Choosing the right MTD software means weighing three routes: spreadsheets paired with bridging software, standalone bridging tools, or fully MTD-compatible digital record-keeping platforms. For most accounting firms, the right answer depends on client volume, income complexity, and how much manual reconciliation the practice is willing to absorb each quarter.
With Making Tax Digital for Income Tax Self Assessment now mandatory for sole traders and landlords with qualifying income above £50,000 from April 2026, and the threshold falling to £30,000 in April 2027, firms are under pressure to settle on a software strategy across their entire client base, not just their largest accounts.
This article sets out the three main options, how they compare, and what accounting firms should consider before recommending one to clients or rolling it out internally.
How does MTD software HMRC recognition work?
MTD software is any application recognised by HMRC as capable of keeping digital records and submitting VAT, Income Tax, or other returns directly through HMRC’s Making Tax Digital APIs. It ranges from full accounting platforms to lightweight bridging tools that simply transmit data from a spreadsheet.
HMRC maintains an official list of compatible products. Checking a client’s proposed tool against the current HMRC MTD software list before onboarding is a sensible first step, since functionality and pricing tiers change frequently.
How does MTD bridging software work with spreadsheets?
Spreadsheets remain in use across many practices, particularly for clients with straightforward affairs or long-standing manual processes. On their own, spreadsheets cannot submit data to HMRC. MTD bridging software closes that gap by extracting figures from a spreadsheet and filing them in the correct digital format.
This route suits clients who are reluctant to change how they record transactions but still need to meet their obligations. The trade-off is that bridging software does not improve the underlying record-keeping. Errors in the spreadsheet still need to be caught manually, and there is no real-time visibility for the practice between quarters.
For firms managing several bridging clients, this approach can become resource-intensive at scale, since each file still needs individual review before submission.
What does full digital record-keeping involve, and when does it outperform MTD bridging software?
Full digital record-keeping means the client’s day-to-day transactions, whether from a bank feed, invoicing tool, or till system, sit inside MTD-compatible software from the outset. Nothing needs to be re-entered or reconciled through a spreadsheet before filing.
This is generally the strongest long-term option for firms managing higher volumes of MTD clients, because it reduces manual handling, supports quarterly updates with less last-minute reconciliation, and gives the practice ongoing visibility into a client’s position rather than a snapshot every three months.
It also tends to hold up better as thresholds fall and more clients are brought into scope. A platform already embedded in daily bookkeeping needs no additional bridging layer when a client’s income crosses £30,000 or, eventually, £20,000.
Choosing MTD software: What factors should firms weigh?
- Client segmentation: Landlords with a single property and modest rental income have different needs to sole traders running CIS subcontractor payments or PAYE schemes. A single software recommendation rarely fits the whole client book.
- Integration with existing workflows: Software that connects cleanly to the firm’s practice management and VAT reporting tools reduces duplicate data entry.
- Support for the full return: Confirm the software handles quarterly updates and the Final Declaration, not just VAT submissions, if it will be used for MTD ITSA.
- Cost across the client base: MTD software free tiers with very simple affairs may be adequate, but firms should check whether a free tier supports multi-property income or covers Self Assessment as well as VAT.
- Direction of travel: With MTD ITSA thresholds tightening year on year, software chosen now should scale as more clients are mandated in.
What is the best MTD software for landlords, and is free MTD software for landlords viable?
How should firms decide between the three approaches?
There is no single correct answer for a whole client bank. Many firms end up running a blended model: bridging software for legacy spreadsheet clients who are unlikely to change, and full digital record-keeping for new clients or those with more complex income. What matters most is that the choice is documented, reviewed against HMRC’s current compatibility list, and revisited as thresholds change. Read this blog to learn about practical ways firms can prepare clients for Making Tax Digital for Income Tax.
Get MTD-ready with Befree
Choosing the right MTD software for your client base does not need to be a guessing exercise. Befree works with accounting firms to review current workflows, segment clients by need, and identify the software mix that will hold up as MTD ITSA thresholds continue to fall. Get in touch with Befree’s MTD support to discuss your practice’s approach.