Best Accounting Software for Making Tax Digital: The Exit Test

You are not choosing a monthly subscription. You are choosing who holds your tax records for the next five years, possibly six. Every search for the best accounting software for Making Tax Digital produces the same comparison table: price, free trial, HMRC-approved tick, star rating. None of them ask the question that actually matters: what happens to your data when you want to leave?

HMRC's digital record-keeping obligation under MTD for Income Tax does not end when you decide to switch products. It survives your cancellation, your change of accountant, your business remodel, and potentially the software company itself. Before you sign up to any platform on the HMRC-approved software list, you should be running an exit test, not a features comparison.

What Making Tax Digital for Income Tax Actually Demands

MTD for Income Tax does not just change when you file. It changes what you must keep, how you must keep it, and for how long. Under the Income Tax (Digital Requirements) Regulations 2021, sole traders are required to maintain digital records of every business transaction and retain those records for at least five years after the 31 January submission deadline following the relevant tax year.

For a sole trader mandated into MTD from April 2026, this means records from the 2026/27 tax year must remain accessible until at least 31 January 2033. Not accessible to HMRC on request alone, which is a separate obligation, but accessible to you, so you can produce them if HMRC opens an enquiry, disputes a figure, or asks for supporting documentation.

That retention window is not theoretical. HMRC opened 274,000 tax enquiries in 2022/23 according to its own published statistics. A sole trader earning £55,000 a year, building a portfolio of quarterly submissions over four or five years, accumulates thousands of individual transaction records. The software holding those records is not just a filing tool. It is an archive.

The Lock-In Nobody Discloses

Subscription software works on a model that assumes you will stay. The pricing is monthly or annual. The onboarding is smooth. The offboarding, where it exists at all, is buried in the support documentation under a heading like "account closure" or "data export".

When you sign up for MTD accounting software and begin categorising your bank transactions, tagging receipts, and filing quarterly updates, that data is written into the platform's database. Most platforms allow you to export it, but export functionality is not standardised and is rarely evaluated in comparison reviews.

Common problems sole traders discover only after they want to leave include:

Proprietary export formats. The platform outputs a file type that no competing product will import cleanly, meaning a data migration becomes a manual re-entry exercise spanning potentially thousands of transactions.

Partial exports. Some platforms export the current year's transactions but not prior years. If your digital record obligation extends back to 2026/27 and you are trying to switch in 2029, you may find only twelve months of exportable data.

Immediate access revocation. Cancelling a subscription can trigger immediate or near-immediate loss of read-only access to your records, leaving you with whatever you managed to export before the deadline, no more.

No submission history export. Your quarterly updates submitted to HMRC exist in HMRC's systems, but your own record of what you submitted, including the underlying data behind each submission, may only exist inside your software. If the platform disappears or becomes unaffordable, that audit trail goes with it.

None of these scenarios appear in the star-rating tables. None are required to be disclosed on the HMRC-approved software register. The register confirms that a product can send a compliant submission to HMRC. It says nothing about what the product does with your data afterward.

As we covered in HMRC Compatible Software: What the Label Cannot Tell You, the HMRC-approved label is a technical certification, not a consumer endorsement.

Who Benefits From Your Staying Put

Software companies do not design lock-in maliciously in most cases. They design products around the assumption that users stay, which is rational: churn is expensive, and integrations take time to build. But the structural incentive is clear. A sole trader who has filed eight quarterly submissions through a platform, built up two years of categorised transaction history, and linked their bank account has significantly higher switching costs than one who signed up last month.

The accounting software market is not small. HMRC's own 2021 impact assessment for MTD ITSA estimated that approximately 4.2 million sole traders would eventually be mandated into the scheme. At even a modest software spend of £15 to £25 per month per user, the market is worth several hundred million pounds annually. The established players have a direct commercial interest in the software mandate continuing and in users remaining on their platforms.

This is not unique to accounting software. It is how SaaS markets work. But it matters more here because you are not just a customer: you are a regulated entity with a statutory record-keeping obligation. Choosing the wrong platform is not just an inconvenience. It could leave you unable to produce records HMRC is legally entitled to demand.

The Best Sole Trader Accounting Software UK: Follow the Money post explored which companies benefit from MTD mandation. The question this post adds is: once you are in, how easy is it to get out with your records intact?

The Quarterly Rhythm Problem

Most bookkeeping software was designed for an annual filing cycle. A sole trader entered transactions throughout the year, generated a year-end profit and loss statement, and handed it to an accountant or entered the figures into a Self Assessment return. The software's job was to hold a running total.

MTD for Income Tax changes the rhythm to four quarterly submissions plus a final declaration each year. That is five interactions with HMRC per tax year, each requiring cumulative figures from the start of the tax year, not just the quarter in isolation. A quarter three submission covering October to December must reflect cumulative income and expenses from April through December.

Some platforms were rebuilt from the ground up to handle this. They treat each quarter as a window into a running total and manage the cumulative aggregation automatically. Others have added an "MTD module" to a product designed around annual thinking, which means the user bears the cognitive load of reconciling quarterly snapshots against a running total the software does not maintain natively.

The distinction is invisible from a comparison site. Both products will carry the HMRC-approved tick. Both will claim MTD compatibility. The difference only becomes apparent when you file your second or third quarterly submission and discover the figures require manual adjustment before they can be submitted.

This is explored further in MTD Accounting Software: What Changes When You Go Live, which details how the live filing experience often diverges sharply from what the free trial suggested.

Applying the Exit Test Before You Sign Up

The most important evaluation you can run before choosing accounting software for Making Tax Digital takes less than twenty minutes. It does not require a free trial. It requires reading the platform's terms of service, its data export documentation, and its account closure policy.

Four questions to answer before you commit:

Can I export all my transaction history in a standard format? Look for CSV as a minimum. Open Financial Exchange (OFX) or QIF formats are better. A proprietary export format that only the platform's own import tool can read is a warning sign.

How long do I retain read-only access after cancelling? Thirty days is common. Ninety days is reasonable. Immediate revocation on cancellation is a problem if you have not already exported everything. If the answer is not on the website, email the support team before you sign up and keep the response.

Can I export my HMRC submission history separately? Your quarterly update submissions, including the dates filed, the figures submitted, and any HMRC acknowledgement references, should be exportable independently of your bookkeeping data. This is your audit trail. Confirm it exists in a form you can save locally.

Does the export include all prior years? Ask specifically. Some export functions default to the current financial year. If you have been filing quarterly for three years, you need three years of exportable data, not twelve months.

As we covered in Free MTD Software: The Questions Nobody Asks Before Signing Up, free products often have the thinnest export functionality. But paid products are not automatically better on this dimension. The exit test applies regardless of what you pay.

What Good Data Portability Actually Looks Like

A platform with strong data portability will do the following without friction:

• Export the full transaction history for every year the account has been active, in CSV format, in a single self-serve download
• Provide a separate export of all quarterly submission records, including the period covered, the figures submitted, and the HMRC submission reference
• State clearly in its terms of service the access period following cancellation, and whether exported files include attachments such as receipt images
• Make the export function available at any time, not just on account closure, so you can run a test export before you are in a hurry

None of these requirements are difficult to build. Platforms that do not offer them have either not prioritised user data rights or have actively deprioritised them because exits are not in their commercial interest.

The Free Accounting Software UK: The Data Question HMRC Ignores post makes the case that data ownership is a regulatory gap HMRC has so far declined to fill. Until that changes, the burden falls on you to check before you sign.

The Question the Comparison Tables Never Ask

Every list of the best accounting software for Making Tax Digital is built around the same criteria: monthly price, free trial availability, mobile app quality, bank feed integration, HMRC-approved status. These are legitimate inputs. They are not the whole picture.

The HMRC-approved software list, as of mid-2025, contains more than fifty products. They range from sole-trader-specific mobile apps to full practice management suites designed for accountants. They are not equivalent, and "approved" does not mean they serve your interests equally well over a five-year horizon.

The Best Accounting Software for Self Employed UK: The Feature Trap post made the case that most sole traders need far fewer features than comparison sites suggest. This post adds a harder constraint: the features you need on day one matter less than the data rights you retain on day one thousand.

Before April 2026 mandates over 700,000 sole traders into MTD, the most useful question any of them can ask is not "which product is cheapest?" or "which has the best mobile app?" It is: "When I want to leave this product, how much of what it knows about me can I take with me?"

The answer to that question is what separates the best accounting software for Making Tax Digital from software that simply processes your submissions until it decides to change its pricing model.