Software for MTD: The Question No Review Site Asks

There are roughly 200 products on HMRC's approved software list for Making Tax Digital. You will be trusting one of them with five years of your financial records. The question nobody in the comparison guides bothers to ask is which of those 200 companies will still exist in 2030.

Most guides to software for MTD will walk you through features: receipt scanning, mobile apps, bank statement imports, compatibility with your accountant's platform. All of that matters. But the category that gets ignored entirely is vendor stability, and for a self-employed person whose MTD obligations do not pause for corporate restructuring, it is arguably the most important factor of all.

The question most sole traders ask when evaluating software for MTD is: does it do the job? The question they should also be asking is: who is doing the job, and will they still be around when HMRC comes knocking?

What You Are Actually Signing Up For

Making Tax Digital for Income Tax is not a single annual event. It replaces the Self Assessment return with four quarterly updates, an end-of-period statement, and a final declaration, which adds up to six filings per tax year. For a sole trader starting in April 2026, that means six filings per year, every year, for as long as they remain self-employed.

Behind those submissions, every income item and every allowable expense must be recorded digitally in a form HMRC can inspect. The legal requirement is to keep those records for at least five years after the 31 January deadline for the relevant tax year. If HMRC opens a compliance check, it can request records going back up to six years in standard cases. In cases where it suspects deliberate non-compliance, that window extends to 20 years.

The software you choose today will be the custodian of that evidence. Its reliability over a sustained period, and the survival of the company behind it, are not minor technical considerations. They are the whole point.

The 200-Product Problem

HMRC's recognised software list for MTD is long enough to suggest a thriving, competitive market. Look closer and the picture is more complicated.

A significant share of the products on that list were built specifically to capture the wave of demand that MTD for Income Tax is creating. Some come from established accounting software companies extending their existing platforms. Others come from small development houses, sole-trader-focused startups, and even accounting firms that productised their internal tools. Several were launched in 2024 and 2025 expressly to get ahead of the April 2026 mandate.

Of those 200 products, a proportion is funded by venture capital with growth targets attached. Some are profitable and stable. Others are burning through their runway hoping that the MTD mandate will drive the subscriber numbers they need to survive. The market will consolidate, as it always does when a regulatory event creates a short-term flood of new entrants. Some vendors will be acquired. Some will shut down quietly. Some will raise prices aggressively once users are locked in.

For the sole trader choosing software for MTD in late 2025 or early 2026, the relevant question is not just which product has the best interface today. It is which vendor will still be operating, and still honouring their existing subscribers' terms, in 2030.

What Happens When Your MTD Software Disappears

This is not a theoretical risk. During the rollout of Making Tax Digital for VAT, which began in 2019, a number of smaller MTD-compatible products were either discontinued or absorbed into larger platforms. In most cases, the transitions were managed reasonably well. In some, they were not.

For VAT, the records involved are relatively contained: quarterly totals, input and output tax, a handful of adjustments. For MTD for Income Tax, where every individual income transaction and every expense must be recorded digitally, the records are considerably more granular. A VAT record migration is inconvenient. An income tax record migration, mid-compliance-period, with a compliance check potentially on the horizon, is a serious operational problem.

Let us be concrete. A plumber turning over £65,000 per year has twelve to eighteen months of digital records stored with an MTD software provider. The provider is acquired in 2028 by a larger platform that discontinues the standalone product. The plumber is given 30 days to export their data. The export format is proprietary. The new platform offers a migration tool, but it does not recognise records from before the acquisition date. A compliance check is opened in 2029 covering the 2026-27 tax year.

The plumber's obligation to produce those records has not changed. The software that held them has gone. The accountant charges four hours to reconstruct the records from bank statements and receipts. That is, at a minimum, a few hundred pounds in accountant's fees and a significant amount of anxiety, caused entirely by a vendor decision the plumber had no control over.

The safeguard is to choose software whose underlying data model is portable from the start, and to export your records regularly in a format that does not require the software to be running to read it.

The Big-Name Trade-Off

The obvious response to vendor instability is to choose the established platforms: QuickBooks, Xero, Sage, FreeAgent. These businesses have the balance sheets and the customer bases to survive a market consolidation. They have accountant ecosystems built around them. They are not going anywhere.

All of that is true. It is also true that the big names were not built for sole traders. They were built for businesses with employees, inventory, and multi-currency payroll, and they offer a stripped-back sole trader tier as an afterthought. The pricing reflects the full product, not the subset you actually use. The annual pricing trap is well documented: introductory rates that expire after six to twelve months, followed by full-price renewals at rates that assume a small business, not a one-person operation.

There is also the complexity cost. Accounting software for self-employed people priced by the hour tends to tell the same story: the time spent navigating features designed for teams routinely exceeds the time a sole trader would spend on a product built for their actual use case. You are paying for complexity you do not need, and you are paying in both money and time.

The answer is not to default to the biggest vendor. It is to ask better questions of every vendor, regardless of size.

Five Questions to Ask Before You Commit

1. How long has this company been operating, and what is its ownership structure?

A product that has been running profitably for three or more years, with a stable ownership structure and a track record of software updates, is meaningfully different from a product launched in 2024 to catch the MTD wave. Check Companies House for the registering entity. Look for reviews that are more than twelve months old, from users who have been through at least one full quarterly cycle. A new product is not automatically unreliable, but it has no track record in the specific conditions of sustained MTD compliance.

2. What happens to your data if you cancel or the company closes?

Every serious MTD software provider should give a clear, specific answer to this question. Ask in what format your records will be exported, and for how long after cancellation you can access them. The acceptable answers are CSV or a standard open format, with access for at least twelve months after cancellation. If the answer involves a proprietary format, a short access window, or vague language about "data availability," that is a meaningful warning. Accounting Software for Sole Traders: Who Owns Your Records? covers the practical and legal dimensions of this question in detail.

3. Was the product built for sole traders, or is it a scaled-down business product?

Products built from the ground up for the sole trader use case, with MTD for Income Tax as the central workflow, are structurally different from enterprise platforms with a stripped-back tier. In the latter case, your product roadmap is driven by the needs of customers who are far more complex than you are. Features that matter to sole traders may be deprioritised or quietly removed when they do not serve the core customer base.

4. How easy is it to import from, and export to, other products?

A vendor that makes it straightforward to import records from a competitor is telling you something: they believe their product will retain you on merit. Equally, if a vendor makes it difficult for competitors to import from their format, that is a deliberate lock-in strategy. Both signals are informative.

5. Is this product authorised specifically for MTD ITSA, not just MTD for VAT?

HMRC maintains separate recognition for MTD for VAT and MTD for Income Tax. Not every product on the compatibility list is authorised for both. HMRC maintains two separate compatibility lists, and the distinction matters: a product that is only recognised for VAT submissions cannot be used for your quarterly income tax updates. Verify the specific authorisation before signing up.

What TapTax Does Differently

TapTax was built specifically for sole traders filing under MTD for Income Tax Self Assessment. There is no enterprise tier, no invoicing module for larger businesses, no scaled-down version of a more complex product. The sole trader MTD use case is the whole product.

Records are imported by uploading a bank statement CSV, with presets for 16 UK banks, or entered manually. That means your underlying transaction data is always a file you already have, stored in a format that predates the software. It is not locked inside a proprietary system. If you ever want to switch, you take your records with you.

The submission workflow covers the six filings per tax year that MTD for ITSA requires: four quarterly updates, an end-of-period statement, and a final declaration. Nothing more complicated than that, because that is all a sole trader needs.

The Small Print Nobody Reads

When you sign up for software for MTD, you will click through a terms of service document that covers data retention, account termination, and export rights. Read at least the sections that address what happens to your data 30 days after cancellation, whether records can be exported in a machine-readable format rather than PDF, and whether the vendor's liability extends to HMRC penalties caused by software errors on their end.

This is not excessive caution. It is the kind of due diligence you would apply to any five-year commitment, which is what choosing software for MTD amounts to for a sole trader coming into the April 2026 mandate.

Making Tax Digital Software for Sole Traders: Five Months In is worth reading alongside this post. It covers the sustained experience of using MTD software across multiple quarterly cycles, which is a different question from reading the feature list before signing up.

The Decision

Choosing software for MTD is not a purchase you reverse easily. Switching mid-year means migrating records, reconfiguring your accountant's access, and re-learning an interface while quarterly deadlines approach. Get it right the first time by asking vendor-level questions, not just feature-level ones. The app matters. The company behind it matters at least as much.