MTD software and the final tax return
Under Making Tax Digital you keep your records, send quarterly updates and submit your tax return from compatible software instead of the HMRC website.
What kind of software do you need?
You need commercial software that works with Making Tax Digital for Income Tax. HMRC doesn't make its own and doesn't recommend any product. Its online software finder lists compatible products and lets you filter by what you need. There are two main types:
- All-in-one software in which you keep your records and make your submissions.
- Bridging software, which connects to records you already keep elsewhere, for example in a spreadsheet, and sends your updates and tax return to HMRC.
Free products are available for simple tax affairs. They may have limits, such as a maximum number of transactions, so check before you start.
Rules for digital records and spreadsheets
- Record the date, amount and category of every income and expense.
- If you use more than one program, they must be digitally linked, for example through linked cells or an import. Moving records by cut and paste or copy and paste is not allowed.
- Keep the original documents or copies. You don't need to send them to HMRC.
- Keep your records for at least 5 years after the 31 January deadline for the tax year.
Sole traders with turnover below £90,000 only have to record whether a transaction is income or an expense (simpler categorisation).
The tax return at the end of the year
After your four quarterly updates you submit your tax return, also from your software. The deadline stays 31 January after the end of the tax year, and you can submit earlier. Missing it gives you a late submission penalty point.
HMRC fills in some information itself, such as PAYE employment income, State and private pensions and CIS deductions. You have to add other income yourself, for example:
- savings interest,
- dividends, including from your own company,
- your share of partnership profit,
- any other income or gains that HMRC hasn't added.
Before submitting, you check the calculation and declare that the information is correct and complete. You can make changes within 12 months of the submission deadline. Refunds can't be claimed through the MTD tax return.
What stays the same
Making Tax Digital doesn't change how you pay tax or when payments are due. Only the way you keep records and report to HMRC changes.
Frequently asked questions
Does HMRC provide free MTD software?
No. You need commercial software that works with Making Tax Digital for Income Tax, and HMRC does not recommend any provider. Free products exist for simple tax affairs, but they may have limits such as a maximum number of transactions.
Can I keep using my spreadsheet?
Yes, if you connect it to bridging software that sends your updates and tax return to HMRC. Records must be linked digitally: you must not cut and paste or copy and paste them between programs.
Can I use one program for updates and another for the tax return?
Yes. You can use different products for different tasks, but only one product for each separate submission.
Sources: GOV.UK: Choose the right software (updated 13 July 2026), GOV.UK: Create digital records, GOV.UK: Submit your tax return (both updated 7 September 2026). Checked October 2026.