One of the defining features of Making Tax Digital is that submissions must be made through software. Unlike the current Self Assessment system, where you can log in to the HMRC website and enter figures manually, MTD requires compatible software to connect directly to HMRC and transmit your data. This guide explains why software is required, what MTD software must do, and how to choose the right option for your needs.
Making Tax Digital is fundamentally a digital system. HMRC's goal is to receive tax information automatically and securely through software applications, rather than having taxpayers enter information through a web portal. This approach allows HMRC to reduce errors, process information more efficiently, and give landlords a clearer picture of their tax position throughout the year.
Software connects to HMRC's systems through an approved programming interface (API). All data, quarterly updates and the Final Declaration, is transmitted through this connection. HMRC has confirmed there will be no manual submission route for MTD income once it is live.
HMRC sets out requirements that software must meet to be approved for Making Tax Digital. At a minimum, MTD software for landlords must:
General accounting software products such as those used by small businesses often have MTD for Income Tax modules. These can be suitable if you are already using accounting software for other purposes, but they can be complex and include features that landlords do not need.
Bridging software acts as a connector between your existing spreadsheet records and HMRC. You maintain your records in a spreadsheet and the bridging software reads the figures and submits them to HMRC. This can work for landlords who are comfortable with spreadsheets and do not want to change how they manage their records. However bridging software often cannot handle the Final Declaration so you may need to use another piece of software or an accountant for the year end process.
Software built specifically for landlords focuses on the reporting categories and workflow relevant to property income. This is typically simpler to use than a full accounting package because it only includes what landlords need. SimplifyMTD falls into this category.
When evaluating MTD software, landlords should consider:
If you currently use accounting software, check whether it supports MTD for Income Tax (not just MTD for VAT, which is a different scheme). Many general accounting packages added MTD for VAT support years ago but have not yet fully implemented MTD for Income Tax.
If you currently use spreadsheets, you have two options: switch to dedicated MTD software, or find bridging software that submits your spreadsheet figures to HMRC. However bridging software often cannot handle the Final Declaration so you may need to use another piece of software or an accountant for the year end process.
SimplifyMTD is designed specifically for UK landlords. It connects to HMRC through an approved API, supports quarterly updates and the Final Declaration, and guides you through each step of the process. It is built for landlords who want to manage their MTD obligations themselves without needing an accountant or a complex accounting package.