Best MTD-Compatible Software for Sole Traders and Landlords

One of the first decisions you’ll need to make after registering for Making Tax Digital is which software to use. HMRC requires “recognised software”, but with dozens of options on the market, choosing can feel overwhelming.

This guide breaks down what to look for and the main categories of software available in 2026.

What Does “HMRC-Recognised Software” Actually Mean?

HMRC maintains a list of software providers tested and approved to communicate with their MTD systems via API. You can find the full list on GOV.UK by searching for “software compatible with Making Tax Digital for Income Tax.”

HMRC does not endorse or recommend any specific product. They simply confirm technical compatibility.

The Three Types of MTD Software

1. Full Cloud Accounting Software

All-in-one platforms handling bookkeeping, invoicing, bank feeds, expenses, and MTD submissions. Examples include Xero, CleanBooks, QuickBooks, FreeAgent, and Sage.

Best for:

Sole traders and landlords who want a comprehensive digital system with automated features. Particularly useful if starting from scratch.

Considerations:

Monthly subscription costs (typically £12–£35/month). Learning curve if you’re not used to cloud accounting.

2. Bridging Software

Connects your existing spreadsheet to HMRC’s MTD system. Doesn’t replace your bookkeeping, just creates the “digital link.”

Best for:

Spreadsheet users who want minimal disruption. Also useful as an interim solution while evaluating full accounting software.

Considerations:

Your spreadsheet must be structured in a specific format. Some bridging tools are free; others charge per submission.

3. Specialist Landlord Software

MTD-compatible software designed specifically for property landlords. Multi-property tracking, tenant management, mortgage interest calculations.

Best for:

Landlords with multiple properties or complex letting arrangements.

Considerations:

Narrower feature set. May not be suitable if you also have a sole trade.

Key Features to Look For

→ Submit quarterly updates to HMRC via the MTD API

→ Handle your specific income sources

→ Produce the End of Period Statement

→ Store digital records meeting HMRC’s requirements

→ Allow your accountant to access and submit on your behalf

Our Recommendation

→ Want everything in one place: full cloud accounting software like CleanBooks

→ Love your spreadsheet: bridging software

→ Multiple properties: specialist landlord software or a cloud suite with strong property features

Need help getting set up? Visit us at The Tax Guys today and complete your MTD registration in 2 minutes.

→ Get registered today