Accounting software that files VAT returns under Making Tax Digital in the UK

Common UK accounting packages that can keep digital VAT records and submit VAT returns directly to HMRC under Making Tax Digital (MTD) include:

• Xero
• QuickBooks Online
• FreeAgent
• Sage Accounting

They’re full bookkeeping systems, rather than just VAT-filing tools. If you already keep your accounts in spreadsheets or another non-compatible program, you can use MTD bridging software to submit the figures without switching your bookkeeping setup.

HMRC’s software finder is the authoritative place to check current compatibility and compare other options; HMRC lists compatible products but doesn’t endorse a particular provider. (gov.uk)

If you tell me whether you’re a sole trader or limited company, and whether you want simple bookkeeping or just a way to submit figures from spreadsheets, I can narrow down the options.

Most major UK accounting packages can file VAT returns under MTD. The main options are cloud accounting platforms, free or low-cost tools, and bridging software for spreadsheet users.

Full cloud accounting packages

• Xero: Sources describe it as one of the most widely used UK platforms, able to calculate VAT and submit returns to HMRC. Xero is one of the most widely adopted cloud accounting platforms in the UK. It enables businesses to keep digital records, automatically calculate VAT liabilities, and submit VAT returns directly to HMRC through an integrated, HMRC-recognised system.
• QuickBooks Online: Offers invoicing, expense tracking and VAT filing. One source says it connects directly to HMRC and handles digital record-keeping without the need for bridging software.
• FreeAgent: Popular with freelancers and contractors. It is fully compatible with MTD for VAT, and if you bank with NatWest, Royal Bank of Scotland, or use the Mettle business account, you get FreeAgent completely free.
• Sage Accounting: Most cloud accounting software packages – Xero, QuickBooks, Sage, FreeAgent – are fully MTD compatible software options.

Free or low-cost options

• MTDSorted Lite and Adminsoft Accounts: One guide says these are genuinely free with no time limits.
• QuickFile: Covers bookkeeping, invoicing and VAT submissions, and is aimed at microbusinesses. Its pricing runs from free to about £5 a month, plus a yearly charge for bank feeds.
• MyTaxDigital: A no-frills tool for submitting VAT returns, listed as free by one source.

Bridging software (for spreadsheet users)
Bridging tools let you keep your spreadsheet and submit summary figures through HMRC's API. Examples include VitalTax (from around £30 a year), BTCSoftware and 123 Sheets. The summary information for completion of the VAT return must not be physically re-typed into another software package. Spreadsheets must also keep digital links, so the data flows directly to HMRC.

Things to check

• Pricing varies between sources. Xero, for example, is quoted anywhere from about £15 to £37 a month depending on the plan. Check the vendor's current pricing.
• Income Tax (MTD for ITSA) is a separate requirement. It began on 6 April 2026 for sole traders and landlords with qualifying income above £50,000, and the threshold drops in later years. QuickBooks' MTD for Income Tax support is still developing. If you are a sole trader who will need ITSA quarterly reporting from April 2026, verify that QuickBooks supports this before committing. You don't need the same software for both obligations.
• Confirm on the official list. Sources disagree on whether HMRC still publishes a list for Income Tax, so check the software list on GOV.UK before you buy. Some third-party guides also list products that have not yet been fully tested.

If you tell me your business type (sole trader, limited company, or spreadsheet user), your turnover level, and whether you need Income Tax as well, I can narrow this down.

To comply with HMRC’s Making Tax Digital (MTD) for VAT requirements, you must use software that is officially recognized by HMRC to keep digital records and submit your VAT returns directly to them.

Popular HMRC-Recognized Accounting Software

Most major cloud accounting platforms in the UK are fully MTD-compatible and handle the entire process—from digital record-keeping to direct, secure filing with HMRC.

• Xero: Widely used and highly regarded for MTD compliance. It connects directly to HMRC, allowing you to calculate VAT, review your return, and submit it directly without needing external tools.
• QuickBooks Online: A robust solution that allows you to manage VAT, perform error checks, and submit returns directly to HMRC. Note that QuickBooks Self-Employed is generally not MTD-compatible for VAT; you typically need QuickBooks Online to meet these requirements.
• Sage: Offers dedicated MTD solutions (such as Sage Accounting and the Sage MTD module for Sage 50) that are well-established for UK businesses and capable of handling complex VAT needs.
• FreeAgent: A popular choice for freelancers, contractors, and small businesses, particularly those who bank with NatWest, RBS, or Mettle, as it often integrates seamlessly and is built with MTD compliance at its core.

Important Options for Your Situation

Depending on how you currently manage your records, you have two primary paths to compliance:

1. Full Accounting Suites: Software like Xero, QuickBooks, or Sage acts as a "one-stop shop." They handle your day-to-day bookkeeping (invoicing, expenses, bank reconciliation) and then use that data to automatically generate and file your VAT return.
2. Bridging Software: If you prefer to keep your records in a spreadsheet (Excel/CSV), you do not necessarily need to switch to full accounting software. You can use "bridging software" (such as 123 Sheets or specialized tools from the providers mentioned above) to digitally link your spreadsheet data to HMRC’s systems. This fulfills the legal requirement for "digital links" under MTD.

Key Considerations When Choosing

• HMRC Recognition: Always ensure your chosen software is on HMRC's official list of compatible software to avoid penalties.
• Business Needs: If you are a sole trader with simple needs, a lower-tier plan (like Xero Simple) may suffice. If you are a growing limited company, you may need the more advanced reporting features found in standard or premium plans.
• Future-Proofing: Since MTD for Income Tax (MTD ITSA) is rolling out for sole traders and landlords, it is highly recommended to choose a provider that supports both MTD for VAT and MTD for Income Tax to ensure a seamless transition when those rules apply to you.

Recommendation: Before purchasing, check if the provider offers a free trial. Many platforms (like Xero, QuickBooks, and Sage) offer introductory discounts, especially around key tax deadlines.

Several UK accounting packages can keep digital VAT records and submit VAT returns directly to HMRC under Making Tax Digital (MTD), including:

• Xero — submits returns directly to HMRC and is listed in HMRC’s MTD software finder. ¹²
• QuickBooks Online — a commonly used option; check the specific plan in HMRC’s finder before subscribing. ²
• Sage Accounting — submits MTD-compatible VAT returns. ³
• FreeAgent — compatible with MTD for VAT. ²

HMRC’s software finder lists many more products, including accounting and spreadsheet-bridging options. Check it to confirm a particular product and plan supports the features you need; HMRC says listed software has been through its recognition process but does not recommend one product over another. ¹

Official finder: Find software for Making Tax Digital for VAT ¹

Sources: ¹ HMRC software finder · ² HMRC-compatible software information · ³ Sage MTD compatibility information