Choosing software is the single most important decision in Making Tax Digital for Income Tax. Pick wrong and you could discover, months later, that your tool cannot actually file your tax return.
Fresh analysis of HMRC’s own software list shows the scale of the trap. Of 128 products listed for property income, 44 cannot file full returns yet. That is roughly one in three. And among the 84 presented as ready, only 11 cover all 16 of the other income types the finder tracks. The list is still growing: a live check on 13 October found 132 UK-property products. With the second quarterly update due on 7 November, now is the moment to check your software properly.
What HMRC’s Finder Tells You
HMRC’s “find software” tool lists every product that works with Making Tax Digital for Income Tax. Each product page shows three things: whether it creates digital records, whether it sends quarterly updates, and whether it can submit your tax return. That last field carries one of three statuses.
Ready now means the product can submit your tax return today. In development means the vendor has committed to building tax-return functionality in time for the 2026 to 2027 tax return, which is the first return under the new system. Not included means the product does not offer the feature at all.
Those middle 32 products are the ones to watch. “In development” is a promise, not a capability. If you choose one, you are betting the vendor delivers before you need to file.
The Hidden Trap: Your Other Income
The headline numbers only tell half the story. Most landlords and sole traders have more than one income source. The finder tracks 16 others: UK interest, PAYE employment, UK dividends, State Pension, private pensions, partnership income, foreign dividends, foreign interest, pension contributions, Construction Industry Scheme income, charitable giving, Capital Gains, Student Loan, Marriage Allowance, voluntary Class 2 National Insurance, and the High Income Child Benefit Charge.
Only 11 of the 84 “ready now” products cover all 16. If your software handles your property income but not your dividends or your PAYE job, it cannot file your complete return. Check every income type you have against the product’s page before you commit, not just the headline status.
What to Check Before You Choose
Run through this list on HMRC’s finder for any product you are considering:
- Tax return status. Is it “ready now”? If it says “in development”, are you comfortable waiting on the vendor’s timetable?
- All your income types. Tick every income source you have, including savings interest and any employment, and confirm each one is covered.
- Quarterly updates and digital records. Both must be supported, not just the return.
- Your accounting period. The finder asks whether you use standard tax-year periods, calendar periods, or neither. Answer accurately or the shortlist will be wrong.
- A free version. The analysis found 32 listed products have a free version, and 22 of those are tax-return ready now, so cost is not always a barrier.
- Your agent. If you use an accountant or bookkeeper, check they can support your choice before you sign up.
After you choose, you still need to sign up for Making Tax Digital for Income Tax if you have not already, and then connect the software to HMRC to authorise it.
Why This Matters Before 7 November
The second quarterly update is due on 7 November 2026, covering 6 April to 5 October under standard periods. Because the 7th is a Saturday, aim to file by Friday 6 November. The updates are cumulative, covering the year so far, so software gaps get harder to hide with each quarter.
One reassurance: HMRC is not applying penalty points for late quarterly updates during the 2026 to 2027 tax year. That gives you breathing space to get the software right. It does not remove the requirement to keep digital records and send the updates.
If your current tool is one of the 44 that cannot file full returns, the weeks before 7 November are the right time to switch, not January. Our switching guide walks through how to move without losing your records. And if you are joining in the April 2027 wave rather than filing this November, our £30k threshold guide explains who is caught next, so choose carefully now.
Frequently Asked Questions
What does “in development” mean on HMRC’s software finder?
It means the software provider has committed to building tax-return functionality in time for the 2026 to 2027 tax return. The feature is not available yet, so you would be relying on the vendor delivering it before you need to file.
How many MTD products can file full tax returns now?
Vendor analysis of HMRC’s list puts 84 of 128 property-income products as tax-return ready, with 32 in development and 12 not offering the feature. HMRC updates the list, so check the live finder for the current picture.
Does “ready now” mean it handles all my income?
Not necessarily. Only 11 of the 84 ready products cover all 16 other income types the finder tracks. Always check each of your income sources against the product’s page.
Are there free MTD-compatible products?
Yes. 32 listed products have a free version, and 22 of those can already submit tax returns. iFiler itself is free MTD-compatible software for Income Tax and VAT.
What is the next quarterly update deadline?
7 November 2026, covering 6 April to 5 October under standard periods (1 April to 30 September under calendar periods). Because it falls on a Saturday, file by Friday 6 November.
Will I be penalised for a late quarterly update?
No penalty points apply to late quarterly updates during the 2026 to 2027 tax year. The updates are still legally required, so use the breathing space to get your records and software right.
Disclaimers
Disclaimer:
This guide provides general information about Making Tax Digital for Income Tax software as of October 2026. Tax rules, government announcements, and software listings can change. Nothing in this article is tax advice. Always consult with a qualified tax professional about your specific circumstances. That’s what we’re here for. In accordance with our normal practice we give this reference in good faith and in confidence, without legal liability on the part of the author or the company. The author assumes no responsibility or liability for any errors or omissions in the content of this site
The information provided in this blog is for general guidance and educational purposes only and does not constitute financial, tax, accounting or legal advice. iFiler, registered in England under Company Registration Number 15996173, has prepared this content to offer general insights into financial and taxation matters. Although we make every effort to ensure the accuracy and relevance of the information at the time of publication, we give no guarantee regarding completeness, accuracy or suitability for your specific circumstances.
Readers should not act, or refrain from acting, based solely on the information contained in this content. Always get professional advice tailored to your personal or business situation before making any financial or tax-related decision. iFiler accepts no liability for any loss or damage arising from reliance on the information in this blog.
