Do You Need Bookkeeping Software for MTD for ITSA?

A Simple Guide for Sole Traders and the Self Emoloyed

Making Tax Digital for Income Tax Self Assessment (MTD for ITSA) is on its way — and if you're self employed, you might be wondering: Do I need special software for this? The short answer? Yes. The nuanced answer? Not necessarily — but using the right tools will make your life a lot easier.

In this article, we’ll break down your options in plain English — no jargon, no scare tactics — so you can stay compliant and stress-free.

What is MTD for ITSA? (Quick Recap)

MTD for ITSA means keeping digital records of your income and expenses, and sending updates to HMRC every quarter — as well as filing a digital tax return at the end of the a year.

It starts from April 2026 for most sole traders earning over £50,000, with those earning over £30,000 following in 2027. Those earning over £20,000 follow in 2028.

The goal? To make tax simpler and reduce errors. But for many sole traders, it feels like yet another admin headache — unless you’ve got the right system in place.

Your Options: How to Stay Compliant

Here are the most common ways sole traders can handle their bookkeeping for MTD:

1. Spreadsheets (With Bridging Software)

If you love your spreadsheets and you're comfortable using them, good news — you can stick with them. But you’ll need bridging software to connect your spreadsheet to HMRC and submit your quarterly updates.

✅ Pros:

• Low cost

• Familiar if you already use spreadsheets

⚠️ Watch out for:

• Risk of manual errors

• Extra steps to stay compliant

• May feel fiddly if you're not tech-savvy

You'll likely still need software for your digital tax return at the end of the year, but there may be bridging software options available for this, too.

2. Bookkeeping Apps

There are simple apps designed to handle your MTD bookkeeping. These let you record income and expenses, create invoices, and submit your updates to HMRC — all in one place.

Popular options include QuickBooks, FreeAgent, Xero, and Sage — but there are also apps built specifically for sole traders with straightforward needs.

✅ Pros:

• Everything in one place

• Easy to track your finances

• HMRC-compliant for MTD

⚠️ Watch out for:

• Monthly subscription costs

• Takes a bit of time to get set up

3. Accountant-Provided Tools

Many accountants (including us at Carr Accounting Studio) offer simple, ready-to-go solutions for sole traders. We can provide the tools, help you stay MTD compliant, and take the stress off your plate — all while you focus on running your business.

✅ Pros:

• Expert support included

• No confusing software setup

• We handle the tricky bits

⚠️ Watch out for:

• Some accountants charge extra — check what’s included

• Make sure they’re MTD-ready

What’s the Easiest Option?

It depends how confident you are, and how hands-on you want to be.

🔧 If you enjoy DIY and are confident with spreadsheets — bridging software could work.
📱 If you want an all-in-one app with minimal faff — bookkeeping software is the way to go.
🤝 If you'd rather someone else sorts it for you — your accountant can take care of the whole process.

The key is keeping your records digital and submitting them on time. How you do it is up to you — but having a system in place before the deadline will save you stress (and potential fines) down the line.

Need Simple, MTD-Ready Bookkeeping?

At Carr Accounting Studio, we help sole traders get MTD for ITSA sorted — without the extra headaches. Whether you want us to handle it all, or just need help choosing the right software, we’re here to help.

Let’s have a no-pressure chat. Get clear, expert help — and get back to running your business.

Contact Carr Accounting Studio