HMRC has said it will begin signing up sole traders and landlords who have not yet joined Making Tax Digital for Income Tax from September 2026. Its published guidance sets out two ways to hold down the Making Tax Digital software cost: free recognised products exist for simple tax affairs, and existing spreadsheets can stay.
Where the rollout stands:
- Making Tax Digital for Income Tax has applied since 6 April 2026 to sole traders and landlords whose qualifying income — turnover before expenses, not profit — was above £50,000 on their 2024 to 2025 tax return.
- HMRC put 864,000 sole traders and landlords in this first phase in February 2026.
- More than 570,000 customers had signed up and over 436,000 had sent a first quarterly update by 12 August 2026, according to HMRC.
- HMRC says it will start signing up those still outside the system from September 2026, in stages.
- Free products sit on HMRC’s recognised list for those whose tax position is straightforward, though HMRC warns a free product may cap how much it can be used.
Why software is the sticking point
HMRC does not supply a Making Tax Digital product of its own. Its campaign site answers that question flatly: no, and it says the department works with a range of commercial providers to widen choice instead.
Quarterly updates reach HMRC only through recognised commercial software. That makes buying or downloading a product a requirement rather than an optional upgrade.
Craig Ogilvie, HMRC’s Director of Making Tax Digital, said acting now lets people stay in control and “choose the software that works best” for them, rather than waiting to be signed up.
What Making Tax Digital software has to do
Under HMRC’s guidance, a product needs to do three things.
It must create, store and correct digital records covering income and expenses from self-employment and property; send quarterly updates; and allow a tax return to be submitted by 31 January the following year.
Quarterly updates are summaries of income and expenses. HMRC is explicit that they are not tax returns.
Digital records are only required for self-employment and property income. Other income, such as pensions, savings, dividends or a share of partnership profit, still has to be reported on the return through the software, but needs no digital record keeping.
Two types of software, and why spreadsheets still count
HMRC’s guidance splits the market in two. One type builds the records itself by importing transactions straight from a business bank account, capturing receipts and invoices by camera, or taking figures entered by hand.
The other connects to records that already exist, most commonly spreadsheets.
HMRC calls this bridging software: the spreadsheet stays where it is, and the bridging product makes the submissions to HMRC.
HMRC does attach a caveat, warning that a spreadsheet “won’t have the same timesaving, user-friendly features” of a purpose-built bookkeeping app. Spreadsheets remain an accepted way to keep records under the rules.
More than one product is allowed. HMRC’s guidance says a taxpayer can use several, but only one for each separate submission, which may suit someone running a trade alongside a rental property. The products then need to work together to cover every requirement.
VAT-registered businesses may already be part-way there. HMRC advises checking whether existing VAT software also covers Making Tax Digital for Income Tax before paying for anything new.
Recognised does not mean recommended
Every product on HMRC’s list has been through a recognition process. That is a technical check rather than a quality rating or an endorsement.
The guidance states that HMRC “does not recommend any product or software provider.” Cost, features and support are left to the buyer to weigh up.
What Making Tax Digital software costs
HMRC says products costing nothing do exist, aimed at those whose tax position is straightforward. It pairs that with a warning: a free product may cap how much it can be used, transaction volume being HMRC’s own example.
HMRC neither sets prices nor publishes them, and its campaign material confirms only that both free and paid options are on the list.
LITRG, the Low Incomes Tax Reform Group, sets out the realistic choices as a full accounting package, a simpler one built for small businesses, an app, or a spreadsheet paired with a bridging product.
What HMRC’s listings do carry is a flag for whether a product has a free version, and a breakdown of the income sources it handles — each marked ready now, in development, or not included.
What they do not carry is any price, any usage cap, or any terms.
So a free version on the HMRC list confirms that something free exists. It does not say what that free version includes, or at what point it stops being free. This is a question for the provider, before signing up rather than after.
How to check what you need to pay
If you are in scope for the 2026 to 2027 tax year, it is worth working through the cost question before committing to a subscription.
- Confirm you are in scope. The rules apply for 2026 to 2027 if your combined self-employment and property income was above £50,000 on your 2024 to 2025 tax return. HMRC measures that before expenses — turnover, not profit — so use the higher figure. Lower thresholds are coming next: above £30,000 from April 2027, and above £20,000 from April 2028.
- Check what you already have. If you are VAT registered, your current software may already cover Income Tax as well. HMRC’s finder tool also has a route for checking whether software you use now, including spreadsheets, is compatible.
- Use HMRC’s software finder tool. You can answer a few questions about your income sources for a personalised list, or browse everything available and apply your own filters.
- Read the HMRC listing and the provider separately. The listing tells you whether a product has a free version and which income sources it covers — check yours are there. It carries no prices, usage caps or terms, so those come from the provider’s own site.
- Sign up before HMRC does it for you. From September 2026 the department is enrolling people who have not yet joined, so acting first keeps both the timing and the software choice in your hands.
- Use the free support. HMRC publishes guidance, webinars and videos at no charge, and the Low Incomes Tax Reform Group publishes free independent guidance on how the rules work.
Tax Rebate Services publishes free information on how the rules apply to property income, including a guide to Making Tax Digital for landlords.
Written by:
Tax Rebate Services Editorial Team
Reviewed by:
Tony Shanks
,
qualified Taxation Technician (ATT)
Last updated:
This article provides general information and is correct as at the date shown. It isn't personalised tax advice — for help with your own circumstances, speak to a qualified adviser or HMRC.
