entry tier, and its pre file checks help catch mistakes before a VAT submission goes to HMRC.
What you get: Intuit's cloud accounting software, sold in four tiers from Simple Start to Advanced. Strong automation, deep app ecosystem, aggressive introductory discounting. It holds a 4.1 out of 5 rating across 235 reviews on Assaylist.
Pricing: The plans run Simple Start at £14.33, Essentials at £34.2, Plus at £50.4 and Advanced at £110.7 per month, excluding VAT.
Why we rate it:
- Strong automated bank categorisation
- CIS from the entry tier
- Project profitability tracking
- Very large app marketplace
Bear in mind: watch the renewal price after the introductory discount.
Read our full QuickBooks Online review →
3. Sage Accounting
Sage Accounting handles MTD for VAT with assisted submissions and a mistake detection step, backed by decades of Sage's UK compliance experience. With payroll bundled into every plan, it covers your VAT and PAYE obligations from one supplier, which simplifies the whole compliance picture.
What you get: Sage's main cloud accounting product for small UK businesses. Payroll for one employee and the Sage Copilot assistant are now bundled into all three tiers. It holds a 4.0 out of 5 rating across 394 reviews on Assaylist.
Pricing: The plans run Start at £20, Standard at £43 and Plus at £59 per month, excluding VAT.
Why we rate it:
- Payroll included in every plan
- Making Tax Digital for VAT
- Sage Copilot AI assistant
- CIS management and submission
Bear in mind: the Start tier is too limited for most businesses.
Read our full Sage Accounting review →
4. FreeAgent
FreeAgent is recognised for Making Tax Digital for VAT and Income Tax and is purpose built for the sole trader and contractor facing the new rules. Its tax timeline shows every deadline and liability, turning MTD's quarterly rhythm into something manageable, and it is free for customers of several banks.
What you get: A UK accounting product owned by NatWest, aimed squarely at limited company contractors and sole traders. Free for as long as you bank with the group. It holds a 4.0 out of 5 rating across 497 reviews on Assaylist.
Pricing: The plans run Free with NatWest, RBS, Ulster or Mettle at free, Sole trader at £19 and Limited company at £33 per month, excluding VAT.
Why we rate it:
- Free with a NatWest, RBS, Ulster or Mettle account
- Built for UK limited company contractors
- Tax timeline showing what is owed and when
- Corporation Tax and dividend handling
Bear in mind: it does not scale to stock or larger teams.
Read our full FreeAgent review →
5. QuickFile
QuickFile offers MTD compatible VAT returns and MTD VAT bridging for spreadsheet users, genuinely free below a thousand ledger entries a year. For a micro business that needs to satisfy Making Tax Digital without a software budget, it is the standout free option.
What you get: A UK company offering full accounting software free for smaller businesses, with a flat £60 a year charge only once your transaction volume grows. It holds a 4.1 out of 5 rating across 203 reviews on Assaylist.
Pricing: The plans run XS, S and M at free, L and XL at £60 and Automated bank feeds at £15 per year, excluding VAT.
Why we rate it:
- Genuinely free below 1,000 ledger entries
- Unlimited users on every plan
- £60 a year at the paid tier, not per month
- UK company holding UK data
Bear in mind: bank feeds are a small paid extra and the interface is dated.
Read our full QuickFile review →Comparison at a glance
Here is how the shortlist compares on what it is best for, the starting price excluding VAT and the current Assaylist rating.
| Software | Best for | Starting price | Rating |
|---|---|---|---|
| Xero | Best overall for MTD | From £16 / month | 4.1 |
| QuickBooks Online | Best for automated records | From £14.33 / month | 4.1 |
| Sage Accounting | Best with payroll | From £20 / month | 4.0 |
| FreeAgent | Best for sole traders | From £19 / month | 4.0 |
| QuickFile | Best free for MTD | From £0 / year | 4.1 |
How much should you budget?
Making Tax Digital software need not be expensive. Free options such as QuickFile, and the free tiers of Zoho Books and Sage Sole Trader, satisfy the rules at no cost for eligible businesses. Paid cloud accounting that includes MTD starts around fourteen to twenty pounds a month excluding VAT and rises with capability, so most businesses pay for the accounting features they want and get MTD compliance included rather than as a separate charge.
Since every recognised product handles the filing itself, there is little reason to pay a premium purely for Making Tax Digital. Budget instead for the accounting capability your business needs, and treat MTD recognition as a baseline that all the serious options already meet.
Our verdict
For most UK businesses, Xero and QuickBooks Online are the best MTD choices, both HMRC recognised and both making digital submission effortless. Sage Accounting is the pick if you want payroll bundled alongside your VAT, keeping all your HMRC obligations with one supplier.
Sole traders and contractors facing Making Tax Digital for Income Tax should look hard at FreeAgent, and the cost conscious will find QuickFile satisfies the rules for free. Since every option here is HMRC recognised, choose on the wider fit for your business rather than on MTD compliance alone, because they all handle that part well.
The bottom line
Since every option here is recognised by HMRC, Making Tax Digital compliance is not the thing to decide on, because they all handle it well. Choose on the wider fit for your business: Xero or QuickBooks for most, Sage if you want payroll bundled, FreeAgent for sole traders, and QuickFile if you need it free. Get the fit right and the quarterly rhythm of Making Tax Digital becomes routine rather than a chore.
Frequently asked questions
What software is compatible with Making Tax Digital?
Xero, QuickBooks Online, Sage Accounting, FreeAgent, QuickFile and Zoho Books are all recognised by HMRC for Making Tax Digital. Each lets you keep digital records and file your VAT return, and most support MTD for Income Tax as well. HMRC maintains a full list of recognised software.
Is Making Tax Digital mandatory?
Making Tax Digital for VAT is already mandatory for VAT registered businesses. Making Tax Digital for Income Tax is being phased in for sole traders and landlords above the income threshold, requiring digital records and quarterly updates. Most businesses now need compatible software.
What is the cheapest Making Tax Digital software?
QuickFile is free below a thousand ledger entries a year and supports MTD VAT. Zoho Books, Sage Sole Trader and FreeAgent all have free routes to MTD compliance for eligible businesses. Paid MTD software starts around fourteen to twenty pounds a month excluding VAT.
Can I use a spreadsheet for Making Tax Digital?
Only with bridging software that connects your spreadsheet to HMRC, such as QuickFile's MTD VAT bridging. A plain spreadsheet on its own is not compliant. For most businesses, moving to proper accounting software is simpler and less error prone than maintaining a bridged spreadsheet.
Does Making Tax Digital software file my VAT return?
Yes. HMRC recognised software files your VAT return directly to HMRC from your digital records, usually in a few clicks. Several products, including QuickBooks and Sage, add a checking step that flags likely errors before you submit, which reduces the risk of a mistake.
Prices were checked against each vendor's UK pricing on 6 August 2026 and exclude VAT unless stated. Vendors change pricing, so confirm the current figure on the vendor's own site before you buy. Some links are commercial; where we earn a commission it never affects our ratings or the order of this list.
