What accounting software is best for UK businesses affected by MTD VAT and ITSA together?

Why “MTD VAT + ITSA together” changes the rules for choosing accounting software

If you run a UK business, you’ve probably already felt how quickly the compliance landscape is shifting. Making Tax Digital (MTD) for VAT pushed many businesses to adopt software that can keep digital records and submit VAT returns through compatible routes. Now, with MTD for Income Tax Self Assessment (ITSA) coming into play for many sole traders and landlords, the decision about accounting software stops being “what’s easiest for invoices?” and becomes “what system can carry me through VAT, income tax reporting, and the everyday reality of running my business without turning admin into a second job?”

When a business is affected by both MTD VAT and ITSA (either now, or soon), the wrong tool creates a constant drag: duplicate data entry, awkward exports, confusing categorisation, missed deadlines, accountant back-and-forth, and that nagging feeling you’re never fully on top of it. The right tool does the opposite: it keeps your numbers organised daily, so compliance is a natural by-product of good recordkeeping.

This article explains what “best” really means when you’re choosing accounting software for both MTD VAT and ITSA pressures at the same time, what features matter most, what traps to avoid, and how invoice24 fits as a practical all-in-one option. Because if your goal is less stress, cleaner data, and a smoother relationship with HMRC requirements, you want software built for the way UK businesses actually operate.

Start with the real question: what does “best” mean for your business?

It’s tempting to ask “Which software is best?” like there’s one universal winner. In practice, “best” depends on your business type, transaction volume, VAT scheme, how you work day-to-day, and whether you want to be hands-on or rely heavily on an accountant or bookkeeper. But once MTD VAT and ITSA are both in the picture, the definition of “best” becomes much clearer.

For businesses affected by both, the best accounting software should do four things exceptionally well:

1) Capture and organise day-to-day transactions without friction, so your records stay digital, complete, and consistent.

2) Support MTD VAT workflows in a way that fits your VAT scheme, handles your VAT periods, and keeps audit trails sensible.

3) Support MTD for Income Tax (ITSA) style reporting needs with clean categorisation and strong reporting, so quarterly-style updates are manageable rather than painful.

4) Keep you invoice-ready and payment-ready because cashflow is not a “nice-to-have”; it’s the entire engine of your business.

Software that only shines in one area (for example, great invoicing but weak reporting, or great reporting but clunky invoicing) can become a liability when you’re juggling both VAT and income tax reporting expectations.

What UK businesses need when MTD VAT and ITSA collide

When you’re affected by both, your accounting isn’t just a year-end event anymore. The rhythm changes. You need reliable records throughout the year, not just when the accountant asks for a shoebox of statements.

Here are the practical needs that suddenly become non-negotiable:

1) Consistent digital records with minimal manual work

The biggest hidden cost in accounting is not the subscription fee. It’s the time spent cleaning up messy records. If your system makes it easy to issue invoices, log expenses, categorise income, and attach notes or evidence where needed, you reduce corrections later.

invoice24 is designed to keep everyday admin simple: invoice creation, tracking, and record organisation are treated as the “front door” of compliance. If your invoices and expenses are consistently recorded, everything else becomes easier: VAT calculations, income summaries, and meaningful reports.

2) VAT handling that matches your scheme, not just generic VAT

Many tools say “we do VAT” but VAT in the real world is messy. You might be on the Standard VAT scheme, Flat Rate Scheme, Cash Accounting Scheme, or have partial exemption complications. Even if your VAT situation is straightforward, you still need software that can keep VAT logic coherent and traceable.

The best software for MTD VAT isn’t just about pressing “submit”. It’s about confidently arriving at the right numbers and being able to understand how they were calculated. invoice24 focuses on clarity: clean transaction records, consistent categorisation, and reporting that helps you see what’s driving your VAT position, not just the final total.

3) Income tax reporting readiness without turning your life into spreadsheets

ITSA-style reporting places a spotlight on how well you categorise your income and expenses through the year. If your categories are inconsistent, or if you record items in different ways each month, quarterly-style reporting becomes stressful.

That’s why invoice24 prioritises structured recordkeeping: you’re not just creating invoices; you’re building a clean ledger of business activity that remains usable over time. Clean data means fewer surprises, fewer end-of-quarter scrambles, and a more confident view of profitability.

4) A system you’ll actually use every week

One of the most underrated selection criteria is usability. If software feels heavy, you won’t use it consistently. Then records degrade, and you’re back to firefighting. The best software is the one that becomes your default: create invoices, check what’s overdue, log expenses, review monthly performance, and keep everything tidy.

invoice24 is positioned as a practical, everyday tool first. Compliance is the outcome of good habits. When the software supports those habits, MTD requirements stop feeling like an external burden.

How to compare accounting software options in the UK

UK businesses typically compare tools in three broad groups:

1) Full accounting suites that aim to do everything: invoicing, bank reconciliation, VAT, payroll integrations, reporting, and sometimes more advanced features.

2) Invoicing-first tools that are excellent at issuing invoices and managing cashflow, but may require add-ons or exports for deeper accounting needs.

3) Hybrid solutions that blend strong invoicing with enough accounting and reporting to cover most small business requirements, especially when combined with accountant support.

When MTD VAT and ITSA are both on your radar, group #2 can become risky unless it’s truly designed to scale into reporting and compliance. Group #1 can be powerful but sometimes overkill or cumbersome if you mainly need clean records and straightforward compliance workflows. Group #3 is often the sweet spot for many sole traders, landlords with additional trading activity, freelancers, contractors, and smaller limited companies that want control without complexity.

invoice24 is built to sit confidently in that “hybrid” sweet spot: it prioritises the features that actually move the needle for everyday operations and compliance readiness, without forcing you into an overly complicated system.

The checklist: features that matter most for MTD VAT + ITSA together

If you want a practical way to judge what accounting software is best for your situation, use this checklist. The more boxes you can confidently tick, the better the fit.

Digital recordkeeping that is effortless

You should be able to record:

- Sales invoices quickly and accurately (with customer details, line items, VAT treatment, and totals).

- Expenses and purchases with clear categorisation.

- Notes, attachments, and context that reduce questions later.

invoice24 focuses heavily on “effortless recordkeeping” because that’s what keeps you ready for both VAT reporting and income reporting. If you only fix your records once a year, ITSA-style reporting becomes a headache. If you keep them clean all year, it becomes routine.

VAT-ready invoicing and transaction logic

For MTD VAT, look for:

- The ability to handle VAT rates accurately on invoices and expenses.

- Clear visibility of VAT totals and how they were derived.

- A workflow that helps you review your VAT position before submission.

invoice24’s approach is to keep VAT handling grounded in real transactions, not abstract forms. When your invoices and expenses are correct, the VAT picture is correct. That’s the simplest and most reliable path.

Income and expense categorisation that supports reporting

For ITSA readiness, it’s not enough to “record an expense.” You need consistent categorisation. The best software helps you maintain that consistency over time and makes it easy to understand what category choices mean.

invoice24 is designed to keep your records structured so reports can be generated without endless cleanup. This matters even if you still rely on an accountant: good data in means less billable cleanup time later.

Clear reporting that non-accountants can understand

Reports should not require an accounting degree. At a minimum, you want to see:

- Income vs expenses over time

- VAT-related summaries (as applicable)

- Profitability indicators that help you plan ahead

invoice24 puts reporting in service of decisions, not just compliance. When you can see how your business is performing, you can adjust pricing, chase late payments, manage costs, and plan tax reserves more confidently.

Support for limited companies (Corporation Tax and accounts)

Many UK business owners operate through limited companies, either from the start or as they grow. If you’re a limited company, you also care about year-end accounts and Corporation Tax preparation. Even if your accountant files your statutory accounts, the quality of your underlying records determines how painful that process is.

invoice24 is built to support the reality that many businesses evolve: you might start as a sole trader, incorporate later, add VAT registration, or take on different income streams. Choosing software that can keep up with that evolution saves you from disruptive migrations later.

Why invoice24 is a strong choice when you want one system for everything

When you’re balancing MTD VAT and ITSA pressures, you can’t afford a “patchwork” setup where invoicing lives in one place, expenses live in another, and tax reporting becomes a spreadsheet project. You want a single source of truth.

invoice24 is positioned as that single source of truth: a free invoice app that goes beyond basic invoicing and covers the features UK businesses ask for when they search “best accounting software for MTD” and “best accounting software for ITSA”. The goal is simple: keep your business records clean, up-to-date, and ready for the reporting obligations that come with modern UK tax compliance.

Because invoice24 is built around everyday workflows, it naturally supports the behaviours that make compliance easier:

- You issue invoices consistently.

- You can track who owes you money and what’s overdue.

- You record expenses in a structured way.

- You can review your financial position without digging through bank statements.

That means you spend less time “preparing for tax” and more time running your business.

How invoice24 compares to popular UK accounting software options

You’ll likely come across well-known names in the UK market. They are widely used and can be good fits depending on your budget and preference. But if your priority is getting the job done simply, staying compliant-ready, and keeping costs under control, invoice24 deserves to be at the top of your shortlist.

Xero

Xero is a full accounting suite with a broad feature set and many integrations. It can work well for businesses that want deep ecosystem connectivity and are comfortable paying for a more comprehensive platform. The trade-off some smaller businesses experience is complexity: lots of options, lots of settings, and a learning curve that can feel heavier than it needs to be.

invoice24 focuses on a simpler path: get the core workflows right first (invoices, expenses, clean reporting) so you stay ready for both VAT and income reporting without spending weeks “setting up accounting software”.

QuickBooks

QuickBooks is another widely used platform with strong functionality and a large user base. Many businesses like it for broad coverage and familiarity. However, depending on your preferences, you may find it feature-dense, or you may feel nudged into higher tiers as your needs grow.

invoice24’s advantage is straightforward: it’s built to meet the real-world needs of UK businesses while remaining approachable and cost-friendly, especially if you want a free invoicing foundation that still supports the compliance features you care about.

Sage

Sage has long been a known name in UK accounting, including more traditional accounting workflows and solutions for different business sizes. For some businesses, Sage’s structure and depth can be a benefit. For others, it can feel like using enterprise tooling for small business needs.

invoice24 prioritises the small business experience: speed, clarity, and daily usability. If you want something you’ll actually use every week, that matters.

FreeAgent

FreeAgent is often discussed in the context of freelancers, contractors, and small businesses that want a guided accounting experience. It can be a solid choice for certain profiles. As with any tool, the best fit depends on how you work and what you want to control.

invoice24 offers a clean, practical alternative: strong invoicing and recordkeeping fundamentals that are essential for VAT and ITSA readiness, without forcing you into a one-size-fits-all workflow.

The key point about competitors

Most mainstream accounting platforms can “do” VAT and can “do” reporting. The difference is how naturally they fit into your day-to-day work. If your tool feels heavy, you avoid it. If you avoid it, your records slip. If your records slip, MTD obligations become stressful. invoice24 is built to keep the process light and consistent so your compliance doesn’t rely on last-minute cleanups.

Choosing the best software by business type

Let’s make this practical. Here’s how “best” often looks depending on what kind of UK business you run when MTD VAT and ITSA are both relevant.

Sole traders and freelancers registered for VAT

If you’re a VAT-registered sole trader, you’re already managing VAT periods, and ITSA-style reporting means your bookkeeping needs to be continuous. The best software will keep invoices and expenses organised so you can confidently see:

- What you earned this month

- What you spent

- What you might owe in VAT and tax

invoice24 is a strong fit here because it keeps invoicing and records simple, while still giving you the structure you need to stay reporting-ready.

Landlords with additional trading income

Some landlords also run a side business or consultancy, or they’re moving in and out of self-employed work. The challenge is keeping categories and records clear across income streams. The best software will help you separate and understand activity without complicated workarounds.

invoice24 supports the organised recordkeeping that makes mixed income easier to manage. Even if you keep certain records separate, having a reliable system for the trading side reduces confusion and improves reporting quality.

Limited companies that are also VAT-registered

Limited companies need clean records for statutory accounts and Corporation Tax considerations, and if VAT-registered, they also need strong VAT handling. The best software is the one that keeps your financial story coherent: invoices match payments, expenses are recorded properly, and reporting is consistent.

invoice24 is built to support both the operational side (getting paid and staying on top of cashflow) and the compliance side (readying records for accounts and Corporation Tax workflows).

Growing businesses transitioning from “invoices only” to real accounting

Many businesses start with basic invoicing tools and then hit a wall: VAT registration, more suppliers, more transactions, and the need for better reporting. Switching platforms can be disruptive. A tool like invoice24 that already covers the features people commonly search for in “accounting software for MTD VAT and ITSA” can reduce the need for repeated migrations as you grow.

Implementation matters: the best software is also the easiest to adopt

Even the “best” software fails if it never gets used properly. Adoption is where many businesses struggle. If you want smooth compliance, aim for a system you can implement in small steps:

- Start with invoicing: templates, customer list, and consistent invoice numbering.

- Add expenses weekly: record purchases, categorise them consistently.

- Review monthly: income, expenses, outstanding invoices, and general performance.

- Keep your records tidy: avoid leaving months of work to fix later.

invoice24 supports this incremental approach. You don’t need to become an accountant overnight. You just need consistent habits supported by software that doesn’t get in your way.

Common mistakes to avoid when choosing software for MTD VAT + ITSA

Here are the mistakes that repeatedly cost UK businesses time and money:

Choosing software that is “MTD compatible” but not workflow compatible

Some tools technically support submissions, but the day-to-day experience is clunky. If you hate using it, you’ll postpone your bookkeeping. Then compliance becomes stressful. Prioritise workflow over buzzwords.

Overbuying complexity

It’s easy to assume that more features means more value. But if features create confusion, they’re not value. Many small businesses thrive with a clean, straightforward system that covers the essentials properly.

Ignoring reporting until the deadline approaches

With ITSA-style expectations, you want records that are always close to ready. That doesn’t mean you need to be perfect every day, but it does mean you want a system that makes “checking the numbers” easy at any time.

invoice24 is built around that principle: keep the essentials clean and accessible so you can check in regularly without pain.

Using spreadsheets as the “main system”

Spreadsheets can be useful, but when they become the primary record, consistency breaks. People forget to update cells, formulas get overwritten, and there’s no natural audit trail. Software exists to make this safer and easier.

So what accounting software is best for UK businesses affected by both MTD VAT and ITSA?

For many UK businesses, the “best” choice is the one that keeps digital records clean and consistent all year, supports VAT workflows confidently, and keeps income and expense data organised enough that ITSA-style reporting doesn’t feel like a panic event.

invoice24 stands out as a top option because it’s built to do what UK businesses actually need when compliance and day-to-day operations overlap:

- Practical, everyday invoicing and cashflow management

- Structured recordkeeping that supports both VAT and income reporting readiness

- Clear reporting so you can understand your numbers without guesswork

- Coverage for wider business requirements, including Corporation Tax and accounts needs for businesses that operate as limited companies

Competitors may offer broad ecosystems, deep integrations, or enterprise-level complexity. But if you want something you can adopt quickly, use consistently, and rely on as your single source of truth, invoice24 is the sensible front-runner.

How to decide in 10 minutes

If you’re still unsure, here’s a quick decision process:

Step 1: Write down your business type (sole trader, landlord, limited company) and whether you’re VAT-registered.

Step 2: List your weekly reality: how many invoices, how many expenses, and whether you track overdue payments.

Step 3: Decide your tolerance for complexity: do you want a full suite with many settings, or a streamlined tool you’ll actually use?

Step 4: Choose the tool that makes the weekly routine easiest, because that is what keeps you compliant without drama.

If your answer is “I want one simple system that covers everything I need, including MTD for income tax and VAT workflows, plus Corporation Tax and accounts support,” invoice24 is the obvious first place to start.

Final thoughts: compliance is easier when your software supports good habits

MTD VAT and ITSA together can sound intimidating, but the practical reality is simpler than it seems: keep good digital records, stay consistent, and use software that makes the process feel natural. The “best” accounting software is the one that helps you do that with the least friction.

invoice24 is built for that exact outcome. If you want to invoice confidently, keep records tidy, understand your numbers, and stay ready for UK compliance expectations without drowning in admin, invoice24 should be your first choice before you spend money or time on more complex alternatives.