Making Tax Digital Software Guide

Making Tax Digital (MTD) is HMRC’s programme to digitise the UK tax system. For accounting firms, it changes not just how clients file their taxes but how practices manage client data, maintain digital records, and submit returns on behalf of clients. Choosing MTD-compatible software — and understanding which phase of MTD applies to which clients — is now a core part of running a UK accounting practice.

This guide covers what MTD means for accounting firms, which phases are live, and which software supports compliance across the MTD programme.

MTD Phases: What Is Live, What Is Coming

Phase	Scope	Status
MTD for VAT	All VAT-registered businesses	Live (mandatory since April 2022 for all)
MTD for Income Tax (ITSA)	Sole traders and landlords with income > £50,000	Mandatory from April 2026
MTD for Income Tax (ITSA)	Sole traders and landlords with income > £30,000	Mandatory from April 2027
MTD for Income Tax (ITSA)	Sole traders and landlords with income > £20,000	Mandatory from April 2028
MTD for Corporation Tax	Companies	Under consultation — date TBC

For accounting firms, the practical impact is:

MTD for VAT is already affecting every VAT-registered client — your software must support compatible VAT returns and digital links
MTD for Income Tax is rolling out from April 2026 and will affect a significant portion of self-employed and landlord clients
MTD for Corporation Tax is on the horizon but not yet legislated

What MTD Requires From Software

MTD mandates:

Digital record keeping: Transactions must originate in or be imported into MTD-compatible software — manual transcription between spreadsheets and software breaks the digital link requirement
Digital links: Data must pass between software using digital connections (API, CSV import, copy/paste is acceptable within the same software but not between separate systems in most cases)
Submission via MTD API: Returns must be submitted directly to HMRC via MTD-compliant API, not through the HMRC online portal

For accounting firms this means the software you use for client VAT returns must already be MTD API-connected to HMRC. For income tax from 2026, the quarterly update and final declaration workflow will require compatible software throughout the year.

MTD-Compatible Software for Accounting Firms

TaxCalc

TaxCalc is one of the leading MTD-compliant platforms for UK accountants, with direct HMRC API submission for both MTD VAT and MTD for Income Tax Self Assessment (ITSA). Accounts production feeds directly into tax computations, meaning firms can prepare statutory accounts and submit MTD-compliant returns without re-keying data across systems.

MTD coverage: MTD for VAT, MTD ITSA (including quarterly updates and final declarations)

Best for: UK practices that want tax preparation and accounts production from a single vendor with full MTD API coverage.

Capium

Capium includes direct HMRC filing for VAT, self-assessment, and corporation tax returns as part of its all-in-one practice management suite. MTD VAT submissions are supported natively, and the platform is building out ITSA support alongside the rollout timeline.

MTD coverage: MTD for VAT; MTD ITSA in development

Best for: UK practices that want compliance, practice management, and client portal tools in one platform with HMRC direct filing built in.

Accountancy Manager

Accountancy Manager is primarily a compliance workflow and client management tool rather than a filing platform. It tracks MTD-related deadlines and filing obligations across the client base but does not submit returns directly. It is commonly used alongside TaxCalc or Capium to provide deadline tracking and workflow management while those platforms handle the actual HMRC submissions.

MTD coverage: Deadline tracking and workflow for MTD obligations; not a direct filing platform

Best for: Firms that want automated compliance deadline monitoring for MTD across their client base, paired with a separate filing tool.

Xero

Xero is MTD for VAT compliant and is used by many UK firms for client bookkeeping with MTD-compatible VAT submissions. For MTD ITSA, Xero is developing the quarterly update and final declaration capabilities required for the 2026 rollout.

MTD coverage: MTD for VAT (live); MTD ITSA in development

Best for: Firms using Xero as the primary bookkeeping platform for clients, where MTD VAT is submitted directly from the client’s Xero account.

Pixie

Pixie tracks HMRC filing deadlines including MTD obligations within its practice management workflow, and automates task creation around those deadlines. Like Accountancy Manager, it manages the workflow around MTD compliance rather than submitting returns directly.

MTD coverage: Deadline tracking and workflow management; not a direct filing platform

Best for: Small to mid-sized UK firms that want automated compliance workflows covering MTD deadlines integrated into their practice management.

Bridging Software and Spreadsheets

Some firms and clients use spreadsheets for their bookkeeping. Under MTD, spreadsheets are permissible as a record-keeping tool provided there is a digital link to MTD-compliant bridging software that submits to HMRC. Bridging tools connect spreadsheet data to the MTD API without requiring clients to move to full accounting software.

This is a short-term solution — as MTD for Income Tax requires quarterly updates throughout the year, the overhead of maintaining spreadsheets with digital links will push most firms toward recommending full accounting software for affected clients.

Preparing Your Practice for MTD ITSA

With MTD for Income Tax applying to clients earning over £50,000 from April 2026, firms should be:

Auditing their client base — identifying which clients will be in scope for April 2026, April 2027, and April 2028
Evaluating software readiness — confirming that your chosen platforms have confirmed MTD ITSA API connectivity and quarterly update workflows
Planning client migrations — clients on spreadsheets or non-compliant software will need to migrate before their effective date
Updating engagement letters — MTD ITSA changes the nature of the ongoing engagement for self-employed clients

For managing these workflows across multiple clients, see our UK practice management software guide. For broader tax software options including non-UK platforms, see our tax software guide.