At a glance
- Choosing MTD for IT software is a significant decision for your practice.
- Consider integration, vendor reputation, client suitability, and value for money.
- Segment clients to match them with general or industry-specific software.
With MTD for IT – Making Tax Digital for Income Tax Self-Assessment – is set to be the most significant change for self-assessment clients in a generation. The decision over which software tools to pick should not be taken lightly.
While it may be tempting to choose the cheapest tools to serve traditionally price-sensitive sole trader clients, firms will also need to consider a wide range of factors to ensure that the tools are appropriate for their portfolio.
Depending on the client profile, some firms may need more than one core tool. This increases the importance of being able to connect to practice management software and add-ons, to ensure consistency and quality of service delivery.
HMRC recognition and compatibility
The most obvious starting point for researching MTD for IT software options is the Gov.uk website, which provides links to HMRC-approved providers. Surprisingly, there have been instances where vendors claim to have been approved but are not listed on the site.
At time of writing, the complete list comprised around 40 different options, including well-known brands such as FreeAgent, QuickBooks, Xero, and Sage, and many newer entrants.
While HMRC does provide some level of detail on functionality today, you’ll need to drill down into the detail to understand what other capabilities are likely to be available when MTD for IT is legislated next year.
Robyn Milstead, director of tax at LKA Chartered Accountants, and founder of the Accountants Therapy community says: “HMRC’s software finder doesn’t allow you to filter results by what vendors are building in preparation for April 2026. Alongside the finder tools, do your own research for each individual company and use tools like our MTD Therapy speed dating webinars to understand the differences and planned functionality.”
Integration and interoperability
The bulk of MTD for IT software listed by HMRC is for core ledger tools, which provide bookkeeping, payroll functionality, and modules for day-to-day record-keeping.
However, practitioners will also need to consider how MTD for IT tools fit into firm-wide processes. This includes practice management, company filings and connectivity to other tools used, such as data capture, payments and accounts receivable for invoicing.
Some firms may choose to adopt MTD for IT tools that are bundled with these features and modules. For example, Nomi includes a practice management suite that covers onboarding and company secretary services.
Tom Bickle runs Accountants Therapy with Milstead and has his own practice, JP Blackmoor. He notes that year-end self-assessment will now be being prepared through APIs rather than by uploading trial balances. And he believes that MTD For IT requires a critical decision: which tech stack is going to be best for each practice’s needs.
Value for money
Many self-assessment clients have relatively simple record-keeping requirements and, on this basis, can be price sensitive.
For this subset of clients, value for money should be a key consideration.
“Don’t discount the free options. Not all self-assessment clients have complex needs, and it may not be worth paying for functionality not needed.”
Robyn Milstead
Currently, there are multiple compliant MTDs for IT tools on the market that are free, and it’s possible to filter the results on the HMRC website to show these.
For example, clients can open a business bank account with the Natwest-owned Mettle, which provides free access to FreeAgent, provided users make at least one transaction a month from their Mettle accounts.
Milstead says, “Don’t discount the free options. Not all self-assessment clients have complex needs, and it may not be worth paying for functionality not needed.”
Vendor reputation and reliability
Strong customer service and reliability should be key factors in decision-making, allowing practitioners to reach out for support and ensure submissions can be completed on time to meet deadlines.
When reviewing vendors, ask about the options available for customer support and assess the online ratings of vendors.
Bickle has been pleasantly surprised that many new vendors have reputation and support credentials that rank strongly against those of more established platforms.
He also stresses that if you are someone who “needs telephone support, some providers might not be the best for you, as there is a tendency for providers to move to a digital customer service.”
Client suitability
Alongside general ledger options, several vendors on the market cater to the unique needs of clients based on their industry.
For example, this includes landlords (Hammock, PatMa, Rentalbux) and construction workers who use the CIS scheme (TaxNav).
Marco Ferrari, co-founder of Hammock, points out that landlords have specific needs, such as hybrid ownership structures, different types of tenancies, and the widespread use of personal bank accounts, which solutions like Hammock are designed to cater for.
Bickle adds: “Many software tools are now specialised to a particular sector. Early client segmentation and analysing the needs of clients is going to allow us to better prepare them with the right software.”
Reporting and automation features
The shift to quarterly submissions creates a new opportunity for proactive accountants to provide forward-looking insights to clients, rather than just viewing self-assessment as a retrospective annual exercise.
Accountants who want to transition into advisory services, such as tax planning, should evaluate MTD for IT options based on their ability to provide closer to real-time data to power reports.
“MTD for IT has great potential for clients to understand their current financial situation better. Check what reporting functions are offered. For example, do they provide a tax estimate after each quarterly submission?” says Bickle.
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