Making Tax Digital for Accountants: Tools, Rules, Compliance

Making Tax Digital (MTD) for accountants is HMRC’s mandatory system that requires digital record-keeping, quarterly reporting, and software-based tax submissions for clients.

According to HMRC data, over 1.8 million VAT-registered businesses are already using MTD-compatible software, and Income Tax Self Assessment (ITSA) is expected to bring millions more into quarterly reporting.

In this guide, we’ll explore everything about Making Tax Digital for accountants, from the best tools to the rules you need to follow.

Key points

• MTD turns accounting into a continuous, year-round process 📅
  Instead of one annual deadline, you now need to manage quarterly updates, final statements, and ongoing record-keeping for every client. This fundamentally changes how your workload is structured.
• Compliance is stricter and fully digital 💻
  Under MTD, you have to maintain accurate digital records, use HMRC-approved software, and ensure proper digital links between systems. Manual workarounds like copy-paste are no longer compliant.
• Workload increases across every client, not just in peak season 📈
  With at least five submissions per client each year, the pressure shifts from a busy season to constant deadlines, more client communication, and less room for error.
• Most traditional software still requires manual effort 🖱️
  Tools like Xero, QuickBooks, FreeAgent, and Sage help with compliance, but still rely on you or your clients to maintain records, categorise transactions, and manage submissions regularly.
• Automation is the only scalable way to handle MTD efficiently 🖥️
  To stay compliant without increasing admin, you need software that captures transactions automatically, keeps records up to date, and prepares submissions in the background.

What Making Tax Digital requires from accountants

Making Tax Digital requires accountants to maintain digital records, submit quarterly updates, and ensure that every part of the reporting process is completed through HMRC-approved software with full digital continuity.

In practice, this is a shift from once-a-year compliance to continuous, system-driven reporting across every client.

Here are the core obligations under MTD:

• Maintain digital records for every client: All income and expenses have to be recorded digitally, including dates, amounts, and categories.
• Submit quarterly updates (4 per year): Each client has to send a summary of income and expenses every three months, creating a consistent reporting cycle.
• File an End of Period Statement (EOPS): This finalises the accounting period, adjusting for allowances, reliefs, and any corrections needed after quarterly submissions.
• Submit a final declaration: This replaces the traditional Self Assessment submission, confirming total income across all sources.
• Ensure digital links between all systems: Data must flow automatically between tools. Manual copy-paste or spreadsheet transfers without proper linking with bridging software aren’t compliant.

In total, this means at least five submissions per client, per year, turning what used to be a seasonal workload into an ongoing operational process.

What this means in reality for accountants

MTD doesn’t just increase the number of submissions – it also changes how accounting work happens day to day:

• Bookkeeping becomes continuous, not reactive: You can’t wait until January to organise your records. Data needs to be accurate throughout the year.
• Client communication increases significantly: Missing data or late records now affect quarterly deadlines, not just year-end filings.
• Error tolerance drops: With more frequent submissions, mistakes are more visible and harder to correct later.
• Workload shifts from peaks to constant pressure: Instead of one busy season, accountants now manage rolling deadlines across their entire client base.
• The entire working dynamic shifts: With the continuous monitoring MTD introduces, accountants move beyond compliance work and become more valuable as strategic partners.

MTD rules at a glance

MTD rules define how financial data must be recorded, processed, and submitted, with strict requirements designed to eliminate manual handling and reduce errors. Here are the main compliance requirements:

For accountants, the biggest challenge isn’t understanding the rules, it’s executing them consistently across multiple clients.

Without the right setup:

• You’re chasing clients for records every quarter
• You’re fixing incomplete or inaccurate data repeatedly
• You’re manually preparing submissions multiple times a year
• You’re increasing the risk of penalties across your client base

This is where software becomes critical. MTD compliance depends entirely on how efficiently you can manage data, submissions, and client behaviour.

The right software should:

• Capture transactions automatically
• Maintain digital records without manual input
• Prepare quarterly updates in the background
• Ensure full compliance without constant checks

Comparing the best MTD software for accountants

Let’s break down the best MTD software options for accountants and how they compare:

How we selected these tools

These tools are included based on:

• HMRC compatibility
• Market adoption among UK accountants
• Feature coverage (bookkeeping, submissions, automation)
• Practical usability at scale

1. Xero

Xero is a widely used cloud accounting platform in the UK, designed with accountants in mind. It allows you to manage multiple client accounts, collaborate easily, and customise workflows depending on client complexity.

Here’s what Xero offers:

• Large integration ecosystem: Connects with payroll, property, and industry-specific tools across clients
• Bank feeds: Automatically imports transactions across multiple client accounts
• Advanced reporting: Enables detailed financial insights for more complex businesses
• Accountant-friendly: Built for practice use, with strong multi-client management features

Xero’s drawbacks:

• Requires manual categorisation and bookkeeping: Work still needs to be done regularly
• More complex for clients: Training or ongoing support is often required
• Costs increase with add-ons: Integrations and extra features can become costly

With Xero, you get flexibility and control across your client base, but you’re still responsible for maintaining records, reviewing data, and ensuring submissions are accurate. For larger or more complex clients, that structure can work well, but it comes with ongoing admin.

Pricing

Plans typically range from £16–£65 per month per client, with additional costs for payroll, integrations, and advanced features. Costs can scale significantly across a full client portfolio.

2. QuickBooks

QuickBooks is commonly used by practices handling freelancers, sole traders, or small businesses transitioning from spreadsheets. It’s best for accountants who want a simple, widely recognised platform to manage smaller or less complex client portfolios.

Here’s what QuickBooks offers:

• User-friendly interface: Is easy for clients to understand and use with minimal training
• Automated bank feeds: Pulls transactions into each client account
• Basic reporting: Covers essential income and expense tracking
• Large support ecosystem: Is widely used and supported across the UK

QuickBooks’ drawbacks:

• Manual categorisation required: Bookkeeping still needs regular input from you or the client
• Limited automation: It’s less efficient when handling large numbers of clients
• Less suitable for scaling: Admin increases as your client base grows

QuickBooks simplifies bookkeeping for individual clients, but as your portfolio grows, the manual work required can add up quickly under quarterly reporting requirements.

Pricing

Starts at around £16 per month per client, scaling up to £100+ depending on features. Costs increase as clients require more functionality.

3. FreeAgent

FreeAgent is best for accountants who want to give clients clear, real-time visibility over their tax position throughout the year. It’s particularly useful for clients who struggle with understanding liabilities and deadlines.

Here’s what FreeAgent offers:

• Real-time tax estimates: Clients can see what they owe at any time
• Timeline dashboard: The app tracks upcoming deadlines clearly
• Clean interface: The app is easy for clients to navigate
• Strong mobile experience: Clients can have a clear view of their finances on the go

FreeAgent’s drawbacks:

• Requires manual bookkeeping: Data still needs to be maintained regularly
• Limited scalability: It’s less efficient for managing larger client portfolios
• Fewer integrations: It offers less flexibility compared to competitors

FreeAgent helps clients stay informed and reduces confusion around tax, but it doesn’t significantly reduce the workload required to keep records accurate and submissions compliant.

Pricing

The price is typically £19–£33 per month per client, and free with some UK bank accounts (Mettle, NatWest, Ulster Bank, Royal Bank of Scotland)

4. Sage

Sage is best for accountants who prefer structured, traditional accounting systems and are already familiar with its ecosystem. It’s widely used in established practices and offers reliable compliance features.

Here’s what Sage offers:

• Established reputation: Sage is a long-standing provider in the UK accounting industry
• Advanced reporting: It offers detailed financial insights
• Bank feeds: Sage imports transactions automatically
• Structured workflows: It aligns with traditional accounting processes

Sage’s drawbacks:

• Steeper learning curve: It may not be suitable for people who aren’t tech-savvy
• Interface can feel outdated: It’s less intuitive than newer platforms
• Manual input required: Ongoing bookkeeping and maintenance may be needed
• Less automation: It’s not designed to significantly reduce admin

Sage delivers reliability and familiarity, but under MTD, it often means maintaining the same manual processes more frequently.

Pricing

Pricing ranges from free introductory plans to ~£39 per client per month, depending on features and usage.

How ANNA reduces admin from your MTD workload – for free

Most MTD software helps you stay compliant, but as an accountant running your own practice, the real issue is capacity.

ANNA is best for accountants who want MTD compliance handled in the background, so they can focus on running their practice instead of managing bookkeeping.

On top of that, ANNA will also prepare and file your 2025/26 Self Assessment for free. If you’ve already filed elsewhere, ANNA will refund that cost when you switch.

Here’s what ANNA can do for your accounting practice:

• Prepare and file 2025/26 Self Assessment for free: There’s no additional cost, and no extra tools, just connect to HMRC.
• Have MTD updates prepared automatically: Quarterly submissions are always ready, without manual prep.
• Let Auto Accountant handle bookkeeping: Transactions are recorded and categorised in real time, so you’re not fixing books every quarter.
• Calculate and file VAT automatically: Compliance is easy, without needing separate VAT workflows.
• Create and send invoices with built-in payments: Clients can invoice, get paid, and stay organised in one place.
• Stay on track with a personalised tax calendar: Deadlines are managed automatically, reducing the need to chase.
• Run simple payroll for one employee: PAYE and NICs are calculated and submitted without extra admin.

Try ANNA today and get MTD sorted without any extra admin. And if you have any questions, we’re in the app 24/7, ready to help.