Tax Tips & Planning
MTD software guide: digital records for freelancers
6 min read
Under MTD, HMRC expects digital records. That means software that can submit directly to them. A spreadsheet on your laptop does not qualify. You need something that talks to HMRC's systems. The good news: several options exist, and most freelancers find one that fits.
What counts as MTD-compatible
HMRC maintains a list of software that meets their requirements. The software must record income and expenses digitally, categorise them, and submit quarterly updates and the final declaration. It must also keep records for at least six years.
- FreeAgent: popular with freelancers, clean interface, bank feeds, MTD built in
- QuickBooks: strong for small business, good reporting, MTD compliant
- Xero: used by many accountants, scales if you grow
- Sage: established option, MTD support included
Bank feeds save time
The biggest time saver is connecting your bank. Transactions flow in automatically. You categorise them once. No manual data entry from statements. Most MTD software supports Open Banking, so you link your account and the sync runs daily.
If you use multiple bank accounts (business and personal), connect both. You need to separate business and personal transactions. Software that supports multiple accounts makes this straightforward.
Migrating from spreadsheets
If you have years of data in Excel or Google Sheets, you do not need to import everything. MTD only requires records from the start of the tax year you join. For April 2026, that means 6 April 2026. Your old spreadsheets can stay as archives.
For opening balances, you will need your position at 5 April 2026: total income, total expenses, and any tax already paid. Your software will ask for this when you set up. Your accountant can help if the numbers are messy.
“I was nervous about switching from spreadsheets. Took me two hours to set up FreeAgent and connect my bank. First quarter submission was done in 15 minutes.”
- r/freelanceuk
Cost vs. benefit
MTD software typically costs £10-30 per month. For a freelancer earning £50k+, that is a small fraction of revenue. The time you save on manual data entry and year-end panic usually pays for it. Plus, you get a clearer picture of your finances throughout the year, not only when the tax return is due.
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