Choosing software can feel like the most stressful part of MTD, but you do not need to start with a brand. Start with what your freelance business actually needs to record and report.
Current GOV.UK/HMRC position: MTD for Income Tax is being phased in. The current thresholds are over £50,000 from 6 April 2026, over £30,000 from 6 April 2027, and over £20,000 from 6 April 2028, based on qualifying income for the relevant tax years. Rules can change, so always check the latest official GOV.UK/HMRC guidance.
For context, you may also want to read Tax Basics for UK Freelancers, Best Accounting Software for UK Freelancers and the Sole Trader Expenses Guide.
What MTD software needs to do
If you are within Making Tax Digital for Income Tax, you will need a way to keep digital records and send updates through compatible software. HMRC-compatible software may be a full bookkeeping package or, in some cases, bridging software that connects records to HMRC. The right choice depends on how you work and how much help you want from the software.
For many UK freelancers, useful features include invoice creation, bank feeds, receipt capture, expense categories, mileage tracking, tax year reports and accountant access. If you already use software, check whether your plan supports MTD for Income Tax specifically. MTD for VAT compatibility does not automatically mean the same product and plan is right for Income Tax.
Do not choose on price alone
Price matters, especially for side-hustlers and newer freelancers. But the cheapest tool is not always the best value if it is hard to use or does not handle your workflow. Equally, a large package with payroll, stock control and advanced reporting may be too much for a simple sole trader.
The best Making Tax Digital software for freelancers is usually the tool you will actually keep updated. A neat system used weekly beats a powerful system ignored for months. Before paying, test the software with a real invoice, a real expense, a bank transaction and a simple report.
Features to compare
Check whether the software can connect to HMRC for MTD for Income Tax, not just produce nice-looking reports. Look for clear expense categories, simple bank reconciliation, receipt storage, export options, support for multiple income streams if needed, and the ability to invite an accountant or bookkeeper. If you work from your phone, test the mobile app rather than assuming it will be easy.
Also think about support. Some freelancers are happy with help articles and chat support. Others want phone support or an accountant who already knows the software. If tax admin makes you nervous, support quality may matter as much as features.
Software and expenses
Good software should make expenses easier to record, but it does not decide whether an expense is allowable for you. You still need to understand the basic rules and keep evidence. Read the Sole Trader Expenses Guide alongside this page so you know what you are trying to capture.
Software can reduce errors, but it can also make mistakes faster if categories are wrong or bank feeds are not checked. Build a monthly review habit: match payments, check unpaid invoices, attach receipts and look for transactions that need explanation.
FAQs
Does HMRC provide software?
HMRC provides guidance and tools to check software, but freelancers usually choose third-party compatible software or work through an agent.
Can I use a spreadsheet?
Some people may use spreadsheets with compatible bridging software, but you need to check whether your setup meets HMRC requirements.
Should I change software now?
Not always. First check whether you are likely to be within scope and whether your current tool will support MTD for Income Tax.
A practical shortlist method
A good way to choose software is to create a shortlist of two or three options and test each one with the same small set of tasks. Create an invoice, record a client payment, add a software subscription, upload a receipt and run a basic income and expense report. If the software feels confusing during this simple test, it may become frustrating when deadlines are close.
Also check how easy it is to leave. You should be able to export your data, download reports and keep records if you switch provider later. Freelancers often focus on sign-up offers, but your records need to remain accessible for tax purposes even if you change tools.
Free, low-cost and accountant-led options
Some freelancers may be comfortable with a low-cost app or spreadsheet plus bridging software, while others will prefer a full accounting package. If an accountant handles your submissions, ask whether they want you to use a particular tool. The best option is the one that keeps you compliant, gives you clear records and fits the way you actually work.
More Making Tax Digital guides
- Making Tax Digital: What UK Freelancers Need to Know
- When Does Making Tax Digital Start for Sole Traders?
- Making Tax Digital Income Thresholds Explained
- Do Side Hustles Need Making Tax Digital?
- Making Tax Digital Checklist for Freelancers
- Making Tax Digital vs Self Assessment
- Making Tax Digital Penalties: What Freelancers Should Know
Related freelancer money guides
- Tax Basics for UK Freelancers
- Best Accounting Software for UK Freelancers
- Sole Trader Expenses Guide
- Existing Making Tax Digital guide
Disclaimer: Freelance Wallet UK provides general information only. It is not financial, tax or legal advice. Always check official HMRC/GOV.UK guidance or speak to a qualified professional for your own situation.