Making Tax Digital software compared
MTD for Income Tax requires HMRC-recognised software. Xero suits growing businesses, FreeAgent suits sole traders and contractors, QuickBooks is the cheapest full package, Sage is strongest for payroll, and bridging software lets you keep an existing spreadsheet while still filing digitally.
The honest comparison
| Software | Best for | Watch out for |
|---|---|---|
| Xero | Growing businesses, anyone with staff or stock | Costs more; more than most sole traders need |
| FreeAgent | Sole traders, contractors, landlords | Free with a NatWest, RBS or Mettle account, otherwise check the price |
| QuickBooks | Cost-conscious small businesses | Introductory pricing rises sharply at renewal |
| Sage | Businesses with payroll needs | Interface feels dated next to the others |
| Bridging software | Anyone committed to spreadsheets | You still have to keep the records digitally and link them |
You do not have to abandon spreadsheets
A persistent myth is that MTD forces you onto cloud accounting. It does not. You can keep your records in a spreadsheet, as long as the spreadsheet itself is the digital record and it is linked to HMRC through bridging software using digital links rather than retyping.
For a landlord with four properties and thirty transactions a month, that is often the cheapest and least disruptive route.
What actually matters when choosing
Bank feed quality, because that is where the time goes. Receipt capture on your phone, because paper is the enemy. Whether your accountant can access it directly. And the renewal price rather than the first-year offer.
What does not matter: the feature list. Almost every package does far more than a small business will ever use.
We are certified on Xero, QuickBooks, FreeAgent and Sage, and we include the software cost in our MTD service so the choice is about fit rather than price.
This guide is general information, current at 9 November 2026. Tax rules change and depend on your circumstances. Please take advice before acting on it.