Making Tax Digital requires you to keep records and report to HMRC using compatible software, so choosing the right tool is one of the most important steps in getting ready. This guide explains what Making Tax Digital software is, what it needs to do, and how to choose, for 2026/27.
Why you need compatible software
Under Making Tax Digital, you can no longer simply type figures into the HMRC website for VAT or, increasingly, Income Tax. Your records must be kept digitally, and the figures must reach HMRC through software that connects directly to its systems. Using compatible software is therefore not optional, it is the mechanism the whole system relies on.
What the software must do
Compatible software needs to do two main things. It must let you keep digital records of your income and expenses, and it must be able to send the required submissions to HMRC, whether that is a VAT return or the quarterly updates and final declaration for Income Tax. Good software does much more, automating bank feeds, capturing receipts and preparing your figures as you go.
Full software versus bridging software
There are two broad options. Full accounting software keeps all your records and handles the submissions in one place, and is the best choice for most businesses. Bridging software is a simpler tool that connects spreadsheets to HMRC, allowing those who still keep records in a spreadsheet to submit digitally. Bridging software can work, but full cloud software is usually easier and more reliable in the long run.
The main options
Popular cloud accounting packages include well known names used by businesses of all sizes, each offering Making Tax Digital compatibility, bank feeds and mobile apps. The right one depends on the size and type of your business, your budget and how comfortable you are with the technology. Many accountants, including us, can recommend and set up the package that suits you, often at a preferential rate.
How to choose
When choosing, look at whether it covers the taxes you need, how easy it is to use, whether it connects to your bank, the cost, and the quality of support. It is worth getting set up well before your Making Tax Digital start date, so you are comfortable with the software before it becomes compulsory.
Getting help
You do not have to navigate this alone. Many people have their accountant set up the software, link it to their bank, and either teach them to use it or handle the bookkeeping and submissions for them. That way the move to Making Tax Digital is smooth rather than stressful.
Frequently asked questions
Do I need software for Making Tax Digital?
Yes. You must keep digital records and submit to HMRC through compatible software, as you can no longer type figures into the HMRC website for these taxes.
What is bridging software?
A simpler tool that connects a spreadsheet to HMRC so you can submit digitally, useful for those who still keep records in spreadsheets, though full cloud software is usually easier.
Which Making Tax Digital software is best?
It depends on your business size, budget and needs. Popular cloud packages all offer compatibility, and an accountant can recommend and set up the right one.
When should I get the software?
Well before your Making Tax Digital start date, so you are comfortable using it before reporting becomes compulsory.