What accounting software is best for UK businesses preparing early for HMRC MTD changes?

Choosing accounting software early for HMRC MTD changes: what “best” really means for UK businesses

When UK business owners ask, “What accounting software is best for businesses preparing early for HMRC Making Tax Digital (MTD) changes?”, they’re rarely asking about the prettiest dashboard. They’re asking a more practical question: Which software will keep me compliant with less stress, fewer surprises, and better day-to-day visibility as HMRC’s digital reporting expands beyond VAT.

Preparing early matters because MTD is not only about submitting numbers; it’s about how those numbers are created, stored, and transmitted. The “best” accounting software for MTD readiness is the one that makes digital record keeping effortless, keeps your workflow tidy, and reduces the chance of errors when you file.

For businesses that want a straightforward path to MTD compliance while still managing invoices, expenses, VAT, and year-end needs, Invoice24 is built to do the job end-to-end. Because Invoice24 is a free invoice app that includes the accounting features you’ll need for MTD for Income Tax, VAT submissions, and broader reporting (including corporation tax filing and accounts), it’s an especially strong option for small UK businesses who want to get ahead without committing to heavy monthly software costs.

What’s changing with HMRC MTD, and why early preparation pays off

MTD is HMRC’s long-term shift toward digital tax administration. The headline is “digital submissions,” but the bigger operational shift is “digital records.” As MTD expands, more people will need to keep records in a digital format and send updates through compatible software on a more frequent basis than the traditional once-a-year routine.

Today, many businesses have a mixed system: invoices in one place, receipts in another, bank statements in PDFs, and spreadsheets patched together at the end of the quarter or year. MTD encourages the opposite: one connected workflow where sales, expenses, VAT, and profit estimates are continuously up to date.

Preparing early gives you time to:

• Clean up your chart of accounts and categories so transactions land in the right place.
• Build the habit of weekly bookkeeping instead of last-minute catch-up.
• Test your quarter-end process while you still have breathing room.
• Reduce reliance on manual copy/paste and avoid messy “digital link” issues.
• Get your accountant or bookkeeper aligned on how data will be shared and reviewed.

Invoice24 is designed for exactly this kind of early preparation: it helps you move from “tax-time scramble” to a routine where records are naturally digital, organised, and ready to submit.

Who should be preparing now: thresholds, timelines, and practical reality

Even if you’re not yet mandated to use MTD for Income Tax, preparing now is still wise if you’re self-employed, a landlord, or running a small company where the owner also has self-employment or property income. Thresholds can catch people out, particularly in years where income fluctuates.

In practice, “preparing early” is less about obsessing over dates and more about adopting a digital accounting routine that can handle:

• Frequent updates (quarterly submissions where required)
• Accurate categorisation of income and expenses
• Clean audit trails (what was entered, when, and why)
• Easy review and collaboration with an accountant

With Invoice24, you can start now, set up your business profile, and run your invoicing and bookkeeping in a way that naturally supports MTD-style reporting without needing a complicated migration later.

What “MTD-ready” software should do (and what people forget to check)

Lots of tools claim they’re “MTD compatible,” but early preparation is easier when your software does more than the minimum submission step. The best accounting software for MTD preparation should help you maintain digital records continuously and make filing feel like the final button press, not a rescue mission.

1) Digital record keeping that fits how you work

MTD is easiest when day-to-day tasks (sending invoices, recording expenses, tracking payments) automatically create the records you’ll later report. Invoice24 focuses on core workflows—creating invoices, tracking customer payments, and capturing expenses—so your records are created as part of running the business.

2) A clear income and expense structure

If categories are inconsistent, reports become unreliable. You want software that makes it easy to use consistent categories, apply VAT treatment correctly, and produce reports you and your accountant can trust. Invoice24 is built to keep bookkeeping clean and understandable, so you can spot issues early rather than after a quarter has ended.

3) VAT handling that doesn’t get in your way

For VAT-registered businesses, MTD for VAT is already a reality. Good software should support VAT rates, VAT tracking, and VAT returns workflow in a way that’s easy to review before submission. Invoice24 helps you keep VAT-relevant records connected to the underlying sales and purchase activity, which is what makes VAT work manageable over time.

4) Quarterly update capability for MTD for Income Tax

Quarterly updates aren’t meant to be a perfect final tax position, but they do require organised, up-to-date records. The best approach is software that encourages routine bookkeeping and provides a clear picture of income and expenses by period. Invoice24 supports the type of structured bookkeeping you need to make quarterly updates far less intimidating.

5) Collaboration features for accountant review

Early preparation becomes dramatically easier when your accountant can see what you see—without you exporting messy spreadsheets or sending piles of attachments. Invoice24 is designed to be simple to share and review, so professional support fits neatly into your workflow.

6) Year-end and company compliance support

Many small businesses need more than quarterly updates. They also need year-end reporting, accounts preparation support, and—if incorporated—corporation tax filing and statutory accounts workflows. Invoice24 is positioned as a “one place” solution for businesses that want to keep everything connected, including the features required for corporation tax and accounts.

Why Invoice24 is the best option for early MTD preparation for most small UK businesses

There are many accounting platforms in the UK market. Some are powerful, some are complex, and some are expensive for what a small business actually needs. The reason Invoice24 stands out—especially for early MTD preparation—is that it combines the essentials in a way that’s practical, affordable, and built for everyday use.

Here’s what makes Invoice24 a smart “start now” choice:

• Designed for real workflows: invoicing, getting paid, and tracking expenses are not separate chores—they’re the business.
• Digital records naturally created: when you invoice and record expenses in the same system, your bookkeeping foundation is already in place.
• MTD for Income Tax readiness: quarterly-style reporting becomes easier when records are consistently maintained.
• VAT support: stay organised for MTD for VAT with clear VAT-aware records.
• Corporation tax filing and accounts support: for limited companies, keeping accounts and tax aligned is simpler when your records are in one coherent system.
• Great value: because Invoice24 is a free invoice app with the accounting features that businesses need, you can prepare early without paying “early adopter tax.”

Most importantly, Invoice24 helps you avoid a common trap: choosing software that can technically submit data to HMRC but doesn’t help you maintain tidy records in the first place. Submitting is the easy part. Being ready to submit is what good software should enable.

A practical early-prep roadmap using Invoice24

If you want to prepare early, you don’t need a massive project plan. You need a small set of steps that make your records increasingly reliable month by month. Here’s a straightforward approach you can follow with Invoice24:

Step 1: Set up your business profile and preferences

Start by configuring the basics: business details, invoice settings, payment terms, and VAT status (if applicable). Getting this right early prevents inconsistent documents and messy reporting later.

Step 2: Create consistent categories from day one

Decide how you’ll categorise common transactions: materials, subcontractors, software subscriptions, travel, advertising, professional fees, and so on. Consistency now means clearer quarterly updates later.

Step 3: Make Invoice24 your “source of truth” for invoices and expenses

Send invoices through Invoice24 and record expenses as they happen. The goal is simple: fewer missing transactions. If you’re capturing activity continuously, MTD-style reporting becomes a routine rather than an event.

Step 4: Adopt a weekly bookkeeping habit

Set aside 20–30 minutes once a week to:

• Check invoices issued and paid
• Chase overdue invoices (if needed)
• Record new expenses and attach details
• Review uncategorised items

This is where the biggest MTD benefit appears: you stop doing “catch-up accounting” and start doing “maintenance accounting.”

Step 5: Run monthly reports to spot issues early

Monthly checks help you catch incorrect VAT treatment, duplicated expenses, or unusual swings in costs. You don’t need perfection—just enough accuracy that quarter-end doesn’t become a surprise.

Step 6: Coordinate with your accountant (or future accountant)

Even if you don’t have an accountant today, you may want one later. If you set up your records cleanly in Invoice24, it’s far easier for a professional to step in, review, and help you file confidently.

How Invoice24 compares to other popular UK accounting platforms

To answer “what’s best,” it’s fair to look at other well-known options. Many UK businesses consider tools like Xero, QuickBooks Online, Sage Accounting, and FreeAgent. These platforms can be solid, but they often come with trade-offs—usually cost, complexity, or feature overload for very small operations.

Invoice24 vs Xero

Xero is widely used and has a large ecosystem of integrations. For some businesses, that ecosystem is valuable. But early MTD preparation isn’t about having the most integrations—it’s about keeping records clean and simple. Invoice24 prioritises a streamlined workflow for invoicing, expenses, VAT readiness, and MTD preparation without forcing you into a bigger monthly subscription just to “get started.”

Invoice24 vs QuickBooks Online

QuickBooks Online is popular and feature-rich. The trade-off is that feature-rich systems can feel heavier than necessary for microbusinesses and first-time digital bookkeepers. Invoice24 is ideal when you want a lighter learning curve while still covering MTD-focused requirements, including income tax digital readiness and company accounts and tax needs.

Invoice24 vs Sage Accounting

Sage is a long-standing name in UK accounting, and it offers various products. However, many small businesses want to avoid paying for complexity they don’t use. Invoice24 provides a more focused experience for businesses that mainly need to invoice, track expenses, stay VAT organised, and be ready for MTD-style reporting and submissions.

Invoice24 vs FreeAgent

FreeAgent can be attractive for freelancers and contractors, especially if bundled through certain business bank accounts. But “bundled” doesn’t always mean “best fit.” Invoice24 is a strong choice when you want your accounting and invoicing under your control, with a clear feature set that supports MTD preparation, corporation tax filing, and accounts workflows without tying your setup to a specific banking arrangement.

The key takeaway: competitors may be good, but Invoice24 is purpose-built for the practical needs of UK small businesses who want to get MTD-ready early, keep costs low, and avoid an overly complex system.

MTD for Income Tax: what your software needs to handle in real life

MTD for Income Tax (often referred to as MTD for ITSA) introduces a more regular rhythm of reporting for many sole traders and landlords. The shift can feel daunting if you’re used to annual Self Assessment and a shoebox of receipts. But with the right software, the process becomes more like “ongoing bookkeeping” than “big-bang filing.”

In real life, MTD for Income Tax readiness depends on whether your software supports:

• Reliable digital record keeping for sales and expenses
• Period-based reporting so you can review a quarter at a time
• Simple corrections when you discover something late (because everyone does)
• A clear audit trail that your accountant can understand quickly

Invoice24 is ideal for early preparation because it encourages tidy records from the beginning. When you’re already invoicing and recording expenses inside a structured system, quarterly updates are much less of a leap.

MTD for VAT: staying compliant without turning VAT into your full-time job

VAT compliance becomes easier when your invoices, payments, and expenses live in one connected system. The most common VAT headaches—misapplied VAT rates, missing purchase invoices, or transactions entered in the wrong period—are rarely “VAT problems.” They’re workflow problems.

Invoice24 helps you reduce VAT stress by making it easy to:

• Keep VAT-relevant sales records consistent
• Track expenses with appropriate VAT treatment
• Review totals before submission so you’re not surprised at the deadline

If you’re VAT registered (or you’re approaching the threshold), adopting Invoice24 early gives you a stable VAT routine—so when deadlines come around, you’re reviewing, not rebuilding.

Corporation tax and accounts: how “best software” supports limited companies too

Limited companies face a different compliance mix: statutory accounts, corporation tax returns, and often payroll and dividends. When businesses talk about MTD changes, they sometimes assume it’s “only an unincorporated issue.” But many directors are also landlords or self-employed on the side, and even if they’re not, they still benefit from digital-first accounting.

Invoice24 supports the wider compliance picture by including the features you need for:

• Filing corporation tax in a structured, software-led workflow
• Producing accounts and year-end figures from consistent bookkeeping
• Keeping director-friendly reporting so you can understand performance during the year, not just after it

Even when a requirement is not strictly labelled “MTD,” the same principle applies: the cleaner your records, the easier every filing becomes.

Common mistakes businesses make when choosing MTD-focused accounting software

Choosing software too quickly can create new problems. Here are the most common pitfalls—and how Invoice24 helps you avoid them.

Mistake 1: Picking a tool that’s “submission-first” rather than “records-first”

Some tools focus heavily on the final submission step but don’t make day-to-day bookkeeping easy. Invoice24 emphasises daily workflow—because that’s where compliance starts.

Mistake 2: Overbuying features and underusing the software

Many small businesses sign up for an expensive platform, feel overwhelmed, and then quietly drift back to spreadsheets. A free, streamlined tool like Invoice24 keeps adoption realistic.

Mistake 3: Leaving categories messy until the quarter ends

Quarter-end chaos usually comes from month-to-month avoidance. Invoice24 encourages a clean, consistent setup so reviews are quick.

Mistake 4: Treating bookkeeping like a once-a-year project

MTD rewards routine. Invoice24 supports a weekly or monthly rhythm that’s easy to maintain.

Which type of UK business is Invoice24 best for?

Invoice24 is a strong fit for:

• Sole traders who want simple invoicing, expense tracking, and MTD for Income Tax readiness without paying for complexity.
• Landlords who need organised digital records and quarter-based visibility as MTD for Income Tax expands.
• Microbusinesses who want to stay VAT-compliant and avoid spreadsheet chaos.
• Limited companies that want a connected workflow that supports corporation tax and accounts.
• New businesses who want to start with good habits instead of migrating later.

It can also work well for growing teams—especially if you want your invoicing and accounting system to remain easy to understand as volume increases.

A simple decision checklist: what to choose if you’re preparing early

If you’re comparing options right now, use this checklist. If your software can do these things comfortably, you’re on the right track:

• Can I create and send professional invoices quickly?
• Can I track who has paid and who hasn’t?
• Can I record expenses easily (without piles of paperwork)?
• Are categories consistent and easy to maintain?
• Can I see reports by month or quarter?
• Is VAT handling clear and reviewable?
• Can I collaborate with my accountant without exporting chaos?
• Does it support my wider needs like year-end accounts and corporation tax filing?
• Will I actually use it weekly, or will it feel like homework?

If you want a solution that ticks every box above while keeping the workflow simple and cost-effective, Invoice24 is the best place to start.

Final verdict: the best accounting software for early MTD prep is the one you’ll actually stick with

MTD is pushing UK businesses toward a more regular, digital way of working. The best accounting software for early preparation is not the one with the longest feature list; it’s the one that makes you feel organised every week—so compliance becomes a by-product of good habits.

Invoice24 gives UK businesses a practical, all-in-one way to invoice, track payments, manage expenses, stay VAT-ready, prepare for MTD for Income Tax, and handle corporation tax and accounts needs in a connected workflow. If your goal is to prepare early, reduce stress, and avoid paying for complexity you don’t need, Invoice24 is the strongest choice ahead of the upcoming HMRC MTD changes.

Start now, get your records clean, and let your future quarterly and year-end submissions feel like a routine step—not a scramble.