Why MTD ITSA Requires Specific Software
Under MTD ITSA, quarterly updates and the Final Declaration must be submitted directly to HMRC via the MTD API — HMRC’s dedicated digital interface. There is no government website or portal through which you can manually enter and submit your data. The only compliant route is through HMRC-approved third-party software.
Unlike Self Assessment, where you could log in to HMRC’s website and enter figures manually, MTD ITSA submissions must go through approved software. This is a legal requirement, not a recommendation.
What Must MTD-Compatible Software Do?
To qualify as MTD-compatible, software must meet HMRC’s technical requirements:
- Store digital records of income and expenses in categorised form
- Connect to HMRC’s MTD API to submit quarterly updates and the Final Declaration
- Display HMRC’s in-year tax estimate after each quarterly submission
- Support multiple income sources — property and self-employment tracked separately
- Retain records in a format accessible for HMRC enquiries
The Leading MTD Software Options Compared
| Software | Best For | MTD Support | Approx. Monthly Cost |
|---|---|---|---|
| Xero ⭐ AccTek Recommended | Landlords with portfolios, freelancers, mixed income | Full MTD ITSA support | £15–32/month (included with AccTek) |
| QuickBooks | Sole traders, freelancers, small businesses | Full MTD ITSA support | £14–35/month |
| FreeAgent | Freelancers, contractors, consultants | Full MTD ITSA support | £19/month (free with some bank accounts) |
| Sage Accounting | Established businesses, landlords | Full MTD ITSA support | £15–36/month |
| HMRC’s free tools | Very simple cases only | Limited | Free |
Xero — Why AccTek Recommends It for Landlords and Freelancers
Xero is the cloud accounting platform of choice at AccTek for most clients. Its combination of powerful features, reliable MTD API integration, and excellent mobile app makes it the most practical option for landlords and self-employed individuals.
Key Xero Features for MTD Compliance
- Automatic bank feeds — connect your bank account and rental income transactions are imported automatically, reducing manual entry
- Property tracking — configure separate tracking categories for each property in your portfolio
- Receipt capture — photograph receipts with your phone via the Xero app; they are attached to the relevant transaction
- MTD API connection — direct integration with HMRC for quarterly update submissions
- In-year tax estimates — real-time view of your estimated tax position after each submission
- Multi-currency support — useful for landlords with overseas income
Can You Use a Spreadsheet for MTD?
A plain spreadsheet (Excel, Google Sheets, or similar) is not MTD-compliant on its own. However, spreadsheets can be used as part of an MTD-compliant system if they are connected to bridging software — a separate piece of software that reads your spreadsheet data and submits it to HMRC via the MTD API.
Bridging Software Options
- Absolute Tax MTD Bridge — popular with accountants managing spreadsheet-based clients
- BTCSoftware — used by many UK accounting practices
- DataDear — connects Excel spreadsheets to HMRC’s API
Bridging software adds cost and complexity — you pay for both the spreadsheet tool and the bridge. Most clients find it simpler and cheaper to use purpose-built software like Xero. Bridging is most suitable where clients already have well-structured spreadsheet systems they are reluctant to abandon.
How to Choose the Right MTD Software
- Consider your income complexity — multiple properties or income streams benefit from Xero’s tracking features
- Assess your bank’s feed availability — most major UK banks connect to Xero and QuickBooks; check compatibility before committing
- Think about mobile use — if you want to photograph receipts on the go, all four major platforms have capable apps
- Consider your accountant’s platform — the most efficient arrangement is using the same software as your accountant; AccTek uses Xero
- Cost — as an AccTek client, your Xero subscription is included in your monthly fee; no additional software cost
What About Free HMRC Software?
HMRC provides basic free digital tools for MTD ITSA for individuals with very simple tax affairs. These tools are suitable only for sole traders or landlords with a single income source, no complex expenses, and straightforward tax positions. Most AccTek clients have income complexity that makes dedicated software a better choice.
Frequently Asked Questions
Software sorted — all included with AccTek
Your Xero subscription is included in our monthly fee. We set it up, configure it for your income sources, and manage it throughout the year.
Final guide: How an accountant helps with MTD ITSA