If you are in scope for Making Tax Digital for Income Tax, you need HMRC-recognised software to keep digital records and submit your quarterly updates. The right choice depends on how complex your finances are, what you already use, and how hands-on you want to be.
To qualify as MTD-compatible, software must:
Not all accounting software currently handles all three. Some tools handle quarterly updates but not the final declaration — worth checking before you commit.
Xero is one of the most widely used cloud accounting platforms for small businesses in the UK and is fully MTD-compatible. It connects to your bank account, automatically imports transactions, and handles quarterly submissions through a clean, well-designed interface.
Best for: Limited companies, growing businesses, those with employees or VAT registration, businesses that want strong reporting alongside MTD compliance.
Cost: From around £16/month (Starter) to £59/month (Ultimate). Pricing has increased significantly in recent years.
Verdict: Our most commonly recommended option for Brighton small businesses. Strong app ecosystem, reliable bank feeds, and good accountant integration.
QuickBooks Online is Xero’s main competitor and is also fully MTD-compatible. It has a slightly lower entry price point and some users find the interface more intuitive for sole traders and simple businesses.
Best for: Sole traders, freelancers, self-employed individuals with straightforward finances. Also strong for those who want built-in payroll.
Cost: From around £14/month (Simple Start) to £38/month (Advanced).
Verdict: A solid alternative to Xero. If you are a sole trader or landlord with uncomplicated finances, QuickBooks Simple Start covers everything you need at a lower price.
FreeAgent is a UK-focused cloud accounting package popular with freelancers and contractors. It is MTD-compatible and has a particularly clean Self Assessment and MTD workflow.
Best for: Freelancers, contractors, limited company directors with straightforward finances.
Cost: Around £19/month, though it is free if you have a business bank account with NatWest, Royal Bank of Scotland, or Ulster Bank.
Verdict: Worth considering if you bank with one of the qualifying banks and can get it free. Strong for freelancers, less suited to complex businesses.
HMRC maintains a list of free MTD-compatible software, including some spreadsheet-based bridging tools. These are technically compliant but require more manual work. For most Brighton businesses with more than a handful of transactions per month, the time cost of manual entry outweighs the saving on software fees.
At Accounting Solution, we provide our own MTD-compliant software as standard to all clients, included in your monthly fee. You do not need to purchase separate software.
Bridging software can connect non-compatible tools (including spreadsheets) to HMRC’s MTD API. This is a valid approach, particularly for landlords who already maintain their records in a specific format. However, bridging adds complexity and is generally a transitional solution rather than a long-term one.
If you are already in scope and not using MTD-compatible software, yes — the sooner the better. Switching mid-year creates a data migration challenge, and getting familiar with new software takes time. Leaving it until your first quarterly deadline is risky.
We guide Brighton businesses and landlords through MTD compliance — software setup, quarterly submissions, and ongoing support. Fixed fees, no jargon.
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